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TellMeElleCee

Things They Didn't Teach Us At School

Tag: Credit Account

Finance & Relationships

September 11, 2020 Ashanta CharmLeave a comment

This is a very popular topic and one that comes with a lot of questions requiring clarity.

Joint Accounts

A couple with a Joint Bank account will both be responsible for the behaviour and management of that account.

Because a joint account tends to play second fiddle to someones main sole account it is easy to go in to an unarranged overdraft without noticing.

Once the account goes in to an unarranged overdraft of say £7, months and then years pass and you are paying interest on interest with being none the wiser. This account balance in the *minus without an arranged overdraft will appear on both of your credit files. The same for any joint utility bills that are not managed well and fall under “missed payments” or the “returned direct debit” bracket.

*Solution = Check your accounts bi-weekly. All of them. Analyse your payments, be aware of when direct debits are due and make sure you have enough funds. Transfer funds between accounts if you need to.

Debt & your Credit Score
Joint loan accounts, Mortgages and the like.

Any unpaid debt, missed payments or defaults will affect the both of you. Even if the payments for the commitment had a direct debit set up from a sole account (Mr), if a payment is missed, this will be attached to both parties as the account is in joint names and both are responsible for the upkeep of it. This will bring down both of your credit scores. Credit agencies like Experian also have a feature where it has an area that lists “linked/associated” accounts. This will bring up your husband, wife, partner etc that you currently or previously had a credit account with or simply have a marital connection to.

When is the right time to open a joint account?

Everyones situation and set up is different, however we found that the right time for us to open a joint account and merge our finances was when we got engaged. We knew that we were committed for the long run and were in the process of planning a wedding, buying a property and supporting one another where necessary so it was crucial that the finances were clear, accessible and shared.

If it wasn’t for marriage or saving for a property I wouldn’t be too keen on having a joint account or intertwining my credit.

Similarly, I know some married people that keep their finances separate. No joint account, no joint mortgage. One pays for the residential home, bills etc and it’s all in his name. One pays for and manages the buy to let property and it’s all in her name.

Do whatever works for you.

Expenses & Savings Goals

The key to staying on top of joint expenses, commitments and saving goals is a spreadsheet! I love me a good spreadsheet, especially one available in a shared Google drive as both you and your partner can edit, access it wherever and whenever you want. The latest version is also always being updated and saved.

We edit the spreadsheet on a monthly basis and are both able to see how much savings we have, the “free” income we have to play with and the bills that need to be paid.

We’re both very visual people so we colour code most of what we do and have regular breakdowns for as much as possible.

A key to us making this work is sharing the load, setting up standing orders and constantly updating the spreadsheet.

Since having this spreadsheet, we have saved more in 6 months than we were able to save in 1 year due to being disciplined and making sure every penny is accounted for.

We have no debts (except a Mortgage) and are enjoying the fruits of our hardwork.

Side Note: We use our credit cards for large purchases like holidays, electronics etc, but clear them within 24 hours. This is so that we can make use of purchase protection, fraud, returns, points and ultimately credit cards act as a level of insurance. I will dissect this topic further another day.

An example of a similar style of spreadsheet my husband and I use to stay on top of our finances can be found below:

I hope this helps.

If you have any questions, please feel free to get in touch via the “Contact Me” tab.

The Clear Debt Quick Plan

September 1, 2020 Ashanta CharmLeave a comment

Everyone is different and so is the size of debt. One thing we can all agree on, is that having debt, is not a nice feeling. Although we know it has to be cleared, at times we can’t think of anything we’d rather do less!

Clearing debt for me use to feel like throwing money in to a black hole.

However, I had to come to terms with the fact that I owed money to the bank and it wasn’t going to go away. I could have all the savings in the world, but until I’ve cleared that debt, my savings are compromised.

THE ACTION PLAN

For ease of the example lets say your net income every month is £2,000

We divide it up in to 3 sections.

10% – Gifts, Tithe, Charity Donations, Emergency fund etc. Whatever your chosen lifestyle supports.

40% – All essential bills including travel & food (This also includes luxuries like eating out and clothes shopping)

50% – Debt. Debt. Debt. Clear that debt!

OR

10% – Gifts, Tithe, Charity Donations, Emergency fund etc. Whatever your chosen lifestyle supports.

60% – All essential bills including travel & food (This also includes luxuries like eating out and clothes shopping)

30% – Debt. Debt. Debt. Clear that debt!

The above is just an example and you can adjust the percentages to suit you. 

Disclaimer: This worked for me as I was married and able to divide all household bills and essentials between 2 people. Due to this, I cleared my debt within 3 months. I do understand that this may not be the case for everyone and it may take longer to clear debt as a single person as your outgoings may be a lot higher. If you still live at home with parents or family, you have no excuse! Contribute, but save!

Something we can all do is cut back on the luxuries and use every spare cent to clear that debt. 

Now that many of us are working remotely, we are saving a lot of money on travel, lunch and after work socials so no excuses!

Let me know how it goes. Let’s clear debt!

Financial Hack: Be aware of your Account balance at all times

July 28, 2020 Ashanta CharmLeave a comment

When I was younger, something I’d avoid with all of my heart was checking my account balance. 

I’d spend and spend until the card didn’t work anymore. My card being declined was the indicator that I had no more money. It was that simple. This went on for about 9months to a year before I got a handle of it.  

I’m not sure what it was, but ultimately it was fear. I knew that the funds in my account would always be decreasing and didn’t believe that checking my balance was worth the heartache.

Fast forward to today, I can’t help but constantly check my accounts. I have a good old nose across all of my accounts to keep an eye on my spending, move money around if necessary to do so and be in the know of how much expendable cash I have. 

It is essential to be aware of your Account balance at all times to ensure that you don’t go in to an unwarranted overdraft, you have enough money for your upcoming direct debits, you haven’t paid for a service you didn’t receive, you wasn’t overcharged for something and many more.

If managing your essential direct debits and overspending on luxuries is something you find difficult, then break the two up. 

I have an account for all of my Direct Debits. I put money in to it every month and I don’t touch it. The role of that account is simply to pay all of my direct debits and standing orders. 

My second account is what I call my expenses account, with this I pay for petrol, food shopping, unexpected life woes (house maintenance) etc. 

Finally I have my luxury account. This is the account I use for all of my online shopping dreams and desires. I have a budget and once it’s up, no more shopping for me! 

This way of working has really helped me to save aggressively and never miss a payment or come up short at the end of the month.

Did you know that most people who have a “missed” or “late” payment as a negative marker on their credit file have no idea that this behaviour is effecting them badly?

Next week we will dive in to this further.

If you have any other tips for someone that doesn’t like to check their Account balance, feel free to leave your comment below. 

Klarna – Buy Now Pay Later, Spread Payments & Credit Accounts

January 27, 2020 Ashanta Charm6 Comments

My guilty pleasure is a little online shopping. It doesn’t hurt anyone and some retail therapy through the screen of your mobile, stretching and flexing those fingers can do some good. 

However, something we all need to watch out for is the negative impacts new credit accounts can have on our credit file. 

A paypal credit card, “VERY” credit account or “take 3 plan” are examples of credit accounts that can have negative impacts on your credit file. This is because a credit search is run to check how likely you are to pay back the funds based on previous behaviours, that you are who you say you are and you live where you say you live. These are all precautions taken so that the lender can retrieve their funds via other means if you were to fall behind on the credit payments.

Some people prefer to have a lot of liquid cash and use various credit accounts to purchase things and clear their balances on a month by month basis. This is fine. However, if you were to over exhaust the use of credit accounts, your credit score could drop dramatically and affect things like buying a property with the use of a Mortgage as lenders tend to look at your debt to income ratio. 

Put it this way, if you could pay back the debt on demand, go for it. If you don’t have the funds and are simply using the credit accounts to relieve the financial strain of things, be careful as this can get you caught up in a very vicious cycle. 

KLARNA – Online Shopping – A girls best friend.

I buy everything that I purchase from ASOS via the Klarna option. This is not a credit account nor is your credit file affected by the use of Klarna. Something that I dislike about online shopping is that you usually have to order more than 1 of the same item to get the right fit. This is why I use Klarna. I order what I like in multiple sizes and send back what didn’t fit. I then pay my balance pretty instantly. I find this way easier and quicker than waiting for a refund.

What is Klarna?

Buy now, pay later. You have 30 days to pay for the things you have purchased. If you send things back before the 30 days, these items are deducted from your overall owed balance. A soft credit search is done which is only visible to you. This search does not affect your credit score.

How can Klarna be a problem?

If you miss your payment deadline (30 days from purchase) you will be sent a series of letters, texts and reminders. If you fail to pay for your Klarna orders indefinitely then this will affect your credit score and show on your file as a missed payment.

Klarna is growing quite rapidly and can be used to purchase items from various brands and online stores. Enjoy it, but browse, shop and pay before the deadline day.

Credit shouldn’t be taken lightly. Protect your credit score at all costs. Build up your credit, borrow funds and use credit accounts to your advantage. Just make sure that if the funds are required from you, you have the means to pay them.

Be responsible. Your future house buying self will thank you.

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  • If it doesn’t happen now, it never will…
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Briony on The Enemy: Japanese Knotw…
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