Sorry I just realised I never came back to post my overdraft method!
I think it is probably the same as the one mentioned on reddit but this is what I did.
I looked at the overdraft limit and looked at the balance of the account over the previous few months.
Let's say the limit was £500 but I never went more than about £370 into it. Let's say on the day I set it up the account balance was -£150.
I created a dummy "tracking" liability account called "Bertie Overdraft" based on what YNAB calls a line of credit. I created this with a 0 value.
I then transferred £400 from the Overdraft account to "Bertie Bank".
This means that I now have £400 "float" in my bank, but it's a positive number overall - the bank balance looks like £250.
I created a category called "Pay off Overdraft" (target: £100)
It has to be a round number, because when you're reconciling an account with overdraft, you have to manually subtract the amount from the dummy overdraft from the balance to ensure that the numbers match up.
The reason for doing this is that it gives you a floor. I could budget all of that £250 and know that my account would not go below -£400. Whereas if you're doing the "budgeting into the red" method, you have no floor and you could potentially just get more and more into that overdraft by telling yourself "but this is an essential purchase!"
Over time, any spare money I had I put into the "Pay off Overdraft" category. When I had built up £100 in there, I made a transfer from the "Bertie Bank" account to the "Bertie Overdraft" account. Because the Overdraft account is tracked, not on-budget, it shows up as a transaction and needs a category - categorise as "pay off overdraft".
Now with YNAB's debt tracking feature you can even set it up as a loan type account with min payment 0 and set up the interest but I don't recommend doing this, because it will automatically add interest calculations on and it's a pain because you want it to be a round number. Plus the interest should come through as a named charge to your main bank, so you ought to know what it is costing you anyway. But if you want to know what the overdraft is costing you, you can do this and just delete those transactions/move them to the main bank and then match with the actual fee.
Once the overdraft got to 0 on YNAB I closed the account on YNAB while leaving the overdraft facility in place on my bank in case of emergency. So far, we haven't needed to use it except when it's gone negative by accident - then I ask DH to do a transfer from his bank. Still have DH's to do but we'll get there!