Whats the best way around my overdraft?

MyLastFiver

Fairy nuff Sarah, maybe I was a bit 'arsh, and I do take on board all the points you've raised. Could I reply to a couple of these though? All my comments are meant in the best possible way, even if my tone is direct. I mean well, honestly. I just want you to see the light.

it was only overdraft advice I needed
OK but the root of your overdraft problem is that it's getting you down because money is tight. The reason for this is that you spend too much relative to your income. You yourself identify the car finance as a major expense.

My car [is]... 2 and a half years old and My previous car was a 1994 Fiesta
OK but there is a middle ground! You can get a reliable car that's over 2 and a half years old.

My friends paying over £200 a month...blah
OK but your friend's circumstances are irrelevant to your own. Maybe she can afford the payments. Maybe she is comfortable with the debt. But you can not, and you are not, otherwise you wouldn't be on here.

You go to great lengths to convince us (and yourself) that owning a 2 year-old car that you can't afford is a good idea, and hey, that's your lifestyle choice, but when you post on a debt forum that you can't afford to pay off your overdraft and you're fed up with having no money, we'll try to help by suggesting ways to help you think differently about money and budgeting. And I would suggest that if an unexpected bill has left you with less money/more debt than you're comfortable with, then you're probably over-committed in terms of your regular expenses.

You say that your car finance comes to an end in 18 months, and you're going to hang onto the car. That's a good, sensible plan. And proof that owning a 4/5/6 year-old car isn't such a bad thing after all. I would just urge you not to make the same mistake again, ie signing up for expensive credit to buy something you don't need and can't afford.

Anyway - best of luck. If there's something positive in your story it's your uneasiness over owing money. That's a healthy attitude and will probably stop you from getting into debt in the future, and ending up like us idiots who had to find out about debt and budgeting the hard way

sarahc1986

it was only overdraft advice I needed
OK but the root of your overdraft problem is that it's getting you down because money is tight. The reason for this is that you spend too much relative to your income. You yourself identify the car finance as a major expense.

My car [is]... 2 and a half years old and My previous car was a 1994 Fiesta
OK but there is a middle ground! You can get a reliable car that's over 2 and a half years old.

My friends paying over £200 a month...blah
OK but your friend's circumstances are irrelevant to your own. Maybe she can afford the payments. Maybe she is comfortable with the debt. But you can not, and you are not, otherwise you wouldn't be on here.

You go to great lengths to convince us (and yourself) that owning a 2 year-old car that you can't afford is a good idea, and hey, that's your lifestyle choice, but when you post on a debt forum that you can't afford to pay off your overdraft and you're fed up with having no money, we'll try to help by suggesting ways to help you think differently about money and budgeting. And I would suggest that if an unexpected bill has left you with less money/more debt than you're comfortable with, then you're probably over-committed in terms of your regular expenses.


I'm not trying to convince anyone. Yes car finance is a major expense but its the only major expense I have. I don't have a mortgage, I pay minimal board and have no utilities. Some people go for fashion and spend a fortune each month looking good all I have is a car as thats more important than the way I look. I can comfortably afford my car and all my other regular commitments. I've had my car for over 2 years and my overdraft was only applied to my account in June 2008 to help with some funeral expenses, so for over 2 years i've lived comfortably without it and at one point had even more financial commitments which have been paid off. I have no other forms of debts don't own credit cards or store cards. The only thing I have is my car and now an overdraft I didn't want but due to the circumstances I needed the money there an then. I'm going to go with the advice of the others and reduce it gradually each month and then I should be shut of it asap. I have a regular income and know how much I get and were it goes it just doesn't help when £450 disappears out of your wages each time they go in. So hopefully in 3-4 months i'll be overdraft free!!!! :j

CLAPTON

Without seeing the full financial picture (a SOA), one just has to make assumptions... sometimes correct and sometime less so... however, they are well intentioned and most people are trying to help.

Just to clarify on the OD...
-you can only close it down by repaying it and not overdrawing again
-if you transfer to another bank leaving the OD, its likely/possible that HSBC will withdraw the full OD facility and demand full payments which will cause you greater problems
also if you transfer your a/c leaving the OD, the interest will be higher each month as currently it does at least fall when you pay in your salary (OD interest is worked out on the daily balance.)
- if you can get a 0% CC then it might be worth transferring it, but if you don't clear it by the time the 0% deal runs out you will be hit with high interest rates.

I'm afraid it makes no sense to say you can comfortably make all your payments when you are living on an OD.

Whether or not your friends have more expensive or less cost effective cars than you, doesn't affect the facts that you can't afford your current lifestyle.. if the reason for the car is your hobby then you need to consider whether you can afford such an expensive hobby until you earn more money...

sarahc1986

I must be confusing matters the only reason I have the overdraft was due to having to pay funeral expenses however i've never had £450 to repay these funds and from what I read in the HSBC terms and conditions I wasn't able to reduce my overdraft as it was a 12 month contract, however upon further reading it does state i can reduce. The only reason i'm living out of it is because when I get paid the £450 is taken back off me. I've just reduced it by £50 and then next month another chunk so hopefully I should be back to health early next year and then it will be cancelled completly

CLAPTON

Indeed, there may be some confusion here

you need to distingusih between:

-an authorised overdraft limit (or facility) ... that is the maximum they have agreed you to be in debt by ...
-your actual overdraft... that is the amount you are actually in debt...
this will obviously vary from day to day because when you pay in your salary then you are not in debt (i.e. you have no overdraft) but as you pay bills/draw out money then gradually you go into the red (i.e. overdraft)
..you only get charged interest whilst you owe them money (i.e. when into your overdraft)
-you can be over your authorised OD limit ..then they typically charge not only interest but various charges.


So what you arranged with HSBC was to have an overdraft limit of 500 for one year.
Be aware then that they may withdraw the facility and demand full payment after the year.
You dont really need to agree anything with them to repay the OD .. you simply stop using it if you can afford to.
You dont HAVE to use it and you only get charged interest while your a/c is overdrawn.

So when you get paid they dont actually take the money back off you.. its just that you are now in credit.
Thats how all overdrafts work.. its not like a fixed loan in a separate account.

So you dont actually 'reduce it ' each month.. you simply dont spend as much each month.

sarahc1986

I'm going to keep reducing it anyway as that resists the temptation to spend more

Thanks for everyones help and advice