Overdraft...

gemsyuk03

Hi guys..

Im a newbie and just wanted a bit of advice really. Like a lot of you in this thread, I am slowly trying to get out of debt. I had a £2300 overdraft which was maxed every month, a £300 credit card, and a £10 000 loan which I pay every month.
I checked my bank this morning online, to find Lloyds have automatically lowered my overdraft by £400. I havent recieved any letter or anything warning me, can they just do this? This has come at such a bad time, right before Xmas!! And I will really struggle after this. Do you think if I phone them they may help me out at all?

Thanks in advance for your advice, Gem x

Jesthar

Hi Gem, and welcome,

You're not the only one to have had this done to them. If you give them a call and ask what is going on, they may increase it a little for you, but they may not. Seems to be a sign of the times, unfortunately.

If they won't give it you back, or only give part of it back, can you avoid going over the new limit? If not, you might be as well to open a new bank account with a completely different bank (you should be able to get a 'basic bank account' no matter what) ASAP, and transfer all your income and bills to that so your money isn't simply taken by Lloyds (yes, they can do that...). Hopefully someone who can gie you better details on this will come along soon.

In the meantime, there may be ways to lower your outgoings we can spot that you have never even thought of! If you'd like us to try and help with that, then how about completeing a Statement of Affairs (SoA - a sort of summary of your montly budget) and posting it up for us to look at? The handy calculator we usually use for this is here:

http://www.makesenseofcards.com/soacalc.html

and if you use the 'MSE' button in the 'Format results for discussion board' area near the bottom, you can copy and paste it straight into a post in this thread.

*hugs* Don't worry, you just landed in a great place for help and advice!

~Jes

gemsyuk03

I think this is right?

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1085
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 300
Total monthly income.................... 1385

Monthly Expense Details
Mortgage................................ 0
Secured loan repayments................. 0
Rent.................................... 120
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 45
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 20
Clothing................................ 50
Petrol/diesel........................... 50
Road tax................................ 0
Car Insurance........................... 34
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 22
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 361

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 900
Other assets............................ 0
Total Assets............................ 900

No Secured Debt

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card....................3000......60........0
Loan...........................8788......267.......0
Loan...........................904.......40........0
Total unsecured debts..........12692.....367.......-

Monthly Budget Summary
Total monthly income.................... 1,385
Expenses (including secured debts)....... 361
Available for debt repayments........... 1,024
Monthly UNsecured debt repayments....... 367
Surplus(deficit if negative)............ 657

Personal Balance Sheet Summary
Total assets (things you own)........... 900
Total Secured debt...................... -0
Total Unsecured debt.................... -12,692
Net Assets.............................. -11,792

Created using the SOA calculator at https://www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission.

======== Enter any other useful information below ========

e.g. the number of adults & children in the household, the number

of cars included in the SOA or anything else that may be useful.

gemsyuk03

Thanks for your help, its nice to have a friendly ear!

Hope Ive done it right?

Jesthar

Hey Gem,

Yup - that's right!

Quick question, do you live at home still? If you do, OK! If not, who pays things like gas/elec/water rates?

You need something listed for road tax and car maintenance I'd think, but otherwise then if you are living at home you have a really great monthly surplus, and could start paying off your debts pretty quickly! For example, if you could pay £500 extra off your credit card each month, you could completely clear that debt in just 7 months.

If you're not living at home, then you seem to be missing several important bills off the list, but you could still be OK.

~Jes

gemsyuk03

Yeah Jes Im still living at home...

I do have a car, but pay the tax every 6 months and I just paid it last month?

gemsyuk03

Do you think Lloyds will be understanding, if I ask them if I can possibly just lower the overdraft by smaller amounts each month, rather than £400 straight away? I usually manage each month paying my bits off, its just £400 is a lot straight before Xmas to have to find!?

Thanks for all your help btw

Jesthar

gemsyuk03 wrote: »

Yeah Jes Im still living at home...

I do have a car, but pay the tax every 6 months and I just paid it last month?

Ah, OK - well, that's good!

You should budget a monthly amount for your car tax and MOT, even though you don't spend it every month. That way you'll have enough to cover them when they do roll around.

Aside from that, you don't really have too much of a problem on paper, as you have a huge surplus every month. You could try for a lower mobile phone tarrif, shop around for a better car insurace deal, and maybe lower your clothing budget, but aside from that there's not much excessive here.

If the problem you have is actually FINDING all this 'spare' cash, then I suspect you may be spending in areas you have forgotten about. You have nothing in 'entertainment' for example - do you never go out or buy a DVD or magazine or something? I can understand if you don't, as I'm not the going out type, but I do spend some money on myself, usually by saving up for gadgets I want!

I suggest you go through your last couple of months bank statements, and write down EXACTLY what you spent each month, and what SoA category it fits into. You may surprise (or even shock!) youself as to where all the pennies slip away! You'll then be able to redo your SoA with some more accurate figures and have a much better picture of your finances, which is always good.

If you happily discover you're still not spending a huge amount, and have plenty left over, then that's not so bad - you may even find the overdraft reduction doesn't affect you! If you get a nastier surprise, then don't panic - if you cut back completely for even a month or two, you'll be back within the new overdraft limit, and you can then move on to clearing the rest of your debts.

Oh, and don't stop the spending diary there. Carry on keeping it - it's amazingly good for keeping your spending in line! I'm not in debt, but I still use a customised spreadsheet of my own design to keep track of all my expenditure by categories, as it really helps me spot if I start to overspend in a particular area. The money I save goes on overpaying my mortgage and home improvements.

Incidentally, you should list your overdraft in your SoA under 'unsecured debts' to help you keep track of it. Can you also find out the interest rates on everything? It will help you to work out what to pay off first.

I don't know what Lloyds will do, sorry - you may get some back, you may not. There doesn't seem to be a rhyme or reason to the logic sometimes! You'll just have to call them and plead with them that it's a bit much on short notice, and could they give you some breathing space? However, once your finances are straight you should be able to bring your overdraft down pretty quickly anyway.

Rather a lot to take in, I know! You should be able to handle this quite well, though, once you get your head round your finances.

~Jes