Would you open a new current account if you were me? Overdraft.

[Littleideasbigbook]

Context: Got divorced from a really physically and financially abusive marriage (think broken bones) in 2016, I was pretty much living in my overdraft since. Long story but I didn't get any furniture, he kept the house. Because I was on legal aid my solicitor was awful, I got 10k from a marital asset house worth 210k because his parents gave us 11k deposit 10 years back then made redundant, went back to university to do MSc, so had to pay for that as well as get crappy rented houses, deposits, fully refurnish etc. Started on a Band 4 job in NHS, worked my up, bought a house on my own Nov 2018 with my divorce payout for deposit, got my aimed for Band 7 job in April this year .

I was £2,600 overdrawn pretty much every month for 4 years. Today I am 80 quid overdrawn. There are £195 worth of Direct Debits to come out, which will take me to minus 175 and I need 100 for the next 15 days until I am paid (2 teenage DS and one 9 year old DD need feeding) so will be 375 overdrawn by payday. Lockdown and wfh mean I won't be paying petrol/cafes/running DC about.

Do you think I should open another current account up, get my salary paid into that and just pay my bils and £100 off my overdraft?

I am determined Christmas isn't going to screw up my finances. All 2 of DC presents are bought (ipad, PS5) DS1 is getting £150 driving lessons and I will spend about £100 on my mum, dad and nephews. Monthly income is £2,571, bills are £1,400?

Just feel like seperating it out might help me get it down faster? I want to start 2021 with all my income being mine. WWYD?

Yes do it. I have my main bank account and move money into a monzo account for other bits like petrol and food. It helps in my mind to have thing separate and it means I save much more.

I wouldn’t take off the overdraft facility as if circs change in the future or your bills unexpectedly go up, car breaks etc you might not be able to get the overdraft back, especially if you are not funding that account with your wage. Decreasing people’s need/use of overdrafts Is a big thing for banks at the min.

There is no reason why you can’t just keep the overdraft facility on there and not use it.

Always better to have options.

I'd definitely look at switching to another bank especially if they have cash incentives to do so. It would mean more money to pay off your overdraft.

@arewethere

Absolutely nonsense. I have current accounts across several banks to spread out money incase of banks collapsing. Where are you getting your info from? Who on earth told you you can only have current accounts with one bank?

Go for it. I dug myself out of a similar financial hole but took me longer, the feeling of debt freedom is immense. You should be proud of yourself!

@arewethere

You can only have one current account unless you use the same bank.

Source?

I think you are doing amazing. However since you are on a strict budget, I would not open another account at a bank.

I’d pay off your overdraft with a 0% credit card and then make payments on that. I’d also at my current bank open a savings account and do an auto transfer of £20 a week. If you need it back, ok. But if it builds up, you can then do an extra payment towards the overdraft on the credit card.

@arewethere

You can only have one current account unless you use the same bank.

I admire what you've done but don't understand why you need to open a second account

Someone should tell the 4 banks i have accounts with then?

So next payday, your overdraft will be - 255
Your salary deposit will be +2571
Your balance will then be +2316.
Bills -1400
Leaving you +916

Sounds OK to me👍

I would leave the overdraft facility and your direct debits as they are. But I would then open a second account to transfer the balance above 1400. This is your available to spend /save money, and your bills are all covered. That's what I did, anyway.

We'll done OP. My ex left me in the shit. He hates to see me solvent🤣

I got your overdraft figure wrong, but principle's the same. You'll be clear of debt in a fortnight. 👍

I admire what you have done in just 4 years. Don’t beat yourself up about using an overdraft, particularly as you have plans to pay it off.

You can have multiple current accounts. At the same bank and at different banks.

In my case, I have a ‘bills’ account and a ‘spending’ account, both with HSBC. I also have unused but unclosed accounts with NatWest and Barclays. I keep about 59 quid in them and do a random transaction once ina blue moon to keep them active.

Posted too soon - I totally understand the security of separate pots of money and that is why I set up my bills/spending/savings accounts. I liked knowing what I had where and for what purpose. I have only had to ‘borrow’ money once from my saving account for my bills because I accidentally paid the same thing twice which didn’t leave enough money for my rent that money. Stupid 🤪 but not the end of the world.

Well done op!!
I've been nhs band 4 for 10 years and the thought of going to a band 7 in just a few years blows my mind😀
Yes I would open another account and pay off the overdraft.
You sound an amazing person⚘