Debt free but struggle saving...

Mustard_Seed

Hi,

Big fan of MSE and newbie

I did the budget brain planner and it works out I have a underspend sum - but me and my husband have always struggled saving as we have had so many home improvements to get sorted.

I've gone through out budget scrupulously and managed to save an additional £200/month which I was so pleased with. However, I really want to turn a corner with saving!

I personally haven't always been debt free so I have come a long way, but just can't seem to get over this final hurdle.

Any tips would be greatly appreciated.

Thanks,
Mustard Seed

Stubod

..set up a spreadsheet, keep records of your income v expenditure and update monthly. Open some sort of "regular" / automatic savings account so money goes in from salary every month..(ie you don't have it to spend).
Ideally the saver should be one that "locks" you money away for a defined period (stocks and share ISA if you are in it for the long term as other interest rates are crap at the mo...)...or if long term look at putting some / more money into any company pension fund....although this is "very" long term.

set yourself a long term goal as to how much you want to save, and or what you want to spend it on at some point....once you get "hooked on saving beware,,,,you may then have difficulty spending anything!..

good luck...and keep using the forum for inspiration...

Thrugelmir

Mustard_Seed wrote: »

as we have had so many home improvements to get sorted.

How many are cosmetic wants rather than necessities.

KGriff

Mustard Seed,

First of all congratulations for turning the corner from being in debt to finding a position, where you and your husband can now save.

The fact you mention you have found a way of saving an 'extra' £200 per month though, left me thinking that you still may have a fair amount outgoing on a monthly basis and if that includes a mortgage, then that should be your next focus. I'm assuming the credit cards and loans have gone totally.

I may be wrong reading between the lines in your post, but I got the impression that there maybe other things you need to do before saving. As you are doing home maintenance repairs etc. I assume it is your own home.

If you do have a mortgage then find out the interest rate ... If it is something like 6%, then it would be best to pay an extra £200 per month off that ... That's if the terms allow that... You certainly won't get 6% in any savings accounts. So best to pay down the mortgage.

You need to detail you and your husbands incomes and expenditure and scrutinise each item carefully.

When it comes to expenditure then any loans or mortgage(s) need to be listed in order ... Highest interest rate at the top, lowest at the bottom.

Always pay off the highest rated items first, but never miss a payment of any item just for the sake of paying off the ones with the higher rate... Always pay the minimum on everything else.

Next get your household bills and look to see how you can save more .. Change your gas and electric suppliers if necessary etc, reduce the outgoings on TV, broadband and phones (including mobiles).

Shop prudently and plan your meals ... It's amazing how much money can be saved on food shopping, particularly if you can cook yourself using fresh ingredients... Look to see when your local supermarket reduces its goods and try to get the bargains.

Keeping your house maintained is good, but prioritise the jobs to save money.

Then and only then can you save... I would start simple. Some current accounts like santanders 123 account not only gives you 3% interest on your money in that account (up to a total of £20,000) but if you pay your household bills from that account too, Santander will give you cash back.. You may even get cash back on your shopping.

It could be a win, win situation for your initial saving.

I would start there and watch your savings begin to grow... As you both watch the money grow day-in, day out... You will think twice before spending it.

Always keep in mind that horrible feeling of what it felt like to be in debt... And stay proud of your achievements every day.

You will eventually reach a comfort level and then it will be your turn to give advice to your family and friends and watch them get out of debt too.

Good luck to you and your husband.

Eco_Miser

I wouldn't start with a Santander 123, as you need £3000 to get the maximum 3%AER.

Instead start with a TSB Classic Plus, which pays 5% AER on £1-£2000, provided you go paperless and pay in £500 per month (which doesn't have to be in one lump, and doesn't have to stay in the account).
When that's full, your husband can get one, and you can get one jointly, for a total of £6000 at 5% - then move on to Nationwide, then Club Lloyds, then all the 3% accounts, as detailed in the Top Savings Accounts link near the top of the page and numerous threads on this board. You can even get 6% AER with a Regular Savings accounts, if you are accepted, and can lock the money away for a year.

To help you save, record all your spending as it happens, then review whether it is necessary, or useful.

KGriff

Yes, Eco Miser is absolutely right, I had forgotten the 123 account required £3000 to get the full 3%. The other accounts would be a much better starting point.

Thanks Eco Miser for pointing that out.

Also mustard seed, keep on reviewing your income and expenses on a regular basis as things can change regularly, with better offers springing up all the time. Keep chasing the bargains and the best rates.

Mustard_Seed

Stubod wrote: »

set yourself a long term goal as to how much you want to save, and or what you want to spend it on at some point....once you get "hooked on saving beware,,,,you may then have difficulty spending anything!...

Thanks Stubod - I'd like to save £10,000 as the budget brain suggested in a year - but realistically know that we will be updating our bathroom and sofa. These items are cosmetic rather than essentials - but these are items we would use are savings to buy.

Mustard seed

Mustard_Seed

KGriff wrote: »

Mustard Seed,

First of all congratulations for turning the corner from being in debt to finding a position, where you and your husband can now save.

Good luck to you and your husband.

Thanks KGriff for your kind words and support and plenty of tips.

I'm thinking of switching to 123 but putting savings into higher interest account as mentioned in other posts.

It works out I could potentially save £10,000 a year however this isn't happening, although completely debt free apart from our mortgage we are spending all potential savings and I suppose it's getting into the right mind set and being disciplined. Having no savings seems to feel as bad as having debts.

I'm going to set up a direct debit into a savings account as a starting point...will also look at over paying the mortgage.

Thanks,
Mustard Seed

Mustard_Seed

Eco_Miser wrote: »

When that's full, your husband can get one, and you can get one jointly, for a total of £6000 at 5% - then move on to Nationwide, then Club Lloyds, then all the 3% accounts.

Hi Eco Miser,

Thanks for your advice, just wondering if you could clarify when we save £6,000 do we keep it in those accounts or move it all to Nationwide etc

Thanks,
Mustard Seed

jimjames

Mustard_Seed wrote: »

Hi Eco Miser,

Thanks for your advice, just wondering if you could clarify when we save £6,000 do we keep it in those accounts or move it all to Nationwide etc

Thanks,
Mustard Seed

I can't answer for Ecomiser but there is no reason to move it if the rate remains the same. Just open additional accounts to make the most of the highest rates.

enthusiasticsaver

We struggled for years to save due to heavy expenditure on home improvements, cost of raising two children and me only working part time due to a husband who has a job with irregular and sometimes long hours. Eventually it comes down to discipline with money. Budgeting for everything and putting a savings amount away at the beginning of the month not the end. I keep a record of every item of expenditure and look for ways of cutting down on absolutely everything if at all possible.


The best formula I have always found works for us is to take all essential spending off our monthly income at the beginning of the month and then divide the remaining disposable income into three. One third is spending money on non essentials - entertainment, clothing, home improvements etc, one third into a separate pot for larger items of expenditure like diy projects, holidays, Christmas and a third into an emergency fund and only to be used in the case of emergency.