How can I get rid of a smallish overdraft?

sianie9

Ok,

so - currently I have a £500 overdraft limit which I basically drain each month. I am part time, paying nursery fees and have very little disposable income each month. I have two credits cards - one at £300 (0% interest balance transfer), and one at £900 - this one is a Tesco 0% purchases card which I used as an interest free loan when I returned to work after maternity leave and had to pay nursery fees upfront (i.e. before payday!!). I am paying both these cards off as best I can each month and plan to transfer them both to new 0% card when the time comes. But I really want to get rid of my overdraft! I know it's not huge, but I'm still paying interest on it and it would be nice to just wipe it out. If I apply for a small loan the itterest will be massive.

I also want to do an OU course so was considering a CDL to pay off everything and give me a payment break. I would then transfer that to an ordinary loan once I finished my course. Does that sound like a good plan....??

Any other ideas?

Tixy

I don't think you'd get a career development loan for this purpose, you could get one to fund a percentage of the course and books but they are fairly strict on what they can be used for. And paying off existing debt isn't going to be eligible as effectively the interest is paid for you whilst you study.

Have you tried posting up a statement of affairs on here to see if people can spot areas you can make cutbacks?

You may struggle to get new 0% cards now (they are much harder to get than they were) so I wouldn't bank on being able to transfer your current deals. Are you paying the minimums or more than the minimums each month? are you reducing your overdraft at all? what APR is your overdraft?

Can you increase your hours? get a second job? earn money from home whilst you look after your child (internet surveys/reviews etc)? do you have items you can sell (ebay/amazon/carboot) to put towards the overdraft?

sianie9

Hi Tixy,

thanks for answering.

The overdraft is changeable - basically every month I get paid and go slightly into credit, then live out of it for the month, sometimes draining it, sometimes there's a little left - depends on the 'extras' each month.

I'm thinking it might be best to get a loan just to get me out of the red - yes I'd pay interest, but once it was paid off that would be it - at the moment I can't see a way of getting out of my overdraft completely as I simply don't earn enough.

As for my actual situation - I'm only paying the minimum on one card, but that's enough to pay it off before the 0% rate is over. I am trying to pay more on the other card each month. I am trying to sell stuff on ebay, doing internet surveys on Lightspeed, and I'm increasing my hours at work as from next month (although after additional nursery fees that may not amount to much extra!!).

Any ideas for other things I can do at home would be gratefully received...!

Tixy

Do you think it might help if you set up a new current account for your day to day banking? You could have a new account with no overdraft and have your income & dds paid out of the new account. Then you set up a standing order to pay a set amount off the old overdraft each month (depending on what you worked out you could afford)

Sometimes this helps people as they are then treating the overdraft as a 'normal' debt not an available pot to dip into all the time.

sianie9

That does sound like a good idea actually....... will investigate current accounts!!

debtdesperado

Aaahh.... you sound like me about a decade ago when only had an ickle debt, and was confidently juggling the interest rate to keep it at zero/as loss as possible and thinking that I was managing my money properly!

A loan to pay off your OD will NOT get you out of the red! Don't think of it like this! :-)

Instead, some other ideas, based on saving and not juggling debt (I say this as a reformed debt juggler - only when I got to £42,000 in debt did I acknowledge that actually, I can't juggle and had dropped all the balls...:-):

1. the slow and steady route... could you call your bank and ask them to reduce the OD by, say, £50, and then the following month call them again and ask them to reduce it by another £50... that way you will only have to cut your living expenses by £50 a month?

2. Alternatively could you cancel all social engagements, spending and live on value baked beans for a month and save £500 (you could also sell stuff)? If you have a chance of being able to raise the entire amount in 4 weeks, the painful route might work and might just be awful enough to teach yourself a lesson?

3. Or what about the simple 'painless' ways of saving: get a jar, seal it up, cut a slot in the top and resolve to put every single pound coin you get into it. Or if you are a bit more technical, open a savings account at another bank and every evening check your bank balance online and round it down to the nearest £10, transferring the difference to your savings account (don't look at the balance of your savings account until the end of the month)...

Hope this helps!

nicnacnoo

what about asking the bank to reduce your overdraft, say by £20 a month? ive been doing this the last few months and found it managable.
Nic

kingfisherblue

For your OU course, have you enquired about financial help? It depends on your income and how many dependents you have. If you already have a degree, you are less likely to get help, but if you don't have one, it is an option worth looking into. My daughter is studying with the OU and is on a low income with no dependants, but the OU don't charge her as her wages are so low. You need to apply in plenty of time before the courses starts though.

sianie9

Thanks everyone -

here is my new plan......

Have set up a new current account through A&L and transferred my wages/DDs and SOs to it. Have said no to an overdraft. I am going to let my child benefit keep going into the current account I have now - this should pay off the overdraft within 6 months, after which I can use the CB to pay off bigger chunks off my tesco card. In the meantime I am going to continue paying whatever I have extra each month to my credit cards.

I've been selling bits and bobs on ebay and rather than withdrawing the money from my paypal account, I have been v. strict with myself and left it in there - the ONLY things I buy from ebay are used clothes/shoes for my son!

I don't feel too bad about it all - I cleared all my little debts once before and only went back into the red when I was a student again for a while. Plus I know my current debts aren't from crazy spending!

Not entitled to any help from the OU sadly (income slightly over the threshold), BUT I've been given some gift vouchers and I've got Tesco reward vouchers and my other half says he'll shout me the rest as long as I save as much as I can.

It'll be nice to back in the black again one day..........!!

moneysavingmonkey85

are you getting childcare vouchers from your employer? I'm not sure, but I think it stops you paying tax on money going straight to nusery fees. I'm sure someone else will know or search on the site.

david39

Is your existing (overdraft) account with A&L also?

If not, have you looked into the possibility that your original bank might withdraw the overdraft facility when they realise that you are no longer paying your salary into it?

The overdraft facility was "secured" as far as they were concerned because you were clearing it each month with your salary. If they had concerns at some time in the future, they could stop the overdraft on the day they receive your salary, thereby leaving you with no money but with them with no loss.