We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
2 current accounts & weekly budgeting works for me
sainsbo
Posts: 4 Newbie
Jump to the long version if you want to know how and why I use two current accounts to control my spending and pay off my debts, or just read the short version if you want to know what I do. I hope this is a help to someone!
The short version
I now use 2 current accounts to control my spending: a main account which receives my salary and deals with all regular outgoings by direct debit; and a spending money account with debit card for day-to-day spending. Every week I transfer my weekly budget from my main account to my spending money account. Here is the account info in detail:
Main account
This is a Nationwide cash card (not debit card) account with no overdraft facility. My salary is paid in to this account every month and all my bills and direct debits come out of this account. This account is effectively locked-down from impulse spending, the only way money comes out of it is via a 3-day bank transfer to my spending money account.
Spending money account
This is a LloydsTSB current account with their new Control feature. Control prevents you becoming overdrawn by declining any transaction that would require more money than is in your account. It also includes their Mobile Banking Pack (normally £2.50/month) which texts you your balance every day and warns you if you go above or below certain limits, as well as a variety of other notifications. The Control with Mobile Banking Pack service costs £10 per month, which may seem like a lot just to stop you going in to your overdraft, but for me it is worth every penny as the savings I make overall are much more significant.
I also have two credit cards:
Regular spending credit card
This is a Nationwide basic credit card with a £500 limit I use for automatic transactions (for example oyster autotopup) or companies that require monthly credit card payments. This card is paid off in full every month by direct debit, and the balance rarely goes above £100. The card itself is at a friend’s house so I can’t access it easily.
Debt credit card
This is the monster that needs to be paid off. I tart this card when necessary to avoid paying interest as much as possible, and pay off as much as I can at the end of every month, when I know how much I can afford. This card sits in a drawer, but should really be cut up.
The long version
I have managed to get myself £5k in credit card debt & £1k in overdraft debt, mainly by spending more than I earn each month, but also by splashing out on mega holidays and events. This is my story of how I'm going to get myself out of it, hopefully it will be useful to others. This strategy I've used is very specific to my circumstances and mindset, so I’m sure it won’t be useful to everyone.
Over the last year or so I’ve enjoyed the good things in life – a bit too much. I’ve spent my money on holidays, going out drinking with friends, attending sporting events, concerts, music festivals and many other fun things. Clothes aren’t really my thing, but gadgets are. I have a good, above-average salary making websites and own 50% of a shared ownership property, but somehow ended up running out of money a good week or two before payday every month.
Therefore, as well as big spending on impulse purchases like holidays, I was adding to my credit card debt each month. Although I am not in debt crisis (as described by Martin), as I was comfortably making the monthly payments, I was getting more in to debt and paying hefty fees and interest.
A key problem for me was that Nationwide would always increase my overdraft automatically when I tried to make a payment that would take me over my limit. So although I had deliberately set up a small limit of £100 to avoid going too much in to debt, it was effectively pointless because as soon as I spent over that amount on my debit card Nationwide would automatically increase my overdraft limit in increments of £250-500. They would promote this as a ‘good thing’ because it avoided me paying any fees or charges, but the net result was that I knew I could use my debit card with impunity even if I was close to my credit limit.
This mentality proved disastrous – I would continue spending much more than I earned each month. And all I would get each time was a friendly letter saying ‘congratulations, your overdraft has been increased’. Eventually Nationwide did stop increasing my overdraft when it was at about £1500. This totally took me by surprise, and led me to move my end-of-month spending to a credit card. I therefore continued to spend a few hundred pounds more than I earned each month.
Eventually I realised this was not sustainable – my problem was how much money I ‘thought’ I had. I was more than capable of limiting my spending when I ‘thought’ I didn’t have much money, but this wasn’t the case often enough. On payday when my balance was high I would go out and blow a few hundred pounds on fun things, as well as making a hefty payment towards my credit cards. But at the end of each month I would end up just as much in debt as I had paid off a few weeks earlier, if not more. It was a vicious circle that had to end – I was incapable of managing money over the 4 or 5 week period in between paydays.
As an example of this, in months where the 1st of the following month is a few weeks away from payday my balance would remain deceptively high before all my bills came out on the 1st. Therefore I ‘thought’ I had a lot of money for a relatively long period of time and would spend a lot accordingly. Then once my bills came out my balance would be really low. In months where the 1st of the following month was quite close to payday my spending tended to be reasonable. I was at the mercy of the randomness of how close payday was to the 1st of the following month.
This had to end. My credit card upper limits were getting close and overdraft was maxed out.
My first glimpse of salvation came when I noticed an advert for the o2 money card. This card is a top-up visa debit card that allows you to transfer money on to it, and then track your spending via text and online.
Importantly for me, you can only spend what is on the card, not anything more. Your transactions are simply declined if you spend too much – it is impossible to overspend. I thought this would be a great way to budget weekly rather than monthly and ensure I wasn’t spending more than I should. Late-night drunken £80 rounds of drinks would be a thing of the past. Or even if they did occur, my spending would be correspondingly curtailed in the days that followed until next week’s allowance arrived.
So I applied for the card and it arrived – but with a critical flaw. Due to o2’s random credit-checking system based purely on address I had only qualified for their lowly card with an £1800/year top up limit. This would be totally useless for me, with spending of at least £200 per week on day-to-day expenses (e.g. pubs, cinema, clubs, football tickets, supermarket food, restaurants, work lunches etc etc). Their upper-limit £10k card would have been ok, but the lower card was useless.
But by now I was convinced that managing my finances weekly rather than monthly was the answer – to me it seemed so much easier. You get to balance out big-spending days with low-spending days, and all purchases are suddenly considered within the context of being able to last the week. Small efforts such as making a sandwich to take in to work instead of going to Pret have an effect that is instantly noticeable – for example you can afford more at the pub on a Friday night.
So I decided to find a way to replicate this set up using another means. With a bit of current-account-related research I discovered that the only way Nationwide would stop increasing my overdraft automatically was to downgrade the current account to a cash-card only account. This was vital to stop me going back in to debt, but would leave me without a debit card.
I then discovered LloydsTSB’s Control feature on there current account. This prevents you going in to your overdraft by declining all transactions that would take you over your account balance. Although there was a £10/month fee for this, in my mind it was worth it to control my spending. It also includes a text-message service which sends you daily updates of your balance and alerts you when you are below a certain balance, which you can set.
Finally I had my solution – by combining a Nationwide cash card account with a LloydsTSB current account with Control I could ensure I never made impulse purchases by locking-down my spending each week. The only drawback was that it would take 3-5 working days to transfer money between accounts – but maybe that’s a good thing.
I’ve been using the 2-current accounts system for 3 months now, and it’s working really well. I lasted the whole of January without running out of money or increasing my debt (previously unheard of in a 6-week pay month) and I have a totally different approach to my money. If I overspend one day, I balance that by saving money for other days in the week.
The text messages from LLoydsTSB enable me to track how much I’m spending and avoid embarrassing ‘transaction declined’ situations. Strangely, it’s just the knowledge that I can’t overspend that prevents me from doing it. I’ve never actually been declined. It’s totally psychological.
Weekly standing orders aren’t possible to transfer the money between accounts, so every Tuesday I set a calendar alarm at work and transfer the money from one account to another.
I’d fully recommend this strategy if, like me, your spending patterns are dictated by how much money you ‘think’ you have. My money is now a weekly state of conciousness for me – payday is irrelevant. I always have my set budget per week, regardless of when I get paid. It’s actually really liberating every Thursday when the money lands in my spending money account knowing that I can spend it on whatever I like, all I have to do is last through to the following Thursday.
I’d be interested to hear any thoughts.
The short version
I now use 2 current accounts to control my spending: a main account which receives my salary and deals with all regular outgoings by direct debit; and a spending money account with debit card for day-to-day spending. Every week I transfer my weekly budget from my main account to my spending money account. Here is the account info in detail:
Main account
This is a Nationwide cash card (not debit card) account with no overdraft facility. My salary is paid in to this account every month and all my bills and direct debits come out of this account. This account is effectively locked-down from impulse spending, the only way money comes out of it is via a 3-day bank transfer to my spending money account.
Spending money account
This is a LloydsTSB current account with their new Control feature. Control prevents you becoming overdrawn by declining any transaction that would require more money than is in your account. It also includes their Mobile Banking Pack (normally £2.50/month) which texts you your balance every day and warns you if you go above or below certain limits, as well as a variety of other notifications. The Control with Mobile Banking Pack service costs £10 per month, which may seem like a lot just to stop you going in to your overdraft, but for me it is worth every penny as the savings I make overall are much more significant.
I also have two credit cards:
Regular spending credit card
This is a Nationwide basic credit card with a £500 limit I use for automatic transactions (for example oyster autotopup) or companies that require monthly credit card payments. This card is paid off in full every month by direct debit, and the balance rarely goes above £100. The card itself is at a friend’s house so I can’t access it easily.
Debt credit card
This is the monster that needs to be paid off. I tart this card when necessary to avoid paying interest as much as possible, and pay off as much as I can at the end of every month, when I know how much I can afford. This card sits in a drawer, but should really be cut up.
The long version
I have managed to get myself £5k in credit card debt & £1k in overdraft debt, mainly by spending more than I earn each month, but also by splashing out on mega holidays and events. This is my story of how I'm going to get myself out of it, hopefully it will be useful to others. This strategy I've used is very specific to my circumstances and mindset, so I’m sure it won’t be useful to everyone.
Over the last year or so I’ve enjoyed the good things in life – a bit too much. I’ve spent my money on holidays, going out drinking with friends, attending sporting events, concerts, music festivals and many other fun things. Clothes aren’t really my thing, but gadgets are. I have a good, above-average salary making websites and own 50% of a shared ownership property, but somehow ended up running out of money a good week or two before payday every month.
Therefore, as well as big spending on impulse purchases like holidays, I was adding to my credit card debt each month. Although I am not in debt crisis (as described by Martin), as I was comfortably making the monthly payments, I was getting more in to debt and paying hefty fees and interest.
A key problem for me was that Nationwide would always increase my overdraft automatically when I tried to make a payment that would take me over my limit. So although I had deliberately set up a small limit of £100 to avoid going too much in to debt, it was effectively pointless because as soon as I spent over that amount on my debit card Nationwide would automatically increase my overdraft limit in increments of £250-500. They would promote this as a ‘good thing’ because it avoided me paying any fees or charges, but the net result was that I knew I could use my debit card with impunity even if I was close to my credit limit.
This mentality proved disastrous – I would continue spending much more than I earned each month. And all I would get each time was a friendly letter saying ‘congratulations, your overdraft has been increased’. Eventually Nationwide did stop increasing my overdraft when it was at about £1500. This totally took me by surprise, and led me to move my end-of-month spending to a credit card. I therefore continued to spend a few hundred pounds more than I earned each month.
Eventually I realised this was not sustainable – my problem was how much money I ‘thought’ I had. I was more than capable of limiting my spending when I ‘thought’ I didn’t have much money, but this wasn’t the case often enough. On payday when my balance was high I would go out and blow a few hundred pounds on fun things, as well as making a hefty payment towards my credit cards. But at the end of each month I would end up just as much in debt as I had paid off a few weeks earlier, if not more. It was a vicious circle that had to end – I was incapable of managing money over the 4 or 5 week period in between paydays.
As an example of this, in months where the 1st of the following month is a few weeks away from payday my balance would remain deceptively high before all my bills came out on the 1st. Therefore I ‘thought’ I had a lot of money for a relatively long period of time and would spend a lot accordingly. Then once my bills came out my balance would be really low. In months where the 1st of the following month was quite close to payday my spending tended to be reasonable. I was at the mercy of the randomness of how close payday was to the 1st of the following month.
This had to end. My credit card upper limits were getting close and overdraft was maxed out.
My first glimpse of salvation came when I noticed an advert for the o2 money card. This card is a top-up visa debit card that allows you to transfer money on to it, and then track your spending via text and online.
Importantly for me, you can only spend what is on the card, not anything more. Your transactions are simply declined if you spend too much – it is impossible to overspend. I thought this would be a great way to budget weekly rather than monthly and ensure I wasn’t spending more than I should. Late-night drunken £80 rounds of drinks would be a thing of the past. Or even if they did occur, my spending would be correspondingly curtailed in the days that followed until next week’s allowance arrived.
So I applied for the card and it arrived – but with a critical flaw. Due to o2’s random credit-checking system based purely on address I had only qualified for their lowly card with an £1800/year top up limit. This would be totally useless for me, with spending of at least £200 per week on day-to-day expenses (e.g. pubs, cinema, clubs, football tickets, supermarket food, restaurants, work lunches etc etc). Their upper-limit £10k card would have been ok, but the lower card was useless.
But by now I was convinced that managing my finances weekly rather than monthly was the answer – to me it seemed so much easier. You get to balance out big-spending days with low-spending days, and all purchases are suddenly considered within the context of being able to last the week. Small efforts such as making a sandwich to take in to work instead of going to Pret have an effect that is instantly noticeable – for example you can afford more at the pub on a Friday night.
So I decided to find a way to replicate this set up using another means. With a bit of current-account-related research I discovered that the only way Nationwide would stop increasing my overdraft automatically was to downgrade the current account to a cash-card only account. This was vital to stop me going back in to debt, but would leave me without a debit card.
I then discovered LloydsTSB’s Control feature on there current account. This prevents you going in to your overdraft by declining all transactions that would take you over your account balance. Although there was a £10/month fee for this, in my mind it was worth it to control my spending. It also includes a text-message service which sends you daily updates of your balance and alerts you when you are below a certain balance, which you can set.
Finally I had my solution – by combining a Nationwide cash card account with a LloydsTSB current account with Control I could ensure I never made impulse purchases by locking-down my spending each week. The only drawback was that it would take 3-5 working days to transfer money between accounts – but maybe that’s a good thing.
I’ve been using the 2-current accounts system for 3 months now, and it’s working really well. I lasted the whole of January without running out of money or increasing my debt (previously unheard of in a 6-week pay month) and I have a totally different approach to my money. If I overspend one day, I balance that by saving money for other days in the week.
The text messages from LLoydsTSB enable me to track how much I’m spending and avoid embarrassing ‘transaction declined’ situations. Strangely, it’s just the knowledge that I can’t overspend that prevents me from doing it. I’ve never actually been declined. It’s totally psychological.
Weekly standing orders aren’t possible to transfer the money between accounts, so every Tuesday I set a calendar alarm at work and transfer the money from one account to another.
I’d fully recommend this strategy if, like me, your spending patterns are dictated by how much money you ‘think’ you have. My money is now a weekly state of conciousness for me – payday is irrelevant. I always have my set budget per week, regardless of when I get paid. It’s actually really liberating every Thursday when the money lands in my spending money account knowing that I can spend it on whatever I like, all I have to do is last through to the following Thursday.
I’d be interested to hear any thoughts.
0
Comments
-
Hi Sainsbo, i use a similar sort of thing which i find has helped me loads with my spending. I have 2 basic current accounts, 1 that my wages go into and the other 1 all of my bills come out of.
I have a standing order set up to transfer the exact amount from my main account to cover all the DD & SO in the bills account, i then know what i have to spend that month is in my main account and when its gone its gone.
I also find if you spend cash rather than using a debit card you will think about it a bit more. As my accounts are with Lloyds Tsb too, i have a txt every Friday telling me my balances of both accounts so i can keep a check on them which is a free service.:AGirlyPink:A"There’s always light at the end of the tunnel, maybe you just need to borrow a torch"CCCS DMP started February 2010 Estimated DFD August 2015 Total Debt 2004 =[STRIKE]£21,500[/STRIKE] 2010 = £9,850:eek:DMP mutual support thread: 3690 -
Thanks girlypink, nice to hear about what you do! So you still manage your money monthly then? For me the weekly thing really helps.
What is the advantage of having your bills come out of a separate account? And what if your bills come in higher than expected? Mine can vary by +/- £100 each month.
It's true that if you spend cash you think about it more - but also if I have cash in my pocket I will spend it on small things that I wouldn't buy otherwise. If I buy lunch for £4 it's better for me to card it than get out a tenner and buy it, because the other £6 will just disappear, I'll buy chocs or crisps that I don't really want or need. If I have no cash on me I'll be less likely to spend.0 -
My bills dont often vary too much but at least if they are coming out of a separate account you 1. cant touch the money in there and 2. know how much you have left for your own spends. If your bills vary perhaps you could put a set amount in each month and then one month you may have some left over which goes into the following much or if you overpay on your bills account each month it could double as a small savings account and every 3 months or so you could transfer it back to your account and use for christmas etc etc??
I try and work out a rough weekly budget but if i go over one week i know i will have to reduce the following weeks so then i have to decide if its worth it.
I never buy my lunch at work if i can help it, if you make your lunch while cooking tea you dont really notice the chore of it and saves you lots of cash. Plus if i dont have to buy lunch, then i dont necessarily have to go into town and no possiblity of any shoes staring at me through the shop windows that i "need" :rotfl:
I try and do most things weekly though, grocery shopping is every week and it helps that my other half gets paid weekly too, i just try to stick to a weekly budget and have only enough cash for that week.:AGirlyPink:A"There’s always light at the end of the tunnel, maybe you just need to borrow a torch"CCCS DMP started February 2010 Estimated DFD August 2015 Total Debt 2004 =[STRIKE]£21,500[/STRIKE] 2010 = £9,850:eek:DMP mutual support thread: 3690 -
very interesting post. I have been playing with the idea of something similar in my head recently.
Is Lloyds TSB the only bank to offer control? its an interesting concept that all of them should offer!£2 coin challenge = 50/250 (20% there)
Olympic challenge = 0.7% paid off0 -
mendedmyways wrote: »very interesting post. I have been playing with the idea of something similar in my head recently.
Is Lloyds TSB the only bank to offer control? its an interesting concept that all of them should offer!
i agree but it should be a service they offer for free rather than charging i think, banks get enough money out of us!!:mad::AGirlyPink:A"There’s always light at the end of the tunnel, maybe you just need to borrow a torch"CCCS DMP started February 2010 Estimated DFD August 2015 Total Debt 2004 =[STRIKE]£21,500[/STRIKE] 2010 = £9,850:eek:DMP mutual support thread: 3690 -
I have just done something similar but slighlty different.I have opened a basic account with the co-op which I get my monthly wage paid into. All the monthly direct debits come out of there including all our shopping. My OH tops it up weekly to ensure there is enough for everything.We have another account that the unsecured debts come out of which we are gradually reducing the overdraft in which DH also pays into weekly, plus any extra money goes in there to pay off the debts.I have also started a spending diary to ensure I know exactly what I spend on household items, shopping, presents ect and don't go over the budget. I am hoping this is the first step to paying off our debts quickly.Has anyone else tried this?Started Self Managed DMP 10th May 2017.
Working hard to get rid of our debt.0 -
Sorry, what is OH and DH?0
-
i have 2 accounts with LloydsTSB, one that i get paid into and one that the bills come out of, when i get my wages (around £400 a month) i transfer the lot to the bills account, then with tax credits, Child benefit etc i get paid weekly so live off that.
I kind of do things differently tho, wages go in bills account, Housing benefit goes on...1 payment for overpayments, the other payment goes in my saver account for holiday, entertainment, emergency, haircuts, presents.
Child maintenence goes on childcare, child benefit goes on overpayments, or at the mo, clothes for my hols in 7 weeks. Finally my weekly tax credits payments pay the rent (£85) then i have £95 left for the week, this covers the food shop and anything else that might crop up. What i dont spend gets paid off the credit card.
Just read that back to me and it makes sense to me so hope it does to you too??:)
Nic0 -
what is this o2 moneycard? is it linked to having an o2 mobile account?
also I too agree that banks are getting enough money out of us and should offer the contol services FOC£2 coin challenge = 50/250 (20% there)
Olympic challenge = 0.7% paid off0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 354.2K Banking & Borrowing
- 254.4K Reduce Debt & Boost Income
- 455.3K Spending & Discounts
- 247.2K Work, Benefits & Business
- 603.9K Mortgages, Homes & Bills
- 178.4K Life & Family
- 261.4K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.7K Read-Only Boards