Savings & My Current Account

pickleiamin

Hi guys

Been on the board a few days now and really loving it.

Now, I have got myself into a pickle by not sticking to a budget, but I am now putting that right. I have a plan and hopefully ill be fine.

I have an ISA and a Current account & CC with HSBC. Currently, my current account is overdrawn and over my OD. This of course will inccur charges. In the next month I am hoping to get my account back on track by sticking to a budget.

I want to start saving a little amount every month again incase of any emerganices or, maybe treat myself a little every now and then.

My question is, If I save say £1k and have £2k oustanding with my CC will they offset that? Or will they only do that if I dont keep my payments up?

Thanks for your help

Chadsman

I would take all the funds out of the ISA and pay off (part of) the most expensive debt first as you will be paying far more interest than you are earning. Every spare penny you get use to pay off some of your debt as there is nothing to be gained from putting money in a savings account when you have debts that are costing you more in interest than you are getting from the savings.
If you want to treat yourself occasionally then get an overdraft extension and an iron will to recognise that that is also a debt that has to be repaid.

I read your post again- I would recommend getting your overdraft down into agreed limits before you have any more treats bigger than a chocolate bar. The chances are you are paying through the nose for the priviledge of going over your overdraft limit.
:beer:

pickleiamin

I understand what youre saying. I would like to, have a savings account incase of emergancies. I was thinking about putting £50 a month a side to start with. Just in case.

Chadsman

that is saying to the bank lend me a tenner at 20% interest and I will save it in an account you pay me 0.5% interest. It is a totally false economy that will keep you longer in debt and cost you more.

...and by having the money in a savings account it presents a temptation to spend it. :eek:

not trying to sound too preachy.

pickleiamin

No I totally understand what youre saying Chadsman. Its fine and I am in this sitation because of me.

What I want though is if I have an issue, for example my bike breaks. Its something I use a lot, now if I had a little bit set aside, I can pay for it and sort it. If I didnt, I would be without my bike and worse off as I would have to get the train to work, no fitness etc.

Or am I looking at this wrongly? Please say if I am.

Maybe I should put that into my budget?

closed

http://www.moneysavingexpert.com/cards/pay-off-debts

pickleiamin

Thanks for that, very eye opening indeed

Chadsman

If you are paying off one or other CC then there must be available credit on that account- that is what you should use in emergencies.

pickleiamin

Chadsman wrote: »

If you are paying off one or other CC then there must be available credit on that account- that is what you should use in emergencies.

Yes, I can see that now.

Thanks for the help you guys, much appreciated.

Mikeyorks

Looking at the debts below your signature - they are your absolute priority. Savings and 'treats' are for when the debts are behind you (it's probably the 'treats' got you the debts).

Post #2 you should print / frame and hang above your debit / credit cards! It's spot on.

pickleiamin

Aye Mikeyorks.

I wouldnt class myself as an idiot. I feel I have never really been educated about finances and have always not really respected it, as you can see. Well, times are changing

Thanks again guys