How much can you save?

eskbanker

Saving-for-a-house wrote: »

£-31 overdrawn in my main current account.

Even if this isn't incurring any charges (?) it'll be worth shuffling your money to avoid being overdrawn, in the context of looking to keep your credit files in decent condition ahead of a future mortgage application....

Saving-for-a-house

eskbanker wrote: »

Even if this isn't incurring any charges (?) it'll be worth shuffling your money to avoid being overdrawn, in the context of looking to keep your credit files in decent condition ahead of a future mortgage application....

Hi Eskbanker, Thanks for your reply. I thought my credit file would be improved by using my overdraft by £50 - £300 each month and paying off in full at the end of the month. Am I wrong in this assumption?

eskbanker

Saving-for-a-house wrote: »

Hi Eskbanker, Thanks for your reply. I thought my credit file would be improved by using my overdraft by £50 - £300 each month and paying off in full at the end of the month. Am I wrong in this assumption?

It's a fair question and one that I can't answer definitively - my impression is that sensible and managed use of credit facilities is generally seen as a positive indicator, but thought that this was typically the case specifically for credit cards, where there's a monthly statement cycle and full settlement is reflected in submissions to the credit ratings agencies. I understood that overdrafts were perceived as 'last resort' expensive emergency credit facilties so regular usage wouldn't be seen so positively, but can't hand on heart confirm that this is the case....

Maybe worth asking the question over on the credit file & ratings board?

Saving-for-a-house

eskbanker wrote: »

It's a fair question and one that I can't answer definitively - my impression is that sensible and managed use of credit facilities is generally seen as a positive indicator, but thought that this was typically the case specifically for credit cards, where there's a monthly statement cycle and full settlement is reflected in submissions to the credit ratings agencies. I understood that overdrafts were perceived as 'last resort' expensive emergency credit facilties so regular usage wouldn't be seen so positively, but can't hand on heart confirm that this is the case...

Thanks again Eskbanker. I had a look in the credit file & ratings board and found this useful thread that confirmed your initial thought on how banks view overdraft use. As a result from next month onwards I plan to keep my current account balance in the + and I will consider whether opening up a credit card and using it within the limit and paying off each month to improve my credit score instead.

RebeccaAnn

Saving-for-a-house wrote: »

£3,065.87 in a Cash LISA

Hey, can I ask why you decided on the LISA?

Not a massive amount of advice from me. I find that keeping the motivation is the hard part, I don't always feel like taking on overtime or being thrifty. I like some of the challenges on these boards and spreadsheeting everything, it makes it all seem more worthwhile and its nice to connect with like minded people. It also makes the choices ie the car seem far easier to make.

Alexland

It's a bit concerning you don't seem to have an emergency / rainy day pot? Pretty much all your money is in the LISA and you would suffer a withdrawal penalty if you needed to use it for something unforseen. Suggest you consider building some cash in easy access 5% accounts.

Also yes a lender might be concerned if you are regularly dipping into the overdraft. If you want to build a credit history then maybe a cashback or reward credit card which you put your normal spending on then pay off in full each month by direct debit.

Alex

Saving-for-a-house

Hey, can I ask why you decided on the LISA?

Sure. I chose an LISA because the maths behind the product seemed simple and advantageous. Essentially I get 25% on top of whatever I put into the account up to a maximum of £4000 per year. This means I can get a maximum of £1000 per year from the government towards the cost of my first home, which made perfect sense to me. Plus, knowing that I'd receive a penalty for withdrawing money helps to deter me from dipping into the account.

Saving-for-a-house

Alexland wrote: »

It's a bit concerning you don't seem to have an emergency / rainy day pot? Pretty much all your money is in the LISA and you would suffer a withdrawal penalty if you needed to use it for something unforseen. Suggest you consider building some cash in easy access 5% accounts.

Hi Alex and thanks for pointing this out. My initial thoughts was to prioritise saving for the deposit whilst putting little bits away to build the emergency fund over a year or so. Would you recommend that I switch things around and focus on the emergency savings pot first?

I've stared drafting my savings plan for 2019 and I hope to save an additional £1500 into my emergency pot, bringing it closer to the £3000 target I want to achieve (which is about enough money for me to live comfortably for 2 months). Should I revise this?

Alexland wrote: »

yes a lender might be concerned if you are regularly dipping into the overdraft. If you want to build a credit history then maybe a cashback or reward credit card which you put your normal spending on then pay off in full each month by direct debit.

Thanks again for the heads-up. I'm looking into opening a credit card with Sainsbury's so I can take advantage of the Nectar points whilst building up my credit score. Your thoughts?

Alexland

You are the only one that thinks the LISA product rules are simple!! Still the bonus is great.

In terms of not having an emergency pot that's running things very lean but it depends on your circumstances on if you are likely to need such a pot and have accepted the risk of suffering the LISA withdrawal penalty if such need occurs.

Nectar credit card is good but I struggle to spend the points (other than the annual double up pre Christmas event where I trade in the maximum allowed) so my focus is collecting Tesco credit card points for days and meals out.

Having a credit card with a 0% purchase offer gives you flexibility to put some types of emergency costs on card if you really needed to. Topcashback often have good signup offers.

Alex

jjmmww1

Update for me should be able to up the savings again now xmas is out the way


RS 5% 250
H2B 4671.16 Needs an extra 50 when I get paid Friday
Savings Builder 1.5% 254.17
TSB 1500


So I'm getting there with the savings now but with it be so spread out it doesn't seem like its a lot.