My Situation

Keep-Fighting

Hey :wave:

I've been browsing these forums for awhile now and thought it was time to post my situation.

I have decided to stop burying my head in the sand and sort my finances out! I went down the payday loan route but have managed to get out of that just before it got really out of control. :doh: However I am now left with the following debts.

Credit card - 696.71 @ 30.34%
Lloyds Loan - 2,241.80 @ 19.17%
Lloyds Overdraft - 2000 @19.28%

Now I opened an account with santander yesterday with the intention of swapping my salary and direct debits over to it. This way my money isn't immediately being eaten up by my overdraft.

My income varies from £650 - £1100 a month depending on additional hours. It has averaged out at £900 over the last few months though.

I was planning on paying a set amount off my overdraft monthly (£200?)

Will lloyds take any action against me for this or will I be ok paying it back over a certain amount of time?

Here's to a debt free 2013! :beer:

StrontiumJenkins

Hi, I'm pretty new to posting on the forum myself, but hopefully I can give a little advice here, hope it helps!

If your income is not all that stable then you might like to look on getting the interest frozen on your credit cards by coming to a mutual agreement with Lloyds about how much you can afford to pay them each month from your Santander account, National Debt Helpline can give you advice on setting this up with one of there free information packs.

Lloyds are not able to take any kind of action on you over this, you just need to make sure your communicating with them, the last thing you want to do is start defaulting on payments, that can get you into a whole heap of trouble.

If your looking for something else, CCCS can set up a debt management plan which will help you pay your total debt in easier to manage payments based on your wages. I do recommend CCCS as there advice is good and most of all Free!

Hope this helps you out a lil bit

R_P_W

An overdraft facility can be withdrawn by Lloyds and they can ask you to pay the balance of it back immediately. You need to be a bit cautious here as they might only be willing to provide the overdraft as you were putting your wages through every month and actively using the account - sounds like you are going to stop doing this so they might review it at some point.

Personally I don't understand how having another bank account helps you? You say that the overdraft eats up your wages every month - well it will do because thats how an overdraft works.

Can you not just keep using the Lloyds account and just look to spend £200 less a month? Gives you exactly the same outcome but without the risk of having the overdraft facility called in.

Buffett

Yes, please be careful ... NatWest closed my overdraft facility about 9 months after I stopped paying in my full salary to that account. Caused me all sorts of problems!

Keep-Fighting

I have tried the spending less thing but its not worked out. My reasoning behind the different account is I'll see the overdraft as a debt instead of available money. I have also used my overdraft to pay off a bit of my cc debt off. Would you recommend I try something differently?

*zippy*

Could you keep having your pay go into lloyds, leave enough in the account for all your direct debits, bill payments etc plus the £200 you want to pay off overdraft, but then withdraw into santander your spending money for the month, then only allow yourself to use your santander debit card and budget from this account with no overdraft facility.

You could also then open a savings account to tuck money away for yearly expenses and an emergency fund if that is something you are planning on doing x

StressedSteph

Hi,

I am in a similar situation to you and I guess it all boils down to your willpower and if you have DEFINATELY had your Light Bulb Moment yet.

What I decided to do was start an Excel spreadsheet. Its laid out much like a Bank Statement but I list all my incomings and outgoings, my budgeted amount of fuel, Groceries, etc etc.

Then you can see how much (on a minimum wage month) you have to throw at your debts. Work your wages out on a "Worst case Scenario", anything extra is just a bonus.

I then cut my amount I am able to pay into two. Half for the debts and half to stay in the bank to chip away at the Overdraft.

I have joined loads of challenges on here (No Spend days / Grocery challenge / Pay off 1% at a time challenge etc etc). these all incentivise me to stick to my budget and NOT spend a penny extra.

You could also start up a "Spending diary" if you are prone to misc spends.

I can send you a sample of my spreadsheet if it would help. do you have Excel ?.


It is tricky with an overdraft but not impossible. I was too scared to stop putting my wages into my OD account as I have heard alot of stories of them taking back the OD and wanting immediate payment in full .

Good luck with your journey xx

HeadAboveWater

Hello!

*zippy* wrote: »

Could you keep having your pay go into lloyds, leave enough in the account for all your direct debits, bill payments etc plus the £200 you want to pay off overdraft, but then withdraw into santander your spending money for the month, then only allow yourself to use your santander debit card and budget from this account with no overdraft facility.

This is exactly what I would suggest

JustAboutThere

*zippy* wrote: »

Could you keep having your pay go into lloyds, leave enough in the account for all your direct debits, bill payments etc plus the £200 you want to pay off overdraft, but then withdraw into santander your spending money for the month, then only allow yourself to use your santander debit card and budget from this account with no overdraft facility.

Agreed. This is similar to what I finally got around to setting up. It took a bit of time (this was prior to internet banking), but I went into the branch and set up various standing orders.

My salary goes into the main account on pay day (end of the month), on the 3rd of the next month, X amount automatically goes into another account that works as a Bills account. All direct debits/standing orders go out of here, so I know how much I need to budget for the month. On the same day, another X amount goes into a savings account. What is left in the original account is what I have to live on.

DD265

*zippy* wrote: »

Could you keep having your pay go into lloyds, leave enough in the account for all your direct debits, bill payments etc plus the £200 you want to pay off overdraft, but then withdraw into santander your spending money for the month, then only allow yourself to use your santander debit card and budget from this account with no overdraft facility.

I've done something similar using my PayPal account - I have a PayPal Mastercard which allows me to spend up to the money I have in my PayPal account but no more. With it being a Mastercard, I can use it pretty much anywhere. The only downside is that I can't withdraw cash from it without paying a hefty fee, but I'll be budgeting to take out a certain amount of cash from my Lloyds account at the start of each month for that reason.

Keep-Fighting

Would you suggest putting my excess cash into paying off the cc first and then start on the overdraft or work on them both together? Thanks for the advice I am going to leave my wages to go into my lloyds account then transfer then money required for direct debits and bills to my santandar account. Stressedsteph that would be brilliant thanks!