I know, I know, it seems contrary that I actually go into my overdraft as a way to increase my savings BUT it really does work. We’ll get onto that in a minute though since I need to disclose my current mental state.
I’m super hungover.
Was I out partying at a club all night? Aboard a yacht to Aruba? Dancing on the beach barefoot with a margarita?
I was at my friend’s house with another friend that just so happens to be my mum.
I’M COOL OK???!!!
We had a little gin tasting (two small bottles, oops) a bottle of prosecco and, bizarrely, a black Russian.
Man, getting up this morning HURT.
When I texted mum this morning and LOOK AT HER RESPONSE:
SHE ACTUALLY ASKED ME WHY I WASN’T FEELING WELL.
My mother is a badass who can cure her hangover with a cup of coffee, unlike Wussy McWuss over here that needs at least 24 hours of bedrest.
My incredibly active social life (wink/sit in the corner and cry) is not why you showed up in my neck the woods, though, so let’s get on with the story:
In a nutshell, I sat down a while back and worked out how much I could save per week – a figure that was not uncomfortable to attain but also not measly – which turned out to be £125. Now, my wages don’t always cover this (most of the rest of my money goes into our joint account), so sometimes I use my overdraft.
Now, I could just take the money out of my savings to cover it, and avoid the penalty of 28p or whatever, but I find that if I do that , I always end up poaching from my savings. Then the next time I have a little extra cash, I top my overdraft up .
This will not work if being in your overdraft doesn’t bother you. In fact, if you happily sit at the bottom of your overdraft, I suggest crawling your way out of it and then cancelling it. Overdrafts are a very efficient way of lining the bank’s pocket – like credit cards – unless you can make them work for you cancel them.
If you have a free overdraft (for example of you’re a student), I highly recommend using your overdraft and popping all your other cash in a savings account – you may only accrue a couple of quid interest but it’s better than nothing, and it’ll stop you from accidentally spending all your money and then spending all your overdraft too. I wish I’d done this when I was at uni, but I didn’t – I wasted money on designer makeup and food, and ended up spending my first summer in full-time employment trying to top up my overdraft (which I did do) despite having worked in a hotel all throughout uni. Le sigh.
I call the using-my-overdraft-to-scare-me-into-not-wasting-money method is basically ‘the fear’. If you keep using your savings to stay in the black in your bank account, there’s nothing to push you to be more frugal. You’ll think twice before buying that new skirt, or getting a takeaway when you have food sitting in the fridge.
This is a fairly controversial statement in the frugal blogger world, but I love my overdraft safety net.
The thing is though, I’m very good with it. My parents have no debt whatsoever (except maybe one to society for creating my brothers and I) and also told never to use my overdraft. Of course I did, but I felt guilty and kept it a secret from them. Now I go into it every so often but only by £100 or so (it’s got a £1,500 limit), and it’ll be helping my (almost perfect *flips hair*) credit score. I’m currently in the market for a new laptop and I want a MacBook Pro. I could easily use my overdraft, but I get palpitations at the mere thought. I’m very aware that that isn’t my money, so I’m waiting. I’ve noticed that the best deals on laptops can be had in Spetember when it’s ‘Back to School’ so I’m going to try and get a decent deal then. If I can’t find one, I’ll use this eight-year-old, battery-less, overheating beast until it breaks.
My overdraft is for Emergencies. Like if I’m made homeless or abandoned in a foreign country – i.e. scenarios that’ll never happen. I like having it there, but I never use it, and probably should get rid of it (kind of like our old vacuum cleaner and/or blender).
So there we have it – how I use my overdraft to increase my savings.
If you have anything to contribute to this pop something delightful/useful/critical in the comments (except not too critical – I don’t like being criticised – wrap it up in gentle words and tell me nicely).
Have a swell day!