Advice on my strategy
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Afternoon all,
So I'm currently trying to overhaul my finances and start automating what I can to make life easier/ensure every penny is accounted for etc.
I'd really appreciate some advice if possible so let me give you some context:
I've done several budgeting attempts in the past and always ensure that my income>outgoings so have no debt etc. Ordinarily I pay for things using a credit card and then pay this off each month before dividing the remaining money into relevant savings accounts etc.
The issue is annual bills (car insurance, utilities bills et al) that I have accounted for in my budgets but ultimately still surprise me a bit when they all hit at the same time (psychological effect rather than not having the money as it feels like I'm paying from my savings). SO - I've decided to automate the process somewhat by creating several 'pots' using online savers. I have used the MSE budgeting tool to narrow down exactly what I need to put away each month to fulfill both monthly and annual bills so this will go into the relevant pots on a monthly basis. The idea being that I still use my CC and then pay it off on a monthly basis from the associated pots. This may seem like it takes a bit of work but I enjoy it and think it will help me to stay within budgets.
My main concerns/questions here are the following:
Any thoughts/advice/guidance/general observations on the above approach would be greatly appreciated
AH
So I'm currently trying to overhaul my finances and start automating what I can to make life easier/ensure every penny is accounted for etc.
I'd really appreciate some advice if possible so let me give you some context:
-
Saving for a house deposit using a LISA(could buy at any point within the next 1-5 years)
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Saving for long term (S&S ISA - currently VLS80 until I am more knowledgeable).
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Paying into workplace pension (only 10% total - this maximises employer conts)
I've done several budgeting attempts in the past and always ensure that my income>outgoings so have no debt etc. Ordinarily I pay for things using a credit card and then pay this off each month before dividing the remaining money into relevant savings accounts etc.
The issue is annual bills (car insurance, utilities bills et al) that I have accounted for in my budgets but ultimately still surprise me a bit when they all hit at the same time (psychological effect rather than not having the money as it feels like I'm paying from my savings). SO - I've decided to automate the process somewhat by creating several 'pots' using online savers. I have used the MSE budgeting tool to narrow down exactly what I need to put away each month to fulfill both monthly and annual bills so this will go into the relevant pots on a monthly basis. The idea being that I still use my CC and then pay it off on a monthly basis from the associated pots. This may seem like it takes a bit of work but I enjoy it and think it will help me to stay within budgets.
My main concerns/questions here are the following:
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Will opening these multiple online savers affect my credit rating? I am an existing customer with the bank(s) in question.
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Money is currently transferring from H2B ISA to LISA - kept the H2B ISA due to the interest rate. I plan to continue paying in £200pm to my H2B and then will withdraw and dump in the LISA before the end of each tax year - can I do this? After the interest only, not bonus of course.
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I will put the remaining £133 into a regular saver (alongside additional cash) but given the timings, this wouldn't now mature until at least April '19 so would be too late - any suggestions on how I can capitalise on high interest accounts given I'd need to withdraw approx. £1596 pre-April '19?
Any thoughts/advice/guidance/general observations on the above approach would be greatly appreciated
AH
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Comments
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It will not affect your credit rating as you are not applying for or taking credit.-
Will opening these multiple online savers effect my credit rating? I am an existing customer with the bank(s) in question.
You have pretty much missed the boat now to get a LISA provider to accept another transfer for 2017/8, if you want to fully use your £4000 LISA allowance for the 2017/18 year you should pay direct to the LISA over the month that remains.-
Money is currently transferring from H2B ISA to LISA - kept the H2B ISA due to the interest rate. I plan to continue paying in £200pm to my H2B and then will withdraw and dump in the LISA before the end of each tax year - can I do this? After the interest only, not bonus of course.
For 2018/19 you could if you want keep funding the HTB (if you didn't have it closed as part of the transfer out to LISA process just now). Some HTB ISAs pay decent interest rates. As it's an instant access account you can get hold of the money at any time to transfer the accumulated balance into the LISA within your £4k allowance during 2018/19. Just don't forget and miss the window to get the transfer through. As you are probably not using up your entire £20k ISA allowance you probably have capacity to just withdraw to your personal bank account and manually pay in to the LISA.
Nationwide has a 5% regular saver for £250pm that is instant access (ie don't have to wait for the end of the twelfth month to "mature" so you can get the money back in late March or early April 2019 and pay it in to the Lisa.-
I will put the remaining £133 into a regular saver (alongside additional cash) but given the timings, this wouldn't now mature until at least April '19 so would be too late - any suggestions on how I can capitalise on high interest accounts given I'd need to withdraw approx. £1596 pre-April '19?
As 5% is higher than what you're getting on the HTB you might prefer to do more in that regular saver account and less in the HTB.
Lloyds also have an instant access regular saver for £400pm but think it's only 2% these days
There are various high interest current accounts (eg nationwide 5% on first £2500 in the account) but to avoid losing them all you could check the articles on the main site banking/savings section.0 -
Thanks. Also noticed the typo which I corrected whilst you were replyingbowlhead99 wrote: »It will not affect your credit rating as you are not applying for or taking credit.
Fortunately haven't missed the boat, the money should be landing in my LISA in the next couple of working days as I managed to get my request in around a month ago.bowlhead99 wrote: »You have pretty much missed the boat now to get a LISA provider to accept another transfer for 2017/8, if you want to fully use your £4000 LISA allowance for the 2017/18 year you should pay direct to the LISA over the month that remains.bowlhead99 wrote: »For 2018/19 you could if you want keep funding the HTB (if you didn't have it closed as part of the transfer out to LISA process just now). Some HTB ISAs pay decent interest rates. As it's an instant access account you can get hold of the money at any time to transfer the accumulated balance into the LISA within your £4k allowance during 2018/19. Just don't forget and miss the window to get the transfer through. As you are probably not using up your entire £20k ISA allowance you probably have capacity to just withdraw to your personal bank account and manually pay in to the LISA.
Nationwide has a 5% regular saver for £250pm that is instant access (ie don't have to wait for the end of the twelfth month to "mature" so you can get the money back in late March or early April 2019 and pay it in to the Lisa.
As 5% is higher than what you're getting on the HTB you might prefer to do more in that regular saver account and less in the HTB.
Lloyds also have an instant access regular saver for £400pm but think it's only 2% these days
There are various high interest current accounts (eg nationwide 5% on first £2500 in the account) but to avoid losing them all you could check the articles on the main site banking/savings section.
All very useful advice, thanks yet again bowlhead. I do actually have the NW Regular saver but had completely forgotten it was instant access. It's yet to receive any interest so am I right in saying that it gets paid annually and therefore I'll just lose the last month or so on whatever is withdrawn to go into my LISA?0 -
Yes I was just meaning that if you had put your request in last month to transfer the HTB contents and were then going to start using it again...the HTB transfer you already arranged that's currently in progress would not contain the March and April contributions that you might be planning to make into the HTB ISA at £200pm, and it may be too late to make them into the HTB and then do yet another 2017/18 transfer into the LISA and catch the year end. So to properly max out your LiSA this year you would be best doing direct contributions to the LISA.
Fortunately haven't missed the boat, the money should be landing in my LISA in the next couple of working days as I managed to get my request in around a month ago.
If they are only going to pay you a year from opening but that's after the tax year end and you are trying to take your money out pre tax year end to stuff the ISA, then you won't get get the interest at that point, only on the interest payment date. Unless you deliberately close the reg saver early to force them to pay you what they owe you to that point.. I do actually have the NW Regular saver but had completely forgotten it was instant access. It's yet to receive any interest so am I right in saying that it gets paid annually and therefore I'll just lose the last month or so on whatever is withdrawn to go into my LISA?
Assuming you keep it open after doing a big withdrawal then you're right that you won't be earning interest on very much in the last month or two, because there won't be very much in the account to earn money on. You'll still get paid for the cash that was in the account, for the time it was in the account. When it's been taken out and stuffed into the Lisa, it will start to earn money in the Lisa instead.0 -
bowlhead99 wrote: »Yes I was just meaning that if you had put your request in last month to transfer the HTB contents and were then going to start using it again...the HTB transfer you already arranged that's currently in progress would not contain the March and April contributions that you might be planning to make into the HTB ISA at £200pm, and it may be too late to make them into the HTB and then do yet another 2017/18 transfer into the LISA and catch the year end. So to properly max out your LiSA this year you would be best doing direct contributions to the LISA.
Ahh, I see what you mean! Apologies, wasn't suggesting I'd do another transfer, as soon as the money lands in my LISA I will manually top up the difference to hit this years £4k limit.bowlhead99 wrote: »If they are only going to pay you a year from opening but that's after the tax year end and you are trying to take your money out pre tax year end to stuff the ISA, then you won't get get the interest at that point, only on the interest payment date. Unless you deliberately close the reg saver early to force them to pay you what they owe you to that point.
Assuming you keep it open after doing a big withdrawal then you're right that you won't be earning interest on very much in the last month or two, because there won't be very much in the account to earn money on. You'll still get paid for the cash that was in the account, for the time it was in the account. When it's been taken out and stuffed into the Lisa, it will start to earn money in the Lisa instead.
That confirms my understanding then, perfect. Thanks yet again :beer:0 -
What my wife and I have done for many years to assist with monthly and annual bill payments plus holidays, car service & a chunk towards Christmas was to have a 2nd current account with the same bank, with an agreed overdraft limit (no arrangement fee at the time).
Add up all the bills & expenses and divide by 12. Setup automatic transfer of that amount from main account.
That way essential spend was separated from general spend if that makes sense to you, and avoided the surprises of those annual bills.
We had an offset mortgage so wouldn't have got much benefit from doing it through a savings account anyway. Nice and easy to set dd's up from and minimal time to manage over the year.0 -
What my wife and I have done for many years to assist with monthly and annual bill payments plus holidays, car service & a chunk towards Christmas was to have a 2nd current account with the same bank, with an agreed overdraft limit (no arrangement fee at the time).
Add up all the bills & expenses and divide by 12. Setup automatic transfer of that amount from main account.
That way essential spend was separated from general spend if that makes sense to you, and avoided the surprises of those annual bills.
We had an offset mortgage so wouldn't have got much benefit from doing it through a savings account anyway. Nice and easy to set dd's up from and minimal time to manage over the year.
Thanks Alan.
This is exactly the type of system I'm trying to implement but rather than just throwing it all into a single CA I'm splitting it out into various pots (groceries, car, utilities, house etc). Going to be a bit more fiddly having multiple accounts but it will make it far easier to manage my budget both to prevent overspending and rebalance my budget (as it were) if I find it's not accurate.
The idea being that a) the remaining money can be spent on whatever I like and b) for annual bills I should just need to dip into the relevant pot.0
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