Since I left university six years ago, I have been really struggling to get on top of my overdraft. I live in it always. At the end of the month I am �1600 overdrawn, then I get paid, go back up to pretty much �0 in my account, and then the cycle of spending my overdraft begins again!
I am spending over �30 a month in interest, and i'm getting sick of it. What I need is to pay it off in one lump, shut it down so that I CAN'T use it, and go from there. I know credit card 0% balance transfers exist, but can I transfer from credit card to overdraft, or do these cards only exist credit card to credit card?
I think i'm indenial a bit about my debt! I have �1500 on one credit card and �600 on another. I am paying �50 a month off of the �1500 one, and �30 a month off of the �600 credit card- but don't seem to be getting very far because of all of the interest.
I'd start by writing out a list of absolutely everything you spend (www.moneysavingexpert.com has some good templates). If necessary (i.e. you have no idea where your money goes) keep a spending diary for a couple of weeks or more.
Once you've written down all your outgoings, you need to look at where you can cut back. It's likely from what you've written that you are spending more than you earn, so always sinking downwards. Once you've identified some savings target the spare money at the overdraft/card with the highest interest rate. Once it's clear aim at the next highest.
Alternatively, if you want to post your budget here (or in the Debt Free Wannabe forum on MSE) I'm sure others would give you constructive comments.
I no longer spend more than I earn, but I did, which is how the debt got there. It is decreasing, but so slowly that I don't even want to think about the amount of interest it's costing!
I have just looked into a loan and think I could get a �3300 loan which should cover what I need, at �100 a month for 3 years. I think that is probably the best option. �100 a month is actually less than i'm paying off now, most of which is interest, so I think it could be the best option. At least then it would all be consolidated, and i'd actually have an end in sight!
Cards like virgin and mbna do allow you to transfer money to a current account on 0% interest for a fixed period for a small fee. However you need to address your budget and spending first otherwise you will just end up sliding back into the overdraft and end up in a debt spiral (I've done that myself 3 times and now working myself out of the mess).
I think i'm going to apply for the loan, and then cut up cards and close my overdraft. I have just spoken to DH and he said he has �1500 of debt (what a pair we are!), so I think we're going to apply for �5000, and pay it over 2 years at �110 a month each. (Raw deal for him seeing as most of the debt is mine- although mostly the debt was built up from buying holidays and household things for both of us, so it's not that unfair that he helps!) I think I will feel much better knowing that we are both debt free aside from a consolidation loan that will be paid off in 2 years. I feel better just thinking about it!
If you take out the loan, try to pay it back over the shortest amount of time. Prioritise the repayments over all your other discretionary spending, budget carefully and go without or delay things that aren't necessary e.g. holidays. Once it is paid off, take the same amount each month and put it into a savings account. That way you start to build a buffer for when/if there is a spending crisis in the future and you're less likely to go back into debt.
I think we've worked out that 2 years is manageable, and will hopefully fly by! We did have an HP debt, but finished paying that off last month, so at the moment it is just the £5300 (added it up last night and that's what it is exactly). I guess it could be an awful lot worse! I think we'll do two years at £230 a month, and then hopefully it will all be paid off and sorted by the time we hopefully have baby no.2.
Consolidation loans are fine in principle but what happens is that you will be encouraged to borrow more 'as a buffer' and will be locked into a long repayment term and end up paying more in interest than if you do the standing order trick on all card borrowing and the 0% transfer swap at the same time
banks and credit card companies HATE my spreadsheet