Thursday, 20 March 2014

Beating the Banker (Or At Least Putting Up a Fight)

Spending wisely is just as important as investing well or saving hard.

This is something that has only just started to dawn on me and I would love to be able to provide myself with some hard facts and figures to back up this newly discovered and enlightening realisation. So I've been working on a few calculations based on our previously rather chaotic monthly budget and tried to assess how the changes I have started to put in place are making a difference.

Firstly - How we pay for things:

We have no mortgage but pay most other regular bills via Direct Debit or Standing Order from our two joint current accounts (Halifax and Santander 123). I set up the Santander account a few months ago to hold some of my husband's pension lump sum (3% interest) and to take advantage of the cashback it offers.

We tend to put most of our shopping (food, household stuff, clothes, cosmetics, travelling expenses etc) onto credit cards. I currently have a M&S 0% interest card as I spend a fair amount there on a regular basis. This is a recent acquisition (part of my drive to get "value" out of my spending) and I also took up a M&S current account which came with a 6% regular saving account at the same time. I'm making a real effort to get back at least some of the profit I've leaked into M&S over the years.

Additionally we have a Halifax Platinum card with a high credit limit (£14,000) for larger purchases and my husband has just started using a Santander CashBack card for everyday groceries (1% cashback) and petrol (3% cashback).

We pay back all cards in full each month (in effect, although I am using the M&S deposit account to hold some of the money eventually destined to pay off the card when the 0% interest period comes to an end, so I am running a balance on that one -  my small stab at "stoozing" as I like the idea of turning things in our favour a little, rather than the banks', once in a while, but I don't have the nerve for the heavy stuff).

What this all means

It is difficult to put an accurate figure on the changes I have made to maximise the "value" of the current accounts and credit cards and what they can give us in terms of points, credit and 0% interest but I've done a very quick and dirty on the figures and I reckon we're about £785 a year better off:

Extra Interest from Santander 123 as compared to Halifax Online Saver: £500
Interest from M&S Regular Saver: £85
CashBack from Santander cards/account: £100 (after charges)
Points/vouchers/discounts from M&S: £100 (after charges)

That may not sound much but it would actually go a long way towards paying for an extra week's holiday or, if I add it to my investments at the rate of £65 per month it gives me:

After 6 years, you would have £96,553

So, it actually pushed me up past my target :-)

Already I'm looking at being able to reduce the time that I have to stay at work to 5 years, I just need to find a little more to save. I really don't think that this should be too difficult.

After 5 years, you would have £86,180
(Thanks again to for providing the calculations).

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