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Use my overdraft every month. How can I get into the black?

(36 Posts)
BG2015 Tue 31-May-16 20:38:21

I earn a good salary. Single mum with 2 teenage boys.

I've sourced the best/cheapest utilities I can. We don't have sky, shop in Aldi and cook most meals from scratch.No debt apart from my car loan and paying back my parents each month. I'm overpaying my mortgage by £40 a month and I try to save £100 a month (more if I'm saving for something in particular)

I have a spreadsheet going which tells me I have about £650 left each month to pay for food, petrol, going out etc

It never lasts and I constantly dip into my overdraft. It costs me £17 a month in charges and it annoys me so much.

I would love to build up a credit in my account to act as a buffer. Any ideas?

I've tried withdrawing a set amount each week - it didn't work!

dementedpixie Tue 31-May-16 21:24:14

Use the £100 savings to pay off the overdraft each month especially as the savings rate tends to be much less than the interest rate on an overdraft

listsandbudgets Tue 31-May-16 21:27:35

Have you looked at what you save by overpaying the mortgage against what you pay out for using you overdraft? It may be worth cutting the overpayment each month to help with the overdraft.

When I had a large overdraft, I mentally imagined the limit going down by £50 a month and tried to work within the new limit. It took some time but eventually I saw cr against my account balance and I've rarely dipped back into my overdraft since smile

concertplayer Tue 31-May-16 21:28:20

Is there not an account you could change to with smaller overdraft
Charges? I googled First Direct make no charges up to £250 o/draft
They will mosty all ask you to pay in a minimum each month but as
you earn reasonably this should not be a problem?
It seems the more you pay in the better the o/d fees.
You could ask your parents for a bit more leaway.
£650 a month seems fine. Right down everything you spend for a
normal month-down to even a bag of crisps.
Go shopping with a list and a meal plan for a week.
Buy only stuff on offer as well/shop around. Freeze things
You can feed 3 for £250 a month.
£200 for the rest leaves £200 left for the month

listsandbudgets Tue 31-May-16 21:28:47

I didn't notice the £100 a month savings - definately put that into overdraft for now.

gamerchick Tue 31-May-16 21:30:03

ask the bank to cancel your overdraft when you get paid? If it's not there and they stop you going over then you'll not be tempted. You'll learn how to stay in it.

Lovefromhull Tue 31-May-16 21:39:20

Similar problem here too. One month I wrote down all spends- anything from the cash machine and noted receipts. It was the one month that we didn't need the credit card at the end. I need to do it every month clearly.

LadyFarnborough Tue 31-May-16 21:41:54

I got out of my overdraft by getting the bank to drop it £50 each month automatically.

BG2015 Tue 31-May-16 21:43:44

I have £250 in savings, that's it so far as I've just paid for our summer holiday (saved up for a year) so I feel I need some savings to fall back on.

My overdraft limit is £600 so I don't know whether to reduce it by £100 a month as subconsciously I know it's there as a back up.

I've thought about moving bank accounts, I'm currently with Santander 123 and pay a £5 fee which is just about covered by my interest from utilities etc

BG2015 Tue 31-May-16 21:45:00

Thanks so much for all your suggestions so far. Its definitely got me thinking

BG2015 Tue 31-May-16 21:49:09

I need to pay my parents off as next year I want to start some home improvements. It should be paid by March.

Then I'll be £300 a month better off.

HelloMama Tue 31-May-16 21:50:29

We reduced ours by £100 a month (it was £1k overdrawn at the worst point) and it took almost a year. Then we reduced the overdraft to £250, just in case of emergencies. Sometimes we use it, but not always. Also switched credit cards to 0% balance transfer and set up direct debit to pay it off, rather than minimum payment, which is what we used to pay. Money Saving Expert def recommends paying off debts before contributing to savings as more worthwhile in longterm. That website is full of great ideas.
Hope you pay it off soon!

RandomMess Tue 31-May-16 21:55:18

Absolutely get rid of your debt first before you start saving - how much interest do you get on £100 per month? £3 tops I reckon!!!

Have you tried writing down in a notebook absolutely every penny you spend?

In your monthly costs/budget you don't have anything down for car repairs/servicing/tax/insurance, school uniform, kids clothes. school costs, kids bus fares - I think your £650 per month is actually far far less than that I'm afraid!

BG2015 Tue 31-May-16 22:15:45

Random you're right. It is less than that. My savings are what I have to cover car repairs etc. Tax and insurance I pay upfront.

I've just reduced my o/d limit by £50 ( I can do it online) and will see how that goes.

I just need to be a bit more savvy.

DawgDawg Tue 31-May-16 22:22:36

You are paying Santander £264 a year in charges & account fee.

I changed to First Direct from Santander. First Direct were giving new customers £150. I think its a bit less now, but definately worth it.
No charge for a £250 overdraft.

BG2015 Tue 31-May-16 22:27:07

When I had my mortgage with Santander it was worth it but now I need to either swap or take the 123 account aspect away from my account and go back to a basic account with Santander or move my account elsewhere

specialsubject Wed 01-Jun-16 13:14:05

650 for just food and petrol should be plenty - so brutally you are frittering too much. Where is it going?

And yes, while you need savings against job loss , with interest so pitiful you should look at paying off the debt first.

RandomMess Wed 01-Jun-16 13:45:36

What I mean is that everything you pay upfront like tax & insurances still have a monthly cost.

Work out what you need to spend for a whole year (Do the teens get pocket money, have hobbies?) then divide by 12. Your savings aren't savings then - they are for expenses that will happen, you need to be adding tax and insurance to that too.

Silvertap Wed 01-Jun-16 13:50:34

Try you need a budget. (YNAB) its revolutionised my spending

FetchezLaVache Wed 01-Jun-16 13:51:04

I think you need to find out where you're spending your £650- it should be plenty for the month, especially as you cook from scratch.

Have you got any stuff you could eBay/car boot, to give you a bit of a buffer?

BG2015 Wed 01-Jun-16 13:58:39

I've just looked again at my outgoings/income and it's actually £860 spare. I've applied for a First Account bank account and been accepted this morning. The first £250 overdraft is free and they give you £100 for switching. It's a good incentive to keep it down.

I'm determined to get this under control. Too much spent on supermarket top ups, bits on eBay/amazon (I'm a primary school teacher so am always buying stuff for school) and not being strict enough with what I spend on the kids.

If I really worked at this I could be in the black with a buffer in 3 months.

purplebud Wed 01-Jun-16 13:59:00

move banks to first direct. Write everything down that you spend. I also put a chunk of money into savings every payday on the assumption that I can get it out again easily if I need it. This money is sometimes used instead of an overdraft. Stop overpaying the mortgage.

purplebud Wed 01-Jun-16 14:04:08

Sounds good. I think a lot of financial management is just to pay attention to what is being spent.

BG2015 Wed 01-Jun-16 14:21:44

I actually pay an extra £36 on my mortgage to round it up to £600 a month.

Should I stop this then. It's not much £432 a year extra £2160 extra over my 5 year fixed rate.

purplebud Wed 01-Jun-16 14:31:49

Try keeping the overpayment for now and seeing what happens? I think if you get into the habit of keeping an eye on what is being spent then you might find you can still afford the overpayment too.

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