Stupid question about savings sorry

[SavingKitten]

Recently came out of a long term relationship where we were in debt (due to lack of money and DH being rubbish with money).

Now that I’m on my own with the kids and no DH hiding money away, I’m finding that I have enough money to pay all my bills and buy food, and then maybe £400-500 a month left over at max. I work full time but don’t earn much over minimum wage so there’s not loads of money about. So with my left over 400 a month, what do I do with it? Ideally I want to save a little to one side for emergencies (like car breakdown etc) and then I can up my debt repayments.

So my question is really, were do I put this money? What is normal? I have a help to buy ISA (has like £6 in it), which I can withdraw from but it doesn’t seem like the right place to be sticking the money as I want quick access to it. If I leave it in my current account I end up spending bits of it because it’s still novel having money to be honest! Do I open a savings account? Or a second current account? Currently using hyper jar as it’s out of my way, but itl never accumulate interest there. Should I just be sticking any spare money at all straight on my debt really? I want to keep a regular small amount back for things like Christmas presents if I can.

Debt is less than 7000 and is technically joint debt but I’d rather just get it gone and out of my way really because itl never get paid off if I wait for ex H to pay his share.

Thanks, sorry that’s long!

Start up a savings account with your own bank then when you have a reserve in there for emergencies or emergency nice treats you can start to pay into an ISA to get tax free savings

But pay off high interest debt first

Is the divorce done and dusted with financial settlement etc?

If not I'm not sure if you can factor in the fact you've paid off a joint debt, hopefully someone more knwoledgeable will advise.

Generally, paying down your most expensive debt is the right thing to do first, then having an emergency fund in easy-access account (could be savings or current or instant access isa).

Worth having a read of money-saving expert on savings, and emergency fund.

I think technically the most sensible thing to be would to pay off your debt BUT would you find it more motivating (given what you say about your ex and it being a joint debt) to put a smaller amount to one side to build up your own savings pot? There are various easy access saving accounts you could look at - I've joined Zopa recently which is good. Unless you can find a cash ISA with better interest I'd stick with a standard savings account.

The other question is how you're fixed in terms of pensions - that would be another (or additional) option.

Ps there are no stupid questions!

What order to do things in is covered in this financial flow chart.

ukpersonal.finance/flowchart/

Moneysaving Expert also has a really good budgeting section

www.moneysavingexpert.com/family/money-help/

While you're in debt, you need to minimise the interest you pay by transferring to low rate credit cards if you can, and paying off as quickly as possible.

But you also need to be realistic about your budget, as you've recognised, you need to save money for annual and irregular expenses like Christmas, insurance, car costs etc etc

However, if you can clear a credit card, you could make that part of your emergency fund because you'd only have to pay for car repairs if they happened, so you'd only pay the credit card high interest rate from that point forward, rather than having the money available in a savings account paying 2% and paying 20% interest on a credit card because you've got a higher balance IYSWIM?

With credit cards, don't just pay the minimum payment, ideally pay as much as you can, but at least £1 more than that, or set up a standing order for whatever the minimum payment is now, and it will pay it off much faster as the balance decreases. If you leave it at the minimum payment, it will take decades to pay off.

With savings, you just want the best instant access account. You won't earn much interest, but it will be some. There are some accounts that pay slightly more as they're marketed as 'rainy day' accounts, so you're only allowed to take money out a few times a year, but that might work quite well for you. You can get the money back whenever you want, but the thought of losing interest if you take money out willy nilly might put you off.

Of course, you can have as many accounts as you like, and they can be very easy to open with online banking, especially if you already have a relationship with the bank, so you could open different accounts for different purposes.

Have a look at:

www.moneysavingexpert.com/savings/savings-accounts-best-interest/

But if you are receiving universal credit, then get a Help to Save account, because it pays a 50% of the highest balance over the 2 year period, so unbeatable if you qualify and well worth having.

Haven’t started divorce yet, it’s only been 5 months since he left (and moved into his new rented place with OW), and I had zero savings and no way of paying rent when he left so I’m just getting on my feet a little now, it was totally unexpected. As soon as I can afford divorce il start proceedings, probably just doing the straight government £600 divorce as we don’t have any shared assets, only thing we have is this debt and I want to get away from him financially incase he’s building up more debt. We do have children that is all sorted (he doesn’t want more than to visit them regularly basically).

The debt isn’t high interest, it’s £600 of catalogue, and then £1500 of unpaid council tax that went to a bailiff company, but the repayment agreement is sorted. So I’d like to clear it quickly but unless I stop paying there’s no more interest or fees being added. The other debt is interest free and currently on hold as they’re allowing me to pay off the bailiff first, so I’m not sure wether to start paying a little to both or just shift the bailiff one all together first.

I'd put about a third of your surplus money into an instant access savings account with your bank. Then use the rest to clear your debt. Is your Ex also responsible for clearing the debt?
Try to build up enough savings to cover your family expenses for four months. Once you have built that up, you can think about looking at other types of savings.

Just read your update. I'd concentrate on clearing the bailiff debt first, then move to the one on hold.
Lots of luck to you, you sound sensible and focused, you should do very well.

Is your ex also paying off his half of the debt? Do you get any money from him for the upkeep of his kids?

No he isn’t, and anyone we own money to has said tough luck (though worded nicer), they don’t care who pays it as long as it’s paid, and I’m the one still stuck at this address. He has started paying maintenance but it’s been hit and miss so I can’t rely on it yet, though this is already factored into my available money, it’s not extra. Its slightly over the minimum legal amount when he does pay so atleast that’s some sort of contribution?

Thanks for all the advice it’s really helpful

Be very careful with what you do with the money. Until you have a financial settlement, all money, pensions etc are considered joint. So if you save the money or put it into your pension, it all goes into the pot to split.
paying off the debts asap will be your best bet. Keep a record of what you’ve paid off against it since you split up, you might be able to take this into account for the final settlement.
Finally, get a financial order sorted out asap!

Contact the credit reference agencies like Equifax and Experian (there are others too but they are the main ones) and ask to put a note on your file that you are separated and will not take responsibility for any new debt incurred while you're still married. That should then show up if he tries to borrow money.

Be aware that as you divorce you’ll need to do a financial declaration- both of you. This will include ALL savings etc including your isa , pensions etc. same,e for him. There are then around 10 criteria the courts will use to decide fair settlement. Even if you go consent order route (e.g you agree between you) the courts have to do due deligience to ensure these criteria are at least being taken into account before they “seal” the order youve come up with
There’s no way around this.
half the debt is his- and debt is also put on declaration forms.
so in that sense I’d be paying off debt and ensuring I use that as e leveredge to hold onto a bigger share of the assets.
the best advice is to instigate divorce urgently and get your financial agreement drawn up in draft asap by solicitor. It now takes 6 months min to process a divorce so you can’t start soon enough. Once you have your financial settlement submitted to courts along with the financial declaration forms, (can’t be done until after interim order or what was old decree nisi) , then any further savings you make will be “yours” …so crack on asap

Agreed with above poster, pay off the debt and build up savings after a divorce. Make sure you get a financial break agreed so he can't come back to you for more money in case you win the lottery later! You might need a solicitor for this but that's what I'd do to protect your future assets.

You can do divorce online yourself including the financial declarations,
dont need a solicitor
pin terms of financial agreement use the Advise Now guides- go to divorce s3ction of board and the link has now been put that by MNs
it will cost you to divorce- but that’s a good use of the money you are saving. At min you’ll need a solicitor to draft legally what you and ex have agreed mutually to split in terms of finances. Our whole bill including court costs for amicable split was around £1500 in 2021.

use your money for this. Don’t need a solicitor for everything unless he refuses to play ball or you can’t reach agreement yourselves.

I'd not realised that you were still married, so in that case, delay opening a savings account for the moment, as he could claim a share.

Keep detailed records of the debts and your repayments, you might be able to use these during your financial settlement process.

You say 'as soon as you can afford to divorce'. From other things you've said, I would think the best use of your disposable income just now would be to divorce your ex and ensure full financial separation. And then tackle debt, savings etc following the flowchart linked above. Good luck!

I agree with the advice to get divorced first and just keep up with the debt repayments. I wonder if there’s a way to get some of the debt split so he takes his share.

I find finance YouTube/Podcasts helpful: the ones that could help you are Dave Ramsay (Seven baby steps to getting out of debt), Mama FurFur, The Humble Penny or Meaningful Money.

My tips would be to open an easy access savings, ideally one that lets you set up different ‘pots’. Save for the divorce costs (he should contribute). Set up a pot for inevitable annual expenses or irregular ones like car repairs, Christmas or dentist/haircuts where you work out a budget for that and keep it topped up.

After your costs are covered you can save an emergency fund and focus on paying down debt. The above mentioned Dave Ramsay says to save a modest emergency fund (£1000 or so) that could cover if you were off work or similar. Then chuck everything on the debt. Once the debt is paid off you can put your extra money towards long term savings for you and your children or to improve your standard of living.

You can have a note put on your credit file saying something like, debts run up during marriage, separated X date.

Talk to all your debtors and ask them to freeze any interest. Tell them you have split, you are now a single parent. This is actually good because bailiffs cannot come in to the house when you have children.

The debt isn’t high interest, it’s £600 of catalogue, and then £1500 of unpaid council tax that went to a bailiff company, but the repayment agreement is sorted. So I’d like to clear it quickly but unless I stop paying there’s no more interest or fees being added. The other debt is interest free and currently on hold as they’re allowing me to pay off the bailiff first, so I’m not sure wether to start paying a little to both or just shift the bailiff one all together first.

pay of the council tax debt first and foremost - as this is a tax debt which makes it high priority even though there isn't interest on the debt - its the first debt to pay.

Also make sure you are paying the following years council tax and getting 25% off for single adult occupancy if relevant, this can be back paid if ex moved out a while back and you haven't informed council tax

Are you able to apply for the Help to Save? You ideally need to save the full £50 every month to get the most benefit back!

Thanks for all the advice, I hadn’t realised about the financial side of divorce either, I just figured as neither of us own a house or have savings it’d be fine, so il look into that properly now!

Use the child maintenance calculator which is free and easy on line. Then if payments are hit and miss get an official agreement set up with them as payments can't be missed.
You are better paying off the debts. I found it was like a noose round my neck when me and my ex split.

I knwiw th divorce complicates thugs but the Dave Ramsey baby straps method I really suggest saving and emergency fund of £1000 before paying the rest of surplus cash into debt. You continue to make the minimum payments whilst saving. The !1000

This way of you have an emergency you can pay it off without have it to resort to credit again.

Then the Dave Ramsey recommended way to lay of the debt is the snowball method pay the smallest off first irrespective of interest rate and then when that is paid, the new smallest as you will have more to put towards it (hence snowball).

These make sense to me.