Sorting out overdraft

illmonkey

So i have a £1500 overdraft with £100 left till i go over it. I also have a extra bank account which WAS savings (only had a little) but thats all gone on my flat.

Every month i get paid, it brings my over draft basically back to £0, then i go back into the over draft as the month goes on.

Would it be wise to transfer my WHOLE pay to my "spare" bank account, put enough money in the overdrawn bank account so it covers my DD's and at the end of the month put any EXTRA money in it, to lower the over draft?

I think this would actually make me feel better about my situation, as at the moment, i get paid, so it resets to £0, then it just goes down. Whereas this way, i can clear as little or as much as i can afford at the end of a month.

I also just got a £320 cheque as i over paid on tax last year! this is going stright towards my overdraft, and i will lower my limit (is it lower or raise!)

woohoo_postingid

Hmmm, it really depends on how strict you are with yourself.

If your account is in credit, you may think you have that money available to spend and will 'forget' about the overdrawn account and will not focus on lowering the overdraft.

Personally, I like paying the money into my main account and get a lot of satisfaction from seeing myself using less and less of it every month.

illmonkey

thats a good point. I feel like i can never get out of the whole im in, and i think doing it this way might boost myself as i am not always overdrawn (even though i am).

I am trying to spend as little as possible, and i am taking on work for friends to fix pc's etc, or trading work for work (need a new lock on my door!) so im saving pennys like that.

I am getting stricter with myself, i've finally started making lunches for work, drinking less, making smaller portions for dinner etc. It will all add up over a month, and i might save £50 extra i can chuck at my overdraft.

CLAPTON

why dont you post a Statement of Affairs here....people may be able to suggest some useful savings which will allow you to reduce the eliminate the overdraft altogether

illmonkey

I have done that previously. I am trying to sort one thing out at a time.

heres the previous one i posted! http://img93.imageshack.us/img93/9438/list5ys.jpg

As you will soon see, these figures are to LIVE only, they dont allow extras like mothers day etc. So it all soon runs out!

CLAPTON

I dont really think that the key here is whether you pay into one a/c or two or how you move it around....the key here is to work out a full budget , to understand where ALL your money goes including yearly, quarterly, presents, going out ,holidays, work lunches, snacks etc. Have you considered a spending diary and keep track of every single item and see what can be cut out.
also..is it possible to increase you income, maybe overtime or a second job?

regards

Imelda

Hi Samgoffe,

Is your overdraft interest free? If it's not, I assume the interest is calculated daily so being overdrawn by £1400 for a few days at the end of the month will result in less interest being charged than if you were £1400 overdrawn for the whole month. I think Clapton is right, you need to sort out a budget, decide at the beginning of the month how much you can afford to reduce your overdraft by and then call your bank to reduce your limit so that you are not tempted to use it. That is my plan, I aim to pay £200 off my overdraft each month but I know how tempting it would be to take "just another" £10 out. I can't wait for the day that I get paid and I am in credit by more than £600!

Good luck!

ms_london

All you need to do is to call your bank and ask them to reduce your OD by £X each month - whatever you can afford. That way you are still repaying it, but you cant then run up the available balance again (if you see what I mean!!). It does take discipline, but it can be done!! You dont NEED an overdraft!!

DopeyDora_2

As Ms London suggests, this is what I have been doing. On the 1st of the month when I get paid I phone up my bank & ask them to reduce my limit. I have been reducing mine by £300 a month recently, which has meant I have had to budget VERY strictly, but this was my choice as I wanted to pay it off quickly, and was prepared to scrimp to do that. You could reduce more gradually I'm sure. This way I will be overdraft free on 1st June!

Dora x

$17mma

Yes Ms_London is right I think the banks call it a manage down. Also check to see when your OD is due for renewal because if it is soon and they choose not to renew it this could leave you in a sticky situation, so managing it down to within a comfortable amount would be best..

In fact just get rid of it.