To think living in overdraft is the norm?

[user1490465531]

Beginning to think it was just me.
Despite working I am always in my overdraft a week before pay day.
I have paid it of before only to be in it the next month.
Speaking to people it seems very common due to rising costs of living and no wage increase.
AIBU to think unless you have a fantastic paid job you will living in your overdraft.
I live a pretty basic life apart from odd treat so not exactly due to extravagant lifestyle don't own car don't go on holidays etc.

I lived in a £2k overdraft for 10 years post graduating. They’re quite difficult to get out of, and I also felt fairly hopeless at ever being able to clear it. I have a lower than average income.

My experience is similar to @freckledleopard, I figured out the apr interest I was paying on the debt was miles higher than any other form of borrowing and it lit a fire under me. I also got charged on charges by my bank when in financial distress and I wanted rid of the overdraft so I could be rid of them! I also used Ynab which revolutionised my finances. It took me a year to fully pay off the debt, although I was out of overdraft usage 6 months in. I switched account providers which was an extremely satisfying moment. Since then, I’m permanently in credit and making most of small amounts of interest I get from my current accounts. I have a credit card that I use for cashback and pay off in full every month. It has made such a difference to my peace of mind and confidence in my money management. Don’t tell yourself that every one is in overdraft, or believe that you are stuck there. It’s so great feeling like you are a bit more in charge of finances.

A few years ago, I got so sick of being constantly on the brink of penury that I spent a year or 2 living like an absolute pauper to get my borrowing (cards and overdraft) back under control.

I'm now debt-free, have reduced my outgoings to the point that I was able to go part-time and still make ends meet, and have some savings. It has improved my life immeasurably and I really don't miss most of the things I have given up.

Thing is, if you go into your overdraft by about the same amount each month, then you are actually living within your wages - you are spending about the amount that you earn every month, you are just starting at, say -200 rather than 0. If you are able to take small steps to reduce it by a small amount each month - rein back on a small spend to reduce it by £10-20 a month, then once you are back at 0 you should be able to stay within your means.

It’s a terrible way to liveable often very expensive. As other people have said, try to reduce it every month, even if it’s only £5 a time.

I have never had a credit card and don’t use an overdraft. If I don’t have the money then I don’t spend it. So, for instance, I wouldn’t be spending £20 a week on cigarettes if it meant going into overdraft

A friend of mine had a sudden downturn in their financial circumstances recently, which meant they were using most of their pre arranged overdraft of a few thousand pounds. Apparently the charges were astronomical (Halifax or Lloyds) and they were having trouble meeting the monthly charge, which, for some reason, was taken out daily - approx £3.00 per day

I have a £50 overdraft, but these days don't use it. I used to have a £5,000 overdraft but that was some years ago, and I did use a lot of that, my wages cleared most of it each month (self employed now and that wouldn't happen now).

No, and it makes no sense to live like this, unless you have no choice. You're paying the bank on top of everyone else.

If you regularly spend more than you earn, you will eventually bust your overdraft limit. If you regularly spend less, you will eventually be in credit. Once you are in credit by enough to handle any short-term variations, you won't need the overdraft any more.

What I'm not taking into account are psychological factors, people thinking they can spend more because their balance is relatively high at the time of the spending.

If you really believe outgoings exactly match income and you just happened to have fallen into this pattern at a time when your bank balance was negative, you're probably wrong. Either you're spending more than you have coming in, so are in an unsustainable downward spiral that is causing you to be overdrawn, or you increase spending whenever you perceive yourself as having spare money, and your psychological line for when you can increase spending is set at the wrong level. For some people the psychological line of "spare money" is when the bank haven't cut them off, for some it's not breaking their overdraft limit, for some it's not having an overdraft, and for some it's being in credit by 1 month (or 6months or ten years) regular spending.

It's frankly a terrible habit to have. No different from living in perpetual credit card debt. the words of a banker who’s never struggled to buy groceries, pay for a school trip, have the boiler repaired/glass replaced or new car parts whilst trying to pay all the household bills including the mortgage, run a car and raise a child on one salary.
I’m the wife of a banker, I’ve been a hardworking single mum with a mortgage, a teenager, a job with a commute and bills.
@RedDwarves you’ve obviously never struggled because if you had, you’d sympathise with others struggling instead of sounding so superior. Honestly I hope you do experience money worries one day, it’s the worst feeling ever!

No, I was only ever overdrawn when I was a student. This was years ago with no support from parents so it was quite tough. Summer term of my third year was very difficult as I needed to spend a bit as part of my degree. Started earning properly straight away but had a bit of an argument with the student banking officer and the cashpoint swallowed my card the next time I used it thanks Lloyds bank! so I changed to Barclays.

Money very tight when I bought my flat but I set a budget and stuck to it. I never went into overdraft.

I lived in my overdraft as a student and actually found it quite stressful but I appreciate not everyone is as bothered about it.

You spend £80 a month on cigarettes. Give up and you'll be able to pay your overdraft off by Christmas. Cut down by half and you'll have it paid off by Easter.

Of course you don't have to quit but it's certainly doable in your situation.

Oh yes. I've not been in the black since 2003!

Based on your update, it sounds like there is no need for you to be overdrawn. Unfortunately, to get out of the cycle you're in, you will need to cut back. Even if you reduced spending by £10 a month, you'd get rid of the overdraft in less than 2 years.

I think though, the main way to get rid of it is to stop seeing it as an acceptable way to live. Once you get into the mindset that you do not want an overdraft, you'll be more likely to look at ways to cut back, even if it's only a pound or 2. However, if you have the mindset that it's acceptable or normal to have an overdraft, you are unlikely to clear it.

I have friends who are not always at their overdraft limit, but are always maxed out on their credit cards. They are both professionals, and their combined income is about three times ours - their house is a bit bigger than ours, but not much and we both moved in at roughly the same time, so the difference in mortgage should be minimal (except that they have remortgaged). I can never believe how much in debt the are - it worries them sick.

BUT - they always have a good holiday every year, new car etc go out a lot to expensive things (eg Andre Rieu concerts, Tall Ships trips etc) - but then live off baked beans for a month. (Slight exaggeration, but you know what I mean).

We don't have debt - if we want something and can afford it, then we get it. Otherwise we do without. Our only debts have been the house and the car. We don't go out frequently, and tend not to go to expensive places. but I can't say I miss that.

And we eat nice food . . .

@siteentrance me either, but the same bank were happy to give me a credit card with nearly £3k spending limit 0% APR

I only wanted something as back up in case of emergencies as well!

*not only always at their overdraft limit - not "not at their overdraft limit"

If income and outgoings really are matched, and you're only in overdraft for a week each month, then all it would take is about a quarter of a months income in one-off extra savings to lift you permanently out of needing an overdraft.

I used to but it was a habit. Mine didnt used to cost anything a sit was a bundled account. Just paid it down over a few months. I now have a £15k overdraft facility but I haven't used it for years.

Iam You don't know anything about my personal circumstances. My mother was a single parent, too, and she also got no maintenance from my dad because he was dead. I did not grow up wealthy. But I'm also not naive and am aware that using credit cards and overdrafts is spending money you do not have. Nothing to do with being a banker; everything to do with common financial knowledge.

No I hate being in debt and in January went into overdraft for 1 month and hated it, hated the charges I paid, felt slightly "on edge" until was back using my own actual money.

Thanks for the genuine supportive posters offering advice will definitely work out a plan to get out of it.

I have never had a credit card and don’t use an overdraft. If I don’t have the money then I don’t spend it. So, for instance, I wouldn’t be spending £20 a week on cigarettes if it meant going into overdraft

The smug and superior are really out in force today!

I’m lucky enough to be married to a Parisian banker (the bank is Parisian, not my DH) but I have been single, debt ridden because one income isn’t enough to raise a family, pay a mortgage and have a life ive struggled

Op you’re not unusual, ignore the smug bitches*

I'm definitely not living above means

You are though. If you weren’t, your overdraft would reduce over time to zero. Smoking is an expensive vice.

No. Only used overdraft for real emergencies. And we have been very very skint at times. Always tried to live within our means. So that has meant at times sitting in the cold and eating very cheap meals.

I mean if you quit smoking for three months you'd be out of your overdraft and could re-start if you really like smoking that much.

If you're in your overdraft by the same amount every month you aren't spending more than you have coming in, you've just got a debt you can't service. If you cut back temporarily you can clear it.

I certainly did live in my overdraft in my early twenties. Fortunately we are in a pretty good position now so we are okay. I agree it’s a shitty way to live month to month.