Teetering on the brink

EatingBeans

If there is one thing that the robot hoover debate has taught me, it is that my mindset and priorities have definitely changed. Reflecting on how I felt about spending money in my replacements ‘pot’ knowing that the end result would be the account balance going more overdrawn, I realised that just housing the ‘pots’ money in the same account as the overdraft was no longer sufficient. Up until now they were very much separate things in my head and I felt totally ok with spending the pot money on the intended purpose, but now, instead of feeling like I have saved that money, (it genuinely used to exist in a savings account so it made sense that I felt that way), now it doesn’t feel the same. The continued focus on trying to get the account balance into the black has made it feel like it is now all just my overdraft. Oddly, I realised that I felt more ok with the pot value for replacements being zero, than I did about spending the money (putting to one side for a moment that I will be fighting for a replacement regardless). So, I got the laptop out, had a ponder, and made a big decision (it feels big to me anyway). 

I have zeroed all of my pots and allocated it against paying down the overdraft. 😱 And to top it off I have moved enough of my current account buffer money to clear the remaining balance too! Goodbye overdraft!

Yes, this did just involve moving cash around rather than bringing any more money in, but the shift is important to me. Now I have no overdraft to worry about, just credit cards. Of course I also have nothing saved for anything, but that’s actually why I have done it. Seeing nothing in the pot will force me not to spend any of it until I have saved up enough for whatever it is. It does mean the next couple of months will now be focused on restoring those pots to where they should be at this point in the year, but I am ok with that as it feels more real.

I will of course leave the account open and overdraft in place in case of a genuine emergency in the next couple of months, but for everything else, I will force myself to wait. 

in_need_of_direction

Congratulations on killing off the overdraft. The mindshift will really help going forwards. Can you challenge yourself to restore your pots in small increments?

MFWannabe

Wow well done clearing the overdraft 
Thats a great mindset change 👌

ellenvan

Thats great that you no longer have an overdraft - the interest on those is crazy.

I think your more straightforward approach will work.

Here's hoping the pots refill quickly with survey money and ebay sales.

In days gone by if you didn't have the cash you didn't get to buy the item.

satchmo1

Well done on seeing the huge benefit of clearing the overdraft! The bank will no doubt try to entice you to overspend, but now that you've had your LBM (light-bulb moment) you'll be able to resist. 

BadBookkeeper

Great idea to clear the od well done 👏 

EatingBeans

Ok, now I have cleared simplified the overdraft/pots situation for all of a few hours, I have been trying to see if there was a better way to save the ‘pots’ money in future that will save me more on interest. Enter, lots of YouTube videos on Velocity banking! 🫣

Now, the strangest thing is, I used to use this, pay off a credit card just to later spend on a credit card method when things were at there worst, basically as I couldn’t afford all the minimum payments. I had no idea it actually had a name! Yes, I know what you are all thinking, it’s really bad to even contemplate spending on credit cards again right? But, now hear me out. That method did actually work when I used it. I just stopped once I could actually make the payments. 

I have looked at my budgets and totted up everything that I am 100% confident could eventually be paid for via credit card and it comes to £522.25pm. Some of that is monthly expenditure, e.g. petrol, and other elements are for things I hold pots for, e.g. dd2’s new phone. 

Now, there would be no point in my mind using this method for the likes of MBNA or Barclaycard where different elements of the balance are at different rates as any new spending would be at standard rate, but NatWest is different. The full balance is already at standard rate so any amount paid down or added will not impact the rate paid, only the amount of interest due. Now, in the same way that I held my pots money in my overdraft account to reduce the balance but recorded the owed balance and pots balance as separate things, I am now wondering why I don’t just do the same but for the credit card. For example, I know I am going to pay out £600 for dd2’s new phone in July. Since I have now cleared the previously saved amount to pay of the overdraft I now have zero saved. New budget as of this morning had me paying £120 a month for the next 5 months into a savings account so I would have enough for July. But, since I would normally buy a that sort of purchase on credit card even if I have the cash, (due to extra protection), I am sat here wondering why on earth I am not just paying that directly into the credit card now and keeping a track of the pots value in Fudget (the app I use for keeping detailed track all my spending/pots). That way I reduce the interest charged to that account between now and July, and I could either keep the payment the same (so the debt on that account decreases faster), or just pay a smaller amount that covers the interest and use the balance to pay down my ‘target’ debt faster. 

I genuinely think it would save me money and I don’t think this would make me more likely to overspend as my budgets in Fudget would remain the same, but obviously it would be adding back complexity which I celebrated getting away from just this morning. 

I do wish my brain would just choose one strategy and stick with it! 🤦‍♀️

ellenvan

While the accounting might be difficult, I agree with the principle.

Which is to pay as little amount of interest as possible.

I am sure Martin Lewis has covered this before in one of his programmes,

No point in having savings if you owe money on credit cards with big rates of interest,

Essentially as long as you have some sort of emergency fund you are OK.

The emergency fund can even be room to spend on a credit card if absolutely neccesary.

Andyjflet

I also have a Robot Hoover, was £150 on offer on Amazon bit my new place isn't robot hoover proof, she gets stuck on the living room rug and now on my new glass and metal framed bedside tables she works her way onto them and cant get off. Perhaps I will try again as its nice to know shes working hard...

EatingBeans

Ah yes, @Andyjflet the joy of a robot who finds something that it loves to beach itself on something! Why do they always seem to do it hey? You would have thought they by now they would have overcome that challenge. (Or maybe they have but that's just for the expensive models). The legs on my desk are prime targets in my house. It still doesn’t stop me loving the dear thing though. It just gets supervised time in that room instead!

I’m beginning to think I am a bit odd loving my little robot hoover so much. I’d like to think it’s just because it saves me time but now I think of it, the absolute best thing I bought for myself in the past couple of years (excluding puppies), has to be my Vax carpet washer. 🤣 Genuinely. I cannot believe I have had dogs for over 20years and didn’t invest sooner. It’s pretty much the same as an upright vacuum but it washes and dries, (well almost dries), the carpet. And you can use it on upholstery too! Yes, seriously, this was my favourite purchase by far. I’m beginning to think I have a weird obsession with clean floors. 😬