Overdraft living.

[Mrsmotivator66]

Can anyone else reassure me that they also live in their overdraft?? Between paying rent and childcare and bills.. About 5 days after pay day I'm straight back into my overdraft. Its depressing. Feel like I'll never get out of it.
Anyone else constantly living in their overdraft??

Reassurance that others do it too isn't going to help you. Overdrafts have become much more expensive this year, so you really need to get out of it.

If the overdraft amount isn't getting bigger, you have enough money, you just need to rearrange your finances a little.

If you currently get paid at the end of the month and all your bills come out shortly afterwards, if you move your bills later in the month, eg to just before the next payday, the money will sit in your account for longer and cost less in interest.

You could also do your day to day spending on a credit card that's paid off in full every month, but again will have the effect of keeping money in your account longer, reducing your overdraft without having to actually pay it back if you can't afford to do it.

However, both those solutions rely on you not using your overdraft for extra spending, or else it will just grow again and you'll be in more debt.

Another solution might be to get a low interest money transfer credit card, use that to pay off your overdraft and then pay the credit card off during the interest free payment.

But then you need to cancel your overdraft and stay in the black, or else you'll have an overdraft and a credit card debt.

Have a look at Moneysavingexpert, lots of tips for increasing your income, reducing all your bills so you have more spare money, and ways to get back in the black.

Its important to understand why you're in overdraft - are you really short of money or are you just forgetting about essentials in your budget leaving you under the illusion that you have money available for non essentials when actually you don't?

www.moneysavingexpert.com/family/money-help/

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Yes, we've been there, it's a long slog out of it. I was working in the NHS via an agency, the trust was overspent and they told me to apply for a staff post or look elsewhere for work. I applied, was accepted and took a 50% pay cut. As my wife had worked for the bank, we were allowed to keep our overdraft facility and every pay day, we'd reduce the overdraft by £1500, by the end of the month we'd be back to £3400 overdrawn. 5 years of that, paying bills first and living frugally- and I MEAN frugally- we got the payout from the 3 (horribly expensive) endowment policies with the bonuses and cleared the overdraft and a good chunk of the mortgage. You WILL get there but it takes steely discipline, NO treats and no holidays. Thank f**k we won't have to do that again. Sorry to break it like that. One thing we learned was to keep close to your bank, they can do you over good and proper if you don't keep them informed. Having said that, this was 2003 to 2008, I am not sure how sympathetic they would be now. Good luck.

Id also look at everything other than bills that is coming out of your account in the first 5 days?

Sit down and see if you are entitled to any benefits - millions go unclaimed each year

Then look at your monthly budget, use something like the money advice service budget, par everything back and see where you can save

Are there any direct debits that you can do without?

Cooking at the beginning of the month double for each meal and freezing for the end of the month when there isn't any money for shopping.

Getting extra work, either with your own company or a second income

Yes. Twice in my life. Once when I was a student. I took a loan out to clear the overdraft and paid it off. Took discipline and frugal living

Again in early married life with the expenses of childcare and mortgage. Took luck and frugal discipline again.

The luck was getting hit by a bus and an insurance payout. Not luck I'd recommend.

I am constantly in my overdraft 😩

No, don’t even have one
Not sure how that helps you though. I have done it previously and it’s not a great way to live. It could be withdrawn at any time
I appreciate it’s not always a choice but it’s not a great thing to do

I was like this, much like someone up thread said - I always went the same amount of hundred into my overdraft and it wasn't growing as I always spent roughly the same amount each month so I knew I just needed a push, a couple of months of seriously frugal living to get back into the black and start again. It is doable.

As others have said, you need to cut back now on everything you can and maximise your earnings as far as you can to break the cycle

This used to be me - only way l got out of it was getting a 2nd job and paying it back bit by bit - took me a year but l never went back into it after that xx

Yes, as a student and during my divorce.

My student overdraft was only £450 but back in the early 90s it felt huge and it was a real struggle to stay within that, despite getting a grant, a p/t job and occasional contributions from my dad. Left uni and got a job, sorted, paid off in 6m.

During my divorce I lived off 2 overdrafts, paying legal bills plus really struggling to house, feed and clothe 2 kids despite working and claiming whatever I was entitled to. We ate cheap rubbish food and accepted all offers of meals at my mum's, drove a shit car, no holidays, zero nights out etc. Kids now older, legals paid, can now work ft with no childcare costs (or guilt).

It really helped to really thoroughly go through every penny coming in and going out each month. Cut right back. Bin off everything you can for as long as you can - set a target for say 3 months, no gym, no sky, no new mobile contract, no takeaways, no coffees from Starbucks, no haircuts/nails/new clothes. Really blast it. Don't take your bank cards out with you. Use cash if you must. Meal plan and go to the supermarket once a week, and stick to it.

You will see it has a huge impact, and you will want to go another month, and another.

The biggest thing I found that helped, psychologically if not monetarily, was to open up a new account. Get your salary transferred in and the standing orders/direct debits you're keeping. Zero overdraft. Set up a new standing order to the old overdraft account, even if its just a few pounds more a month than the interest you'll be paying. You'll still owe the money but its separate to your everyday account, and as long as you're paying it off bit by bit you'll see it reduce to nothing eventually.

TLDR: Cut back on every single outgoing, separate your everyday stuff into a new account (without an overdraft)

Another tip is to make sure you have your banking app on your phone and to check it daily. Dont put it off because it's going to be bad news. I found checking it regularly kept my focus clearly on getting rid of the overdraft.

I'm 39 and I had mine since my uni days and I only paid it off last year. It is incredibly hard to get out of it, especially if it's your current account. I set up a savings account and put any extra money or leftover from my budget (eg from the monthly food spend) into that. I know the ideal is to pay off the interest but it all gets so confusing when money is continually coming out. When I got to my target, I waited until pay day and moved it all across. It was incredibly satisfying!

In my 20s, yes. But overdraft living is really the most soul-destroying type of debt.

If you can get a money-transfer 0% credit card, use that to pay off your overdraft, set up a direct debit to pay off the 0% card, and then solemnly promise yourself you will never go back into it again. Reduce the limit right down to e.g. £100.