AIBU? to be living of your overdraft all the time

[LidiaM]

hi ,
Me and my husband have planned overdraft of £2000 , my partner works full time , I dont work due to having baby and my materninty has finished few months ago,
We dont get any benefits or help from family.
We are renting and are fine with bills etc but we end up using our planned overdraft every single month and it feels like we are always in debt.
My partner comes home with £2,500 a month but despite that l, we always end up with £-2000 at the end of each month . the salary goes in and 3 days later the same thing happen over and over again

It makes me feel shit and I wonder if we are the only one?
:(
I am going back to work in Jan2020 so hopefully it can improve our situation with the overdraft but right now I am so nervous as this is not a guaranteed credit and Im just worries that they can take it away and what are we going to do :((((

I’m in exactly the same situation and I hate it. I went back to work part time after maternity and that’s where it all went wrong! I’m now expecting my second in May and I have been working really hard to reduce my outgoings and my aim is to cut my overdraft down by £100 a month. I won’t be completely out of it but it’s a relief to see it going to other way. I keep telling myself that although it’s stressful, it won’t be forever x

I dont think you are unusual, but you are leaving yourself with no buffer. Saying that finances can move around and you are currently going through a period where you have half the income and added expense so I dont think you are doing too badly.

If my maths is correct you do actually live within your means, its just that you seem to have saddled yourself with a £2k debt ( that being if you start with £2k overdrawn add income take away monthly expenses and finish with £2k over drawn).

I would use your salary less the costs of you being at work (travel childcare etc) for paying off loans and savings, and you will be in a much stronger position. Also look into why you don't get benefits, as it seems to me that you would be due some.

2500 is a low wage to pay for everything. Was there really no way for you to return to work?

It feels like your in debt because well an over draft is a debt! It’s not free money, it’s more you have borrowed during the month and pay pack on the day your dp gets paid.

Do you know exactly where every penny is going? If 2500 is all you have to pay for everything rent, bills, food etc for 3 people then you need to know where every single penny is going.

You need to sit down with your bank statements and make a chart of where the money goes, boring but that’s adulting for you. Then once you know where it goes, you can see if you can cut back anywhere

Over drafts are hard to get out of, you have to stop using it by say £50 a month and over time you will be out of it, but it’s going to make a while.

You're not fine with bills if youre 2k overdrawn everymonth.

As long as the overdraft remains at £2K each month and doesn't increase then you ARE fine with your bills and are living within your means. What you have is no buffer and no means of currently paying back the money that you have borrowed. Hopefully returning to work in January will increase your income so your first priority should be to reduce and get rid of the overdraft and then, secondly, to put money into savings. Presumably you'll have some childcare costs when you return to work but, once you've paid for those, use the rest of what you earn to pay off the overdraft and then start saving. Start straight away so you don't get used to having extra money to spend.

I agree with a previous poster that MN is full of people that have never had a CC, got £100k in the bank.

OP - Mat leave is financially hard and equally the cost of child care when they are small is horrific. We had a £2k monthly nursery bill at once stage.

I would try and get your OD onto a 0% CC if you can and then pay it off monthly.

When you set your budget to manage this do make sure you somehow put a tiny amount for a treat of two a month. I don’t mean crazy stuff, but something that makes makes a little highlight at the weekend.

I feel for you because I’ve been there. We are in a much better position 8 years on but ultimately that has come down to me going back to work after 1 years mat leave each time, into full time work.

2500 is a low wage to pay for everything. Was there really no way for you to return to work?
P1nkHeartLovesCake Did you read the OP? She's returning to work next month. £2,500, which would typically signify a salary of over £40K, is not a low wage to pay for everything either. It's not bucketloads, but it's enough for a family to live on reasonably comfortably.

I was like this.

I found a job closer to home and paid more to help.

It maybe a case of you having to look at what lifestyle you can realistically afford

I’ve been in my overdraft for 20 years

You are in debt. You will be until you have a credit balance the day before each pay day.

You need a budget, and you need to plan to spend only £2000 to £2250 each month instead of £2500, so that the amount of overdraft the day before payday gradually reduces.

Write down everything you spend. Think about what you can do without temporarily. The great thing is that your current normal day-to-day lifestyle is pretty much living within your income as the amount you are overdrawn each month is pretty steady, so you can get back on an even keel by just living frugally for between 4 and 8 months depending on how much temporary savings you can make.

Come over to the MN debt-busters support thread for mutual support and motivation as you tackle this.

In my previous job, I used to coach people in budgetting and money management. In approx 50% of cases, the gap between income and outgoings could be closed by doing two things: cancelling Sky and going SIM only on phone contracts at the earliest opportunity.

It was hard going, convincing people that Sky tv and the latest iPhone weren't actually essentials, but pointing out that they wouldn't actually die without them often did the trick. Getting rid of those 2 things often saved a couple £170 or more a month. That saving would clear a £2k overdraft in a year.

Another useful exercise is to go a month buying only essentials that can't be postponed. The two questions "Do we really need it?" and "Can we put it off till next month?" focus the mind really well. It sort of resets your priorities and after a month a packet of nice biscuits or some non-economy shampoo really feel like a treat.

Don't overlook the small things. One lady was paying £3 a day to park near work. She started parking further away, where it was free, and walking in. She saved over £600 a year and lost a stone!

A £2k overdraft should be relatively easy to clear over time, but it does depend on your overall financial position. If your rent is £1,500 a month, council tax £200 and travel to work for DP is £300, you're left with so little spare that it will be hard to reduce spending.

I first got into my overdraft in my first term at Uni when I'd blown my student loan, and had a 2K interest free overdraft. That was 15 years ago, and I have NEVER been out of it since. I've lived entirely in my overdraft every day for over 15 years. Doesn't bother me, it's not even something I really think of nowadays. I'm a single parent of 3 kids under 5 in London, and my rent is £1.2K, and my childcare is £1.1K. I don't earn enough to pay bills and clear my overdraft, so I'll continue to live in it until my kids aren't in childcare anymore probably.

Can’t put get an interest free credit card, close the overdraft and set up a direct debit to pay off the overdraft over the next couple of years? Would be cheaper than overdraft fees. If you are staying within your overdraft limit you are now living within your means but you need to reduce the debt as well.

my rent isnt bad as its £850pm
Eon bill £ 90pm
water bill £ 50pm
Virgin media £ 30pm
life insurance £ 50pm
Car insurance £ 80pm
council tax £160pm
2 x sim pay as you go £ 20pm
food for 2 adults and 1 baby £200pm
tax road £20pm

my husbabd has a company van and free fuel so we dont pay Mot, fuel is free so I feel lucky in a way.
we would of been better off this months already but we have currently changed homes (cheaper rent) but this one was unfurtnitured and we hadnt had any furniture at all because the last one had everything in it !!
we are both quite young as my husband is 27yr and Iam 24 so fingers crossed that life will get better in future.
I was thinking of apllying for Universal Credit but to be honest because I am not British I am made feel
that we (Polish) people are always in Uk for all the benefits available and I have promised myself to never ever be getting anything from the government because not everyone are like this.

I pay around 90-100 pounds a month for my overdraft and Im just worried that they will decide to take it away

You probably won't be entitled to UC due to your husband's salary as it's only for people on low incomes and despite previous comments a take home pay of £2500 pm is not a low income.

You might be entitled to help with childcare costs such as tax free childcare, so worth looking into this when you go back to work. Are you getting child benefit? Everyone in the UK is entitled to about £20 pw CB, unless anyone in the household earns more than £50k. You should make sure you get this, your DH (and you when you are working) pay plenty of tax anyway.

Does your DH pay extra tax due to the van and the fuel? He should check how much this is costing him as a 'free' work vehicle can generate quite a large tax bill and sometimes you have to pay for private use too, so always worth checking how much it is costing and if it is worth it to you, because it's sometimes an expensive luxury.

@LidiaM £90-100 a month is insane, go speak to your bank for help, see if you can get an interest free credit card to transfer it to. But you mustn't add to it, spend that £90-100 paying it off instead and it'll be gone in 20 months.

And remove the overdraft entirely!

I pay around 90-100 pounds a month for my overdraft and Im just worried that they will decide to take it away

As per my previous post, speak to your bank with a view to reduce it by a small amount every month.

If you are struggling they might freeze the interest and accept £100 as a repayment each month.

@barbaraofSeville Theres literally no more cost of tax as its a small company and the van is just ours but all the costs are to do with the company .

I would definitely stop having the salary paid into that account - then you can try pay the overdraft off a little bit each month rather than just living in it!

I don’t think this is normal. You constantly use your overdraft to pay your normal expenses - how would you be able to afford your bills otherwise? Using it once or briefly when unemployed etc is fine, but you’re reliant on it.

Im just worried that they will decide to take it away

If your bank took it away (which they can, it’s in your T&Cs) you would be fucked.

Long term you need to try to raise/save the £2.5k so you never dip into your overdraft again. In the short term, make sure you make payments monthly - to not set off their customer risk algorithms (which would lead to them removing it). The larger the payment, the better, because if you’re constantly stuck in your overdraft it will seem like you’re struggling to make repayments and can also trigger them to remove it

@kaptenKrusty I cant do that because They will them remove it and I wil be fucked as Instead of being in a Planned od I will end up in unplanned one. They need to see, that monies are coming in every month onto that account.

@poorstudent1010 theres not such thing as paying them for my od . I only pay when I use my overdraft and I pay every single day depending on how much I ve spent, for example if I am -2300 then Iam being charged £3.20 every fricking day !!

@poorstudent1010 it is fucked up indeed, Because even when I try to stay away from being -2000 and for example Im in -1700 then their everyday charges makes me go well nearer my limit of -2000

100% you need a zero interest credit card and to stop using it. The interest you are paying should be paying off the balance!