Getting rid of the overdraft and more

kbarty

Hi there,

we've been in lots of debt before (£15k+) and managed to get ourselves out of it through lots of hard work. We defaulted on a couple of our debts and it was the best thing we ever did. Knowing our credit rating was shot was just what we needed to stop us getting deeper and deeper into debt. A little extreme I suppose, but worked for us. We did eventually pay everything off and for the last 2 years around about we've been pretty much debt free. I say pretty much. We've had this overdraft hanging round for ages and since my parents owed us some money in effect it cancelled it out and we'd planned to pay off the overdraft once the money from my parents came through.

Unfortunately this year has been a pretty hard one for things going wrong with the car and expensive things happening. A couple of times we were ready to pay off the o/d and officially be debt free and something came up. So after a while it looked like what we really needed to do was just get it paid off asap the regular way! I'm annoyed it's there and we're in debt again, although a much more manageable amount now it has to be said. The overdraft is £2000.

I just wanted to have a shiny new thread all for myself so decided to write this. Not sure if I'll keep up any sort of diary, but we'll see. Shall think about sorting out a SOA, although I'm sure we're pretty sorted in that way. Not much going out tbh, just what's coming in that's the problem!!

Once the overdraft is paid off we want to save for a campervan, have some sort of emergency fund sorted and eventually have 6 months worth of living expenses sorted so we can try and relocate somewhere.

So what I need to do is:

*increase our income as much as possible
*factor in some money for things such as car maintenance, holidays, birthdays and Xmas
*Curb our grocery spending, we do too many little shops that cost too much.
*gradually reduce the overdraft as it gets a bit paid off, otherwise it'll get spent again.

and there's probably more, but I'm feeling a bit rotten today and my head is fuzzy!

kbarty

One of the hardest things I find to deal with with the overdraft is that no actual payment comes out to reduce it so it stays there, and stays there. I applied for an Egg card today to see if I could get the overdraft transferred to there on 0% and lo and behold - I was accepted (well OH was)!! Ok, it's not quite all the o/d - credit limit is £1250, but with my current expected payments to the o/d I'll be hoping to kill the extra £750 in 2 and a bit months.

I'm hoping I've done the right thing, credit card will be cut up and frozen as soon as it's all transferred.

Been quite happy in the past few years to have had no credit cards, but I guess if we are good with this one then it can only help our credit when we eventually think about a mortgage.

nicnacnoo

hi kbarty, i have an overdraft with LloydsTSB and get it reduced by £20 a moonth, could you not go into your bank and arrange something similar?

piglet39

Hi KB

Good luck on your journey. I empathise! We are sort of in the same situation ourselves. I have not posted an SOA yet (although I should) as we are into our third year of paying stuff off. We have a smaller O/D - about £500 but it's been really hard to reduce. Everything is pretty muched pared to the bone expenditure wise as OH is unemployed at mo. We are going to have to do something about upping our income in the next couple of months or our 3 years of hard work is going to unravel - not a place emotionally and financially I ever want to go back to.

Good luck and keep posting!

Piglet

kbarty

nicnacnoo wrote: »

hi kbarty, i have an overdraft with LloydsTSB and get it reduced by £20 a moonth, could you not go into your bank and arrange something similar?

Hiya,

I didn't know I could do this - will look into it. We're with the Halifax. Thanks.

scottsburg

Wow not just me then... I've had my interest free student overdraft for the past 5 years and got a letter last week saying it will not be interest free from next month so I'm going to try to gradually pay it off. £50 a month even though the interst on the £1k I owe is around £12 a month.

Like you say, I'd have probably paid it off if there was a minimum monthly payment to make each month like a credit card. And it's never really bothered me as it was interest free, but now is time to get shut of it.

kbarty

Well, the challenges I've started this month seem to be doing well, but tbh this month is proving very expensive and I'm not really sure how much I'll be able to put to the o/d yet from our basic income. I think this month is going to have to be a settling in period and at the end of the month we'll see how I've gone and will pay off what I can from our income if any is left and my challenge money will get paid off then too. It's getting put in a savings account at the moment till I get everything all sorted.