What should we do??

babybakey

Hi everyone

well hubby and i are starting to make good changes but im now worried the money we save will whittle away and im in two minds as to what to do.
We know we cant save to save our lives we have literally nothing in savingas and an overdraft of £2.5k which we will pay off here and there but its £1 a day to be in the over draft so £365 a year to have it.

i have the access to put over every penny we can save to the mortgage account as we pay by standing order so the bank says we can do mini payments for anything even £5 if we want. however it doesnt earn any interest but it is out of our bank and away from us so we cant spend it. which we need !!!

at least if i could put across the small ammounts here and there to an account i can see it build up eery now and again when i ring to check whats in there. I was thinking then at the end of each month however much money is left in the account we will transfer tot he account with an overdraft. to try and drop it bit by bit , even if its just small ammounts.

Can anyone think of a better way of doing things? i really need us to clear the mortgage i know the over draft has fees but if i can clear the mortgage whilst were on 2.9% it will save us more in the long run wont it ??? plus the over draft fees arent going to change as theyve only just set it so would be years before another change as its the account features they sell it on ( halifax. )

What would you do ? i know if i save £5 or £25 it needs to go away from me but what do i do ? i dont want it in the account as it will just dissapear. but then i know the house needs things doing to it too the kitchen flooring is £729 which we need ASAP before i get my next environmental health inspection as our old stick down tiles are peeling up and its looking bad. ( i make cakes for a living )

can anyone think of any solutions?

also something ive been trying to get my head round but maths is not my best thing. If we saved up and did random bigger payments ( we get charged £84 to make a extra payment and have it removed from the balance) would it save us as much as having the term reduced ? as i was thinking we could save then at the end of each year adjust the term accordingly to use the savings over the following year to up the payments if that makes sense. its only £42 to do the change of term ( weve just reduced it to 21yrs) they say we change the term at any point.

babybakey

just realised ive messed up if we save all year then ring the mortgage company to shorten the term by what weve saved that will only last a year so we'd have to make that much extra a year guaranteed then .

Oh im confused now :-(

Jonbvn

OP,

Sorry but your posts are a bit difficult to understand. What exactly is your question?

I would add the following comments:

You should pay off your overdraft before overpaying your mortgage. £365 per year on £2.5k equates to nearly 15% interest.

Another thing is that it is not generally a good idea to overpay youtr mortgage if you get hit with ERC's. Given that your mortgage rate is 2.9% you can get similar interest in a cash ISA, without penalty.

babybakey

Jonbvn wrote: »

OP,

Sorry but your posts are a bit difficult to understand. What exactly is your question?

I would add the following comments:

You should pay off your overdraft before overpaying your mortgage. £365 per year on £2.5k equates to nearly 15% interest.

Another thing is that it is not generally a good idea to overpay youtr mortgage if you get hit with ERC's. Given that your mortgage rate is 2.9% you can get similar interest in a cash ISA, without penalty.

Sorry i did waffle on a bit , Im wondering how were best to use the tiny ammounts through the moneth which we have so if i save £3.50 on something shopping wise id like to add it across to either a savings account or the mortgage one. we can transfer moeny across to them without the fee unless we want it put on the actual balance which then does have the fee. although im aware theres no interest so we wouldnt earn anything on the cash just sat there.

if i had an isa or something can i just put across tiny ammounts or would it need to be £10 plus each time?

the reason i need this is were likely to spend it if its in my purse.

the over draft will get cleared soon as were taking the car dealer to court which is what we had the over draft for and have decided to keep just one car for a while so were going to pay off the over draft with the money we get back.

Im also wondering if making one off big payments saves you as much on the interest as small regular monthly over payments ? im not sure how it works but wondered if its as good as the rate reduction weve done to reduce the interest costs.

i hope ive made sense this time , money and maths isnt my thing i just find it all well over my head!

Jonbvn

You can contribute to most ISA's in any amount you want. I would suggest you do not OP your mortgage if you have to pay ERC's.

babybakey

ooh thats good to know , i think ill ring Halifax today and see what i can do theyve been offering me the option to change to a online ISA for ages , might be easier if i can do transfers every time i have a bit of cash saved.
i need to start doing my normal banking online really too as i havent yet and have no idea whats in the bank from day to day , it might help i guess.

babybakey

p.s. ( sorry rushing on school run )
were not over paying currently weve shortened the term and it was half the fee and i just count that as an over payment each month to keep our motivation going its £90.33 more a month fixed , we just need to save every other penny to put towards it too. i didnt want to reduce too much and be left short you see.

Joe_Bloggs

@babeybakey, you are managing your finances whilst in an overdraft pit that is difficult to get out of. I suggest not making overpayments to the mortgage as it only costs 2.9% per year by not doing so.

Divert these overpayments into a savings account.
When the savings account balance is more than the current account overdraft then pay off the overdraft and never dip into the overdraft again. Continue to save for an emergency fund before bothering with mortgage overpayments, your overdraft is too expensive to contemplate doing anything else, in my view

J_B.

museumworker

I concur, get out of your overdraft asap, then save 6 months of money into an emergency fund. If like me you are itching to start OPing the mortgage, then once out of the overdraft, pay half into savings, and half into mortgage (or ISA until you can transfer a decent amount to mortgage).

Joe_Bloggs

Having read what I wrote and re read all the posts I just got to the part where the OP did not have on line banking access. I mistakenly assumed everyone had it if they can use this forum. On line banking is a 21st century success story. In line banking is so 19th century.

Do not plan on getting justice from the courts . Those with the deepest pockets will buy the best legal representation. They may even have taken out insurance to pay for it.

J_B. ( forever cynical )

babybakey

Joe_Bloggs wrote: »

Having read what I wrote and re read all the posts I just got to the part where the OP did not have on line banking access. I mistakenly assumed everyone had it if they can use this forum. On line banking is a 21st century success story. In line banking is so 19th century.

Do not plan on getting justice from the courts . Those with the deepest pockets will buy the best legal representation. They may even have taken out insurance to pay for it.

J_B. ( forever cynical )

he's not got legal help dont worry he's a pathetic excuse for a car dealer. I have him over a barrell really hes even been driving the vehicle with no authority therefore no insurance since we sent it back via the AA , it was unmovable when we sent it back too so hes obviously had it repaired to pretend theres nothing wrong with it. I have everything documented and my friend who is a solicitors been helping me with it all , its only small claims court and hes failed at every step so unless the judge is deaf , dumb and blind i cant see how they could ever find in his favour.
Sorry were so frustrated over all of this we'd saved for the car like mad and within an hour of buying it was plunged into this nightmare and thats where the overdraft has come from trying to cope without the vehicle and cover all the costs elsewhere to do with the issue.