Financial Focusing update #4

Today’s Financial Focusing task was to review and update our savings – one of the more challenging tasks for me finding a good home for my hard earned cash!

I think I am a natural saver it all started when I visited my Aunty one holiday and her local newsagent had a tin money-box with six sections and a slot for each in the lid and a key and lock to keep it safe.   I just had to have it and I handed over my 2/6d and from that day on I would feed my spare pennies and threepenny bits in through the lid and once a month count the contents.  I would be about 10 years old and I have saved ever since.   This was more difficult as our girls were growing up and money was very tight but when I returned to work 14 years ago I made a point of using some of my earnings to save again and we did very well with interest rates as high as 7%.  The credit crunch has made it increasingly difficult to squirrel the same amounts away with cost of living forever rising but our mortgage on the other hand is lower than it has ever been.

I like nothing better than seeing our savings increase year on year providing a nice passive income.

But…nothing is simple with savings these days – we seem to have bits of money all over the place forever chasing higher interest rates.  To keep track of everything I had to devise a chart so I can see at a glance when an ISA is coming to maturity and needs moving to a better rate.  They are not the easiest of things to keep track of and I have a feeling I haven’t used this years allowance yet.

So today I have been searching online and found that the only way to get a reasonable ISA rate is to fix again but the question is how long for.  The better rates of 3% are available only if fixing for 4-5 years but I think if there was an upturn we could lose out.  So we are being our usual prudent no risk selves and going for a 2-3 year fixed.

On my travels around the internet I noticed the 5% being paid by the Bank of Dave – it isn’t an ISA but even with tax taken off this is a good rate.  He is someone I would definitely bank on!  – I totally admire what he is doing.  Unfortunately there is a waiting list of a year for his guaranteed 5% savings account.

So after much deliberation, a packet of crisps, 2 biscuits and cup of tea I have opted to reinvest an existing matured ISA with the Post Office who are advertising a Fixed Rate Cash ISA (Issue 11) that pays 2.25% AER for two years and possibly open a second one with the money from a matured Nationwide ISA– but I will sleep on that one.  As we approach the end of the tax year there is usually an interest rates war going on to attract new investors so may be worth hanging on a while.

Although our savings are growing (albeit slowly with the low rates) we are now in a position where the interest available is just slightly lower than the interest we are paying out on our mortgage (2.5%) so I am making a large overpayment of £3000 today towards reducing our mortgage.  This is with money I have saved throughout last year in a regular saver paying 2.5% (but taxed) and equally to watching the savings grow there is nothing better than seeing the mortgage total come down.

So I think that wraps up today’s task.  Hubby will have to transfer his ISA in the morning by phone as I did.

Have you any good savings tips?