Dealing with the overdraft monster

speakingofart

Hi everyone,

I'm starting this diary as a way to track my efforts to (finally, three years after graduating) get rid of my student overdraft. I actually started to try and get rid of it just after christmas, but had a minor career change of heart, quit my job, was unemployed for a month and have now been offered a new one in the field I want to enter. So in the spirit of new starts, I'm also trying to get rid of my overdraft!

Updated SOA to reflect my new salary:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1200.63
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1200.63

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 425
Management charge (leasehold property).. 0
Council tax............................. 62
Electricity............................. 60
Gas..................................... 0
Oil..................................... 0
Water rates............................. 16.73
Telephone (land line)................... 0
Mobile phone............................ 37
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 30
Groceries etc. ......................... 0
Clothing................................ 0
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 70.7
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...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 701.43


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
Overdraft......................1603......100.......0
Total unsecured debts..........1603......100.......-


Monthly Budget Summary
Total monthly income.................... 1,200.63
Expenses (including HP & secured debts). 701.43
Available for debt repayments........... 499.2
Monthly UNsecured debt repayments....... 100
Amount left after debt repayments....... 399.2

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -1,603
Net Assets.............................. -1,603



At the moment, this doesn't reflect any of my expenses that aren't fixed, because one of the reasons I have such a massive overdraft in the first place is that I'm rubbish at tracking my spending! So this month: spending diary so I can put the values I want to stick to in next month. I'm aiming to pay off £100/ month as a minimum, and when I know what day I'll be paid will set up a standing order to make this happen. However, I aim to sort this out long before september 2014.

timetogrowup89

Hi,

Good luck on becoming debt free...

You should try to put a monthly figure for things like your MOT so that you are not hit paying it in full off of one wage.. Thats what I got told when I first posted my SOA.

Also your car value would count as a asset

PollyOnAMission

You're starting from a very similar position to me a year or so ago, only I also had a credit card debt so it total I owed ~£4k. Clearing the overdraft was the first thing I did too!

Are your figures right in saying your overdraft has no monthly charge or interest? If so that's great; you are tacking things at just the right time It also makes things very simple: as you've said, you just need to keep a spending diary and start living within your means, those "means" including paying off your overdraft. Is there a date from which you will start to be charged for it?

My overdraft was being charged interest so I did it a slightly different way (switched my spending to a 0% credit card to get my bank account balance in the black, then made monthly payments to clear the card before the 0% period ended), but the really important thing is the spending diary and the budgeting.

I really recommend the smartphone app "EasyMoney" to help you keep track of your spending. Good luck!

PollyOnAMission

P.S. your mobile phone and internet costs are quite high, is there any way you can reduce them at the moment or are you tied into contracts?

As for annual costs such as MOT, car servicing, car tax - you should be able to roughly estimate a base cost for these. They won't include any work/repairs, but as an "essential" cost.

MOT £25 - £50
Car Tax - look up online if you're not sure (or look on your tax disc)
Servicing - Varies hugely depending on your car, how you service it etc. What did you pay last time?

I worked out my annual costs of car tax (£120), servicing (£180), car insurance (£320) and home insurance (£100). I left MOT off because I usually get it for £25 and tend to be able to find that easily enough in one month. That's £720 per year for me, which averages out to £60 per month. So what I do is transfer £60 per month to a second current account (it's actaully my old account from when I did a bank account switch). Then I've always got the money to cover my big annual bills when they come up as I've not spent it!

speakingofart

Wow, thanks so much for the helpful advice! Re: car value, it's an R reg so at most about £50. It's just passed its MOT so could add £35/ 12 I guess? My phone and Internet costs are quite high ( damn orange!) and I'm looking to reduce them when the contracts are up. No interest because its a graduate account, ( or, not strictly none, it was 82p last month which i'm choosing not worry about overly) but this is changing in July so more motivation to get rid of the thing. I've already opened a new current account and transferred everything over, so once I've paid it off I can just close it and be done.

speakingofart

Well, dealing with my debt this year didn't exactly go to plan. However, hopefully the things that have prevented that so far are now dealt with, and with the new year providing an excellent opportunity for a fresh start, I'm determined to tackle a number of ambitious goals in 2014, including my overdraft. Updated SOA is below:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household.........
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1200.7
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1200.7

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 425
Management charge (leasehold property).. 0
Council tax............................. 65
Electricity............................. 65
Gas..................................... 0
Oil..................................... 0
Water rates............................. 19.64
Telephone (land line)................... 0
Mobile phone............................ 35
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 19.75
Groceries etc. ......................... 150
Clothing................................ 10
Petrol/diesel........................... 85
Road tax................................ 12
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 28
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...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 0
Overdraft repayment..................... 150
Total monthly expenses.................. 1174.39


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 50
Other assets............................ 0
Total Assets............................ 50

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Overdraft......................1765.9....0.........17.81
Total unsecured debts..........1765.9....0.........-


Monthly Budget Summary
Total monthly income.................... 1,200.7
Expenses (including HP & secured debts). 1,174.39
Available for debt repayments........... 26.31
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 26.31

Personal Balance Sheet Summary
Total assets (things you own)........... 50
Total HP & Secured debt................. -0
Total Unsecured debt.................... -1,765.9
Net Assets.............................. -1,715.9

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

A few things to note to myself: I don't have gas, oil or a TV and so these categories are empty. I've added in my overdraft repayment already, this is the amount I'd ideally like to put in each month. In january, I'm hoping to add in £320, as I'll be getting some backpay and also £100 from a Christmas market research activity that I've been doing, so hopefully I should be off to a good start there!

I also really want to cut down my spending - the overspend I find mostly is on food shopping, however I also want to start weight watchers and cut down on the amount of crap I buy massively. I'm going on holiday for a week in January (this is already paid for, hence the holiday category being empty) but as we're going all inclusive, I'm hoping that this won't represent a big spend.

speakingofart

Right, first attack on the debt complete following payday - with the market research that I did over christmas, I had £250 to pay off, so a very good start! Aims for this month are not to go into the overdraft on my current account, and try to reduce my spending on food.

MrsSmith2013

Just wanted to say good luck on your journey, you sound like you have a good plan and £250 is a great start to pay off your overdraft!

Mrs S x

FinanciallyUnsavvy

Hi :wave:

Just wanted to say hi and well done on coming back to tackle your debt head on! I still have my student overdraft too... except it's coming up to 5 years since I graduated (and a £4000 credit card on top of that...)

You're in a good position - it's good to see your overdraft payment is part of the SOA and you still should have a bit left each month.

I'm guessing you live by yourself? I think you should be able to reduce your grocery spend to £100-£120. I've managed £120 this month - I live by myself but my boyfriend is here half the time so I essentially shop for two.

You can also try to cut back a bit on the entertainment spend. Re WeightWatchers - I'm a fan of WW, but it is quite expensive! I'd recommend you just give healthy eating a go off your own back at first to save £20 a month. If you're struggling then maybe try the meetings but see how you get on first (that's what I'm doing at the minute!)

It may be worth looking into a credit card that lets you do a 0% money transfer to pay your overdraft with. They're not as common as balance transfer cards but if you can secure one it would be so much better to not have to pay the interest you're accruing on the OD - worth looking into.

Good luck- you can do it! :j

speakingofart

Another month and another payday, overdraft payment made and down to just under £1400, which is great. Being debt free still seems a long way away, but I will get there. The big problem is that paying £150/ month towards my overdraft really doesn't leave me with a lot of money for anything else, and worse some unexpected bills (this is why I need some savings) have meant that I've gone into the overdraft in my current account as well.

However, I'm hoping that having a very lean month this month - with uni and a full time job and a dissertation, this won't be hard as I have no time to spend any money - will fix this problem at least to some extent. I'm hopefully getting a pay rise in May, and this should mean that I can up the overdraft repayment and get rid of that more quickly, then focus on my current account and building some savings. Slowly but surely I suppose!

speakingofart

Another month and some more paid off my overdraft, as in signature. I'm glad it's slowly going down, but I think I'm getting to the stage now where I'm getting sick of constantly thinking about and worrying about money. However, I just need to keep plugging away, remember it will be gone this year and that it'll be like having a pay rise when it is, and that I will get there. This month is going to be quite tough as I have to MOT my car, and HMRC have made a mistake in my tax code meaning that unless they sort it in time, I'll pay £90 extra in tax next month. So several sources of stress, even without essays/ exams/ a full time job!

Hopefully by the end of the month I'll have a much more positive update to report. On the bright side, debt went down and not up. That's something to be grateful for and I need to remember that on the not so great days.