Is this behaviour dumb?

frugglewump

My OH has told me that one of the things I do each month is anti-DFW & dumb.

Each month on the 1st I put £200 into my ISA until the point in the month where I run out of money & put £100 back in drips & drabs (the rest is the monthly budget for quarterly bills)

His pov is that the ISA is 5% whereas the o/d is 14%. So i'm doing the spending high, saving low thing.

My pov is that I try very hard each month to stay within limits so i don't have to put the 100 back and we have some savings for b-days, xmas & emergencies (especially now we own rather than renting). Which now i read it is very like the 'wrong' reasoning given in Martin's article.

Also if i say to him "i have x left for the month" when he wants something it's easier than "i have x+100 i don't want to spend". We don't have a joint account, but we do have joint spending of a sort - mainly along the lines of "so who can afford this at the moment". Gods, it sounds like i'm hiding the money so he can't spend it - that's not true.

He is not interested in DFW, but then he has £1k on CC and no other debt, but a much lower income. He is, though, very good about waiting for things until we can afford them.

I'll shut up now, but would appreciate opinions.

Emmzi

If you are a LOGICAL sopender then he is right - you are overpaying on interest.
If you are an EMOTIONAL spender you are right - it's safer to keep the money out of the way and mentally 'ring fenced'.

Or maybe you're both a bit right!

Do I think a couple of hundred quid's travel journal for the month is worth fighting over? Nope!

frugglewump

Emmzi wrote:

Do I think a couple of hundred quid's travel journal for the month is worth fighting over? Nope!

Neither did I - apparently it's been bugging him for months.

The house buy was 5 months ago, maybe this is a release valve for "OMG we own a house, £££,£££ debt"

tyllwyd

To be honest, I think you are worrying about the wrong thing.

If you are only talking about a small amount of money, then the difference between 5% and 14% interest isn't going to be a large amount of cash in the year. The bigger problem is if you are living permanently in overdraft.

My feeling is that the best thing to do would be to stop the ISA thing for now, so that any savings are bringing down your overdraft - then when your overdraft is clear, it makes perfect sense to save the money in the way you have been doing. If you sit down and agree that with him, then there is no reason why you can't tell him 'I only have x amount to spend this month' - there is no need to get into discussions over whether you have any overdraft facility left. It sounds as if you both need to do a joint budget - why not set up a separate joint account for bills, then you can both see where you stand?

Or maybe put aside a smaller amount (say £20 per month) and that can be your emergency savings and you will be less likely to dip into it because you will have mentally set it apart from your everyday money.

Jolinar

Personally I would and do set specific amounts aside for things like birthdays, unexpected repairs, car tax etc and put this into your budget and then put that money away, to me this is common sense and not really what Martin was talking about in his article I think. Whatever is left throw at the OD and have it reduced each month so you don't dip into it. If you are running out of money before the end of the month maybe you need to review the budget anyway?