Stopping the overdraft cycle

Kimmy2309

I am trying to stop the cycle of us using the OD and then it cutting into next months wages.

I am not sure what to do and would like some ideas. As it stands:

We have £910.43 on the overdraft and £219.57 owing on the credit card. We have just changed banks and my partners wages have gone into the new account which is why I am starting to see this as the opportunity to get sorted out.

The bills for this month are £1878.72 leaving us with £1453.50. I thought of keeping half of that (£726.25) for everyday things and food shopping etc. Then with the remaining £726.25 paying off the credit card and putting the remaining £506.68 towads the OD leaving £403.32 to pay off next month.

We usually save £1000 per month which won't be possible. Next month we could save £500 and then the following month be back to the normal amount after the OD is taken care of.

Is this a senseible plan or should I pay off the OD and the credit card which will leave us with £322.50 for the month and then we would be in danger of going into OD again. It would mean that again no savings this month but we could go back to the normal £1000 next month.

DarkConvict

Do you have money in savings already? If so use it to clear the debts.

Overdrafts and credit card debts, cost more in interest than you make in savings. You should avoid going in the overdraft especially as it can be stopped given 30 days notice, and credit cards paid in full every month.

You can just say keep half the money, you actually need to budget and be aware of costs. This tool should help you lay down what things cost - http://www.makesenseofcards.com/soacalc.html

I would say, do not save but pay off the debts. Go back to saving when you have no debts to pay off.

Marisco

Hi Kimmy, yes I agree, don't save anything until its paid off. The £1000 you usually save could pay off the overdraft and cut back a bit, or dip into the savings, and pay off the CC:) Then start saving again, but not so much that you have to go into an overdraft situation again;)

Kimmy2309

Thanks.

We have about £1800 in savings but that is for the service charge that will need to be paid really soon. We haven't got the bill for it yet but I know that it is coming soon.

I am going to talk to my partner tonight but I think the best thing to do will be to pay off the OD and credit cards and just have a super tight month. I know that we only have a small amount of debt but I just wish we could get things in order so we have money left in the bank at the end of the month.