help me see my overdraft as debt

debtfreehopeful_2

Firstly i DO know it is debt but currently i am living in my overdraft, with no bills at all it would take 2 1/2 months to pay it off.

i live by a budget and in theory i can pay off around £400 a month which would get rid of it pretty quickly, however heres the problem i see that £400 as spare money and sometimes it does go on legitimate things we need as an emergency fund but usually it just gets spent on rubbish, im happy to take a little longer getting rid of it so that we can have a life such as £100 next month (at the absolute limit more likely around £50) will be going on my daughters birthday party, this as such isnt the problem, i have budgeted it and wont exceed my budget. the problem is that i will likely end up spending the other £300 without a clue what i have spent it on. i think the main problem is that of course to clear the overdraft it lives in my main account so my account shows how much i have available

what i am after is any tactics to shock me into remembering that available balance is money off my debt when i look at my account not there for spending on rubbish. i have joined the one debt 100days thread and think that will help as i have registered the £58 i have as 'available' on their in the hope that will deter me using it.

sorry this is a fairly long post. the only other question i have is i realise that borrowing more to get out of debt is a bad idea, but i have 2 loans currently running for 4 years and 5 years respectively and looking at my bank online i can combine them, not add to them and bring the term of both down to 4 years, obviously i would look around before doing this but is it neccesarily a bad idea?

thanks all and sorry to be a bit stupid, i feel fairly ridiculous that i cant seem to get my head right about this overdraft but im hoping someone can help

brians_daughter

lol, been there too - infact i still am to some extent. My od is 0% tho as a mature student so it 'free' so to speak

With my current account od i used to look at what i NEEDED for the month when i had been paid, i did my budget (not to the minimum but left some luxury £s then we didnt feel deprived lol)then called the bank and asked them to lower my od by that amount, even if it was only £10!

Once they've lowered the limit you cant spend whats there! If you do this on payday then the money is simply gone to pay the od debt and unless you start to increase the amount again you cannot spend it!

Maybe if you look at what you actually pay in interest it will spur you one ie Halifax charge around £1 per day you are in the OD, so thats £365 a year, practically a holiday a year you woill be paying to the bank..if you put it in terms of what the interest COULD provide you with if you didnt have to pay it? it seems to do the trick for me!

debtfreehopeful_2

thank you, i did try lowering it online but it wouldnt let me, i think i will try speaking to the bank, we were planning a review with them anyway so that would make sense, we pay about £20 month interest on it so it does add up, i hate how much im paying to the loans as well, without those i could lose the overdraft in no time. oh well one step at a time.

thanks for a nice response i was really worried i had come across as not caring and that mentioning the party would look irresponsible but was just trying to paint the picture that even when i do budget for extras with the intention of not spending any more i keep spending the extra anyway

brians_daughter

debtfreehopeful wrote: »

thanks for a nice response i was really worried i had come across as not caring and that mentioning the party would look irresponsible but was just trying to paint the picture that even when i do budget for extras with the intention of not spending any more i keep spending the extra anyway

Not at all, we all have different views on debt and what is more/less important. Once you get your head around the fact you want to be debt free, and owned up to yoruself how much you owe, it gets easier and you find you are actually loving trying to find ways to be debt free quicker! Its addictive lol

HAVE YOU DONE a SOA? It will help! we maybe able to show where youc an make savings etc
http://www.makesenseofcards.com/soacalc.html

Also try the snowball calc to see how to prioritise debt to pay lowest interest/pay quickest way possible
http://www.makesenseofcards.com/snowcalc.html

comedy_dave

What I have done is open a Current account with another bank. Got all my pay, DD & SO transferred to that. Then included my old Overdraft in my DMP.
This way I am (theoretically if LTSB would stop being !!!!!!) shrinking my Overdraft and treating it as a debt. Whilst still able to operate a functional account.

comedy_dave

On a side note. Living in your overdraft and therefore so close to your limit will mean you have most likely incurred charges at some point.
Once you move accounts, start reclaiming these charges, that may take a lump out of what you owe. And stick with it, its well worth getting that money back.

joedenise

If you don't know what you're spending the money on then I think you probably need to use a spending diary to see where the extra money is going. It will at least show where you are wasting this money - it's amazing how much a coffee here, a magazine there etc adds up. Once you know where the money's going you'll be in a better position to see where you can cut back.

Denise

immoral_angeluk

Get a new back account without an overdraft. Transfer all your income and bills into the new account and work out a repayment arrangement with the bank your overdraft is with. But whatever you do don't get a new bank account which is in any way linked to any of the companies your bank account is linked to.

IE don't get a santander bank account if your overdraft is with Abbey.. for example, as they'll be able to use setting off rules to take money from any linked accounts to pay off arrears.

david_hellier

joedenise wrote: »

If you don't know what you're spending the money on then I think you probably need to use a spending diary to see where the extra money is going. It will at least show where you are wasting this money - it's amazing how much a coffee here, a magazine there etc adds up. Once you know where the money's going you'll be in a better position to see where you can cut back.

Denise

Quote from LBDC:

Overdrafts For most of us overdrafts are a nuisance as they never seem to go down. The banks (particularly in the UK) usethem as a method to charge for banking services on current accounts. The main problem is the "snowballing" effectthe charges have on the balance, causing the overdraft to almost permanently stay at its limit. So, to manage overdrafts it is very important to include an overdraft payoff amount in the budget sheet. This will have theautomatic effect of nibbling away at your overdraft figure. When this is combined with carrying forward any spare cashfrom the end of a week this will reduce the average balance further, reducing interest and other charges. Remember that the banks do not want you to reduce your overdraft, do not want you to budget and they do not want to disclose the true costs of borrowing to you. Only you can manage these things.

debtfreehopeful_2

sorry have only just got back to this
Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 740
Partners monthly income after tax....... 0
Benefits................................ 850
Other income............................ 0
Total monthly income.................... 1590

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 0 paid out of wages before we are paid
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 126 dual fuel total cost
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 42 12 month contract
Mobile phone............................ 45 2 mobiles and one internet dongle
TV Licence.............................. 13
Satellite/Cable TV...................... 10.5 sky half price for 6 months
Internet Services....................... 0
Groceries etc. ......................... 400 food and living costs
Clothing................................ 0
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 25 includes military kit insurance
Life assurance ......................... 0
Other insurance......................... 10.5
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 19
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 691


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

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR cant get to paperwork on
loan...........................7333......249.......0 apr at the moment
loan...........................5886......176.......0
overdraft......................3000......45........0
Total unsecured debts..........16219.....470.......-


Monthly Budget Summary
Total monthly income.................... 1,590
Expenses (including HP & secured debts). 691
Available for debt repayments........... 899
Monthly UNsecured debt repayments....... 470
Amount left after debt repayments....... 429

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -16,219
Net Assets.............................. -16,219

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

debtfreehopeful_2

comedy dave, can i ask what you mean about ltsb being !!!!!!? we are with them, forewarned is forearmed and all that! its been a very long time since we incurred charges as though we are living in overdraft i budget tightly and wont go over. i was looking at reclaiming when it all started but was nervous that they would close our account/demand the loan was repayed immediately