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 don't have an overdraft and only use the credit cards for specific purchases and then pay off each month.

You are better placed than you think to pay off your OD. Firstly, if you aren't increasing it every month then you have probably got to the point where your budget works and you are only spending what you get in. Secondly, you expect your income to go up a bit soon. Thirdly, you spend £20 pw on cigarettes.

I would suggest:-

1. Reduce your spending on cigarettes by £5 pw
2. Put 1/2 of your net increase in income into reducing your OD
3. Keep an eye on your budget and bank balance to make sure the OD keeps moving in the right direction.

You will get it cleared in max 9 months.

Never , have i ever, had an overdraft. I'm in a proper shit paying job in the charity sector as well

@Bobbydeneiro - I don't have any loans, store cards or overdraft. I do use a credit card for the vast majority of purchases. However, I do this to avoid the charges on the use of a debit card and pay it off in full every month so no charges on that either. If that makes me a pious financial expert, so be it.

I really don't understand why someone would think having an overdraft is better than a loan or a store card. They are all debt with varying degrees of cost. A loan is generally cheaper than an overdraft and a store card can be cheaper too, so either could be a more sensible way to manage debt.

No, never. I do not feel safe unless I have some money saved. Always managed some savings ever since I got my first job (min wage at the time). It is not that hard as long as you think a bit before buying things and do not spend more than you have.

Is it the norm - how can we tell you unless we poll the whole world and work out if it is? Is it the norm where I’m from (my family/friends?) no it isn’t.

YANBU to ask for help re cutting down though - how can we help you get out of the overdraft? Besides cigarettes, anything else you can cut down on? (I’m not about to lecture you on how bad/expensive cigarettes are etc etc because you already know that)

Oh dear - don't want to derail OP's thread, but this 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, really resonates with me. I'm going to have to do something about it now aren't I? I am much better with money than I used to be - used to have loans totalling some £18k which I managed to work my way out of with a lot of emotional support from my DH , but I think I've been too smug about that while happily still counting my overdraft limit as available money and frittering it away on unnecessary purchased.

We used to, best thing we ever did was stop. Each month we reduced our overdraft limit by a set amount, it was easier than we thought once we started looking at everything we bought. Feel so much more in control of money.

I've never had an overdraft apart from once when I was 20=

Nope. In 8 years neither myself or Dh have ever been in our overdrafts. We only have one in case for any reason dh’s salary wasn’t paid and we needed to cover our mortgage/bills. We don’t earn ridiculous money (I’m a sahm) but we just don’t spend money we don’t have. We have credit cards we don’t use either. If you’re using your OD every month, you can get a reducing limit so basically pay off £20 a month and eventually you have no overdraft facility. By the sounds of it, you’re breaking even, but doing it by using your overdraft, so must be including fees in that too- if you could cover the small reduction each month, once it was paid off, you’d have more money each month than you do now because you wouldn’t be paying fees to the bank.

About five or six years ago, I was constantly overdrawn by £1,000 so every time I got paid it would all be gone within days.

When we wanted to buy a house I knew I had to get rid of it as if a lender saw my bank statements and saw how often I was overdrawn, I doubt anyone would lend to me!

Got rid of it and haven't had one since. Once you are overdrawn it's quite difficult to get back out as every month it's paid off but leaves you short for that month and it's just a vicious circle

If your offended by being thought of as smug no need to post on my thread .
You can share your wisdom on other posts in the aibu board.

I ljust bed well into my overdraft as a student (about £3000 overdraft by the end!) and a few years post graduation, but I spent those years reduced my it, around £50-100 a month until it was gone. Never been into it since. I like to have a £200 "buffer", I never go below £200 and if I do I consider myself overdrawn. That £200 is for emergencies. I also save a set amount every month. I use a credit card for online be purchases but pay it off every month, and I have a car loan but that is factored into my monthly spending. Only other debt is mortgage and student loan (which will be paid off in the next 3 months - finally!) I get very anxious if I'm not on top of my spending, although I don't use spreadsheets or anything, I just keep a track of it I my head and check all my accounts online every couple of days.

I know I'm incredibly lucky to be able to afford to do all this. I get paid a reasonable amount, not a high wage but above average, as does my wife (although she earns less than I do and does a 4 day week.) We have similar attitudes to money which helps.

Sometimes I feel a little sorry for myself that we can't afford things - I grew up going on foreign holidays every year, we can't do that these days. We don't have as much in savings as I would like. But actually we are still incredibly lucky. We don't really struggle with money, we can afford luxuries, we don't have to live off credit and plenty of people don't have it so good. I try to remind myself of that every day

*I lived

I used to use my overdraft a lot in my early 20s. We paid it all off and then maxed out CCs, silly frivolous spending. Paid them off and lived within our means and built savings then redundancy hit and a dabble in setting up a business we ended up in further CC debt and repaying a 4k tax credit overpayment.
5 years later we are debt free and have savings. I refuse to use the overdraft it's definitely the trickiest debt to have as it's difficult to budget on a minus balance. However I'm sure it's fairly normal for most families.

Until the boiled failed and i got pregnant ive never been in the over draft. Since them its been a nightmare to clear and just now 2 years later im about level. Never ever want to go in again. We lived on £20 a week food and still didnt clear.

I would imagine many of the pious financial experts on here have bank loans for other stuff, credit cards and store cards

No loans - as I said, if we can’t afford it we don’t have it. No store cards. We do have a credit card - we put practically all spending on that and pay it off in full each month. Every few months we get a nice big chunk of vouchers (last month we got £75) which we then buy ourselves a treat with (wine, port and gin this time).

we used an interest free loan for our kitchen nearly 20 years ago as there was no money off for paying in full and we just put the money into a high interest account for the year instead.

We aren’t smug or pious and when we first had our house with a large mortgage (interest rates in late 80s were huge) we struggled, at one point I worked three jobs BUT we didn’t go into debt.

Me and my partner don't have an overdraft or credit cards. He has in the past and destroyed his credit rating, then turned to payday loans resulting now going through debt management. That alone has scared me off, so I don't have an overdraft at all.

I can see that living in overdraft is not the norm so I need to really budget to clear it

OP. As a PP recommended, YNAB is really really good, it's how I got out of being in overdraft every month, and I have so much more control of my spending now.

You can get a 3 month free trial here: www.youneedabudget.com/landing/camp-patton/ After that it is actually fairly pricey, but worth it IMO.

There is also lots and lots of support and help available for free, which you might find useful.

I would imagine many of the pious financial experts on here have bank loans for other stuff, credit cards and store cards.

I have a credit card I pay off as I use it each month. I only use it because it provides better protection than a debit card when shopping online.

No loans, no store cards, no overdraft. Our only "debt" as a couple is the mortgage on our house.

I lived in my overdraft as a student from December of my first year . At one point it was £3500 . Paid it off in my first year of working and paid my student loan off the following year . I do most of my spending on a cc but it’s paid in full each month .
I think if you can get into the mindset of reducing it by even £20 month you will be able to clear it . It’s terrible watching every penny, I’ve heard great hinga about the ‘you need a budget ‘ app mentioned here . There’s a super money matters board on here which might be useful for you . Good luck

When I get paid each month I go back to zero in my account at the moment. I’ve just gone back to work after a year of maternity leave though so it was a conscious decision to use my overdraft to fund a few extra months off. I’m slowly getting out of it by cutting our spending down to the absolute bare minimum, I would never see it as a permanent state to be in as you’re paying interest constantly otherwise.

I would recommend moneysaving expert forums over any app. They are full of people who will help you with a budget, given advice on how to reduce outgoings, and give you support. Really worth posting there. The forums are full of people who are or have been in major debt, some of whom have very small incomes, so they do know what it is like.

Please don't think me smug, just answering your question. No, never have been overdrawn except as a student, and even then, only in my undergraduate years (I got a scholarship for my postgrad, plus work part time), no credit card debt, no store cards, no debts of any kind except for mortgage, not even the car, we bought second hand cash. I do have an above average wage, but I am the sole earner in the family, too.

I don't have an overdraft

I earn about £22.5K/year and my husband earns considerable less than that, probably about £35K combined income, no tax credits or benefits etc

I'm just very strict with myself, don't have anything I can't afford, no store cards or car finance etc

I save as hard as I can to give myself a buffer and have saved £12K in the last 2 years

I think it comes from a fear of having nothing and ending up in serious debt or homeless