Dealing with the overdraft monster

in_need_of_direction

Nearly a third of the way there. Yay

speakingofart

Most of this is cross posted from NinjasavingKat's April challenge - I usually struggle with the challenges as I'm not paid till halfway through the month, so I do the bits I can do. However, this month it's make up your own rules, so:

How did I get into debt?

Never been brilliant at managing money, got given a big overdraft when I was at university, had some problems that lead to me dropping out and changing university and spent foolishly to try to deal with those. Then went into teaching, continued to not be very good at tracking spending and didn't pay off the overdraft.

Now: Eventually realised I hated teaching, quit and took another job and am retraining. This has been amazing for my sanity, work life balance and future career prospects, but meant a significant salary cut and another qualification. So I'm now paying off the overdraft, trying to track every penny and cut the junk food so I can lose weight. My goal is to be able to afford a gym membership when I pay off my debt.

Right... goals for the month:

1. Have 15 no spend days. (I usually manage about 5, so this is ambitious to say the least, but I'd really like to make this number!)
2. Up to payday (15th): spend as little as possible, use up the food in freezer/ cupboards before buying more, and no buying junk food.
3. Avoid nice coffee/ tuck shop/ travelling food van at work. I take lunch in everyday, I do not need to buy more food.
4. Reduce electricity use now the lighter nights are here.
3. After payday: continue to use YNAB. Set budget of £150 for food and stick to it.
4. Leave the office for at least 30 minutes every lunch time and take a walk.
5. Revise for exams at least a little bit everyday.
6. Make another payment towards overdraft.
7. Overpay overdraft to get it under £1,000 (about £70 overpayment, depending on April interest)
8. Stop procrastinating and write this damn essay before I go insane.
9. (this is more a hope to the universe) Car to pass MOT without needing to take out of what I've paid off the overdraft.

As of today (31/03) my current account is empty, and so I'll need to use my overdraft again this month; although this isn't great, it isn't a complete disaster either because I'm much further on in the month than normal and have plenty of food/ petrol etc to see me through to the 15th. Also, I have an essay in on thursday, which in an epic procrastination fail I haven't yet started properly and am therefore having to take tomorrow off to write. Between this and revision, I'm hoping that I won't have any time to spend money. I'm also going to try leaving my purse at home, on the basis that I take lunch to work and therefore don't need to buy anything during the day.

Let's hope for a good end to the month!

speakingofart

Right, now I've got a week's annual leave and some time to sit down, I've finally got round to creating a new SOA for April and May. We got a cost of living rise last month, and that and the new tax allowance has given me about an extra £20/ month. I'm also hopefully going to get a pay rise in June, which will let me put an extra £50 towards my debt per month. Also, I'm doing some market research soon which should pay £100 by the end of the month - this will be paid straight into my overdraft account, so that will be another chunk paid off. I'm hoping that as a result, I'll be debt free quite a bit earlier, maybe in September.

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................ 1226.68
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1226.68

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 425
Management charge (leasehold property).. 0
Council tax............................. 61
Electricity............................. 60
Gas..................................... 0
Oil..................................... 0
Water rates............................. 19.75
Telephone (land line)................... 0
Mobile phone............................ 28.45
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 19.65
Groceries etc. ......................... 150
Clothing................................ 0
Petrol/diesel........................... 80
Road tax................................ 13
Car Insurance........................... 50
Car maintenance (including MOT)......... 36
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)...... 15
Haircuts................................ 0
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0
Professional membership................. 15
Weightwatchers.......................... 11.95
Total monthly expenses.................. 1034.8


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......................1237.79...150.......17.89
Total unsecured debts..........1237.79...150.......-


Monthly Budget Summary
Total monthly income.................... 1,226.68
Expenses (including HP & secured debts). 1,034.8
Available for debt repayments........... 191.88
Monthly UNsecured debt repayments....... 150
Amount left after debt repayments....... 41.88

Personal Balance Sheet Summary
Total assets (things you own)........... 50
Total HP & Secured debt................. -0
Total Unsecured debt.................... -1,237.79
Net Assets.............................. -1,187.79

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

speakingofart

Been paid for the month and have paid another chunk off my overdraft; it's so nice to see it in 3 figures instead of 4 at last! I've just upped my standing order to it to £200 per month from next month, to reflect a pay rise that I've been given. This hopefully should see it clear by September, although I have a birthday in July and am planning to ask for money, as I have more than enough stuff, so it may even be slightly earlier.

As a result, I've been doing a lot of thinking about my finances more generally, and how I'd like to manage them once my debt is paid off. The majority of my overdraft was built up when I was unemployed for a a few weeks, as I had to pay living expenses out of it until I'd started my new job and been paid, which ended up being nearly 3 months. To prevent this happening again (although I don't plan on going for another career change anytime soon) I'd first like to build up some savings and have opened 2 accounts in preparation for this; one with my current bank to take short term savings, such as a monthly amount for car insurance/ repairs etc, and one with a building society to hopefully build up a longer term pot. Once I've paid off my debt, I'd like to set up standing orders into both of these.

I'd also like to get a lot better at managing my account month to month, as even before I starting paying back my overdraft, I was almost always in the overdraft on my current account each month purely due to a lack of tracking my spending and spending on rubbish. I've started using YNAB as I find this the best way of making sure I don't overspend, and this has made a big difference. However, I'm still ending up in my overdraft, so this needs to continue otherwise I'll be right back where I started. An extra £200/ month without the debt repayment will help here.

Finally, I need to start to think about longer term financial planning, especially replacing my car, getting on the property ladder and starting some sort of pension. I think after my overdraft is paid off I will start investigating all these things - I would like a couple of months to build up at least some savings and ensure that I'm not going into my other overdraft at all before adding any additional outgoings, so this may be a plan to research for the winter. This month's focus is spending as little as possible, as the car insurance is due for renewal next month and I'd love to pay a year in advance again - I managed this last year and it's been so nice not having the direct debit coming out, so a frugal month ahead.

speakingofart

Another payday and my overdraft is now down to £655.87 - just three more payments to go! It's very exciting to see the available balance tip back to over a thousand, but walking into the bank to close the account altogether will be much more exciting! I had a much better month last month, finishing only about £60 into my overdraft on my other account, as opposed to over £300 the month before. I also renewed my car insurance, going for the monthly payment option as while I could have managed a full payment (just over £400) this would have involved taking money back out of my overdraft, and so the interest and fees would have added up to more than simply paying monthly. Next year, I hope to have enough saved to simply pay it!

Target for this month is to try and really keep on track with my spending; I'm going to Brussels next weekend so want to make sure that I don't overspend there. I also have to tax my car next month, as well as going to Cornwall for a few days so some ambitious goals for the immediate future, to make sure that I stay within budget!

speakingofart

My overdraft is now down to £404.62 - just two more payments to go! I'm very excited now as the end is truly in sight and I literally cannot wait to be debt free; partly to have an extra £200/ month and partly just to have the mental weight of it off me. I've also now started using YNAB for budgeting and am starting to see why people rave about it so much - it's really helpful to have all the categories spread out and see what I can actually pay for, rather than just what I think in my head will come up. Spendy month this month, and at a bit of a crossroads job wise, but hopefully these things will work themselves out and whatever happens at work, just two more payments to go!

speakingofart

The below is copied from NSKs August challenge, but I thought it was worth repeating here as we've been asked to think about what we'd like our financial legacy to be and for me, this prompted some quite deep thinking! In other news, I've joined the pension at work for August - time to grow up and start thinking about my retirement. I do wish I could have gone in when I started, but realistically I wasn't in the right place. I know better now and I'm in a better place now so I've come to the conclusion that it's silly to regret all my past mistakes: far better to put the energy into the present...

I can't believe it's August already - when I started properly paying off my debt in January, September and being debt free seemed like a lifetime away, and now I'm almost here. I'd like to add my thanks to NSK for running these challenges; although I'm not always the best at updating, it really has helped to have this community.

I would like my legacy to be quite simple: break the pattern in my family of being terrible with money and build a solid life for myself. I want to get out of debt and start saving for a new car, a flat deposit and a buffer/ rainy day funds YNAB style. I'd also like to increase my income and am currently studying a professional qualification in order to achieve this.

Challenge for this month:

12 SFD’s (Spend Free Days). 0/12

Set your DFD (Debt Free Day) 15/09/2014. I will then close the account with the overdraft in it.

Pay towards debt first: I have a standing order for £200 that goes out automatically to my overdraft account the day after I get paid.

Food budget: £79 remaining to 15th August - need to do a big shop and freeze some meals, as I have now worked my way through the cupboards and the freezer. Then £120 from 15th August - 15th September

I have one social event planned (Robin Hobb signing! Woop!) which I'm going to use Waterstones cards and some spending money to pay for. I also need to buy 2 birthday cards and a present and put into a collection at work. Finally, I have a fee to pay to my university of £75.

Do a good deed and ask that person to PIO = "Pass-It-On". Do not expect or act in attempt to get something back. Let’s pass on good deeds and see if they come back to us. You choose what this deed it but let’s not make it something we would have done anyway - lets step outside our comfort zone and see who we meet! I like this idea very much. I will keep an eye out

Exercise Week 1: 0/4

I'm really excited by this challenge - off to do my big shop and purchase enough food to get my through to the 15th so I can start checking off NSDs!

Tiggy10

Hi, I have just read your diary! I took advantage of the maximum 2000 overdraft. 2 years later im getting there!




Just out of interest, and only because im a teacher and I have a lot of days where im not 100% convinced I chose the right career, what did you retrain to do if you don't mind me asking?


good luck with your debt free journey your doing fantastically!!

speakingofart

Hi Tiggy, sorry I've only just seen this! I moved into HR (a bit like being a form tutor, but with a really big form and more interesting problems) and I love it. There's no OFSTED, no SLT bullying, I only work weekends if I'm studying.... honestly, I feel like I have my life back. Much as I loved the kids I taught, I can 100% say I've never regretted it.

Now I just need to be debt free so that I can start saving! Looks like you're doing amazingly well on your journey too....

foolsgold01

Well done speakingofart (my smilies aren't working but wanted to use the clapping one)


Your post caught my attention for a few reasons. 1 - my husband has an overdraft of £1800 and this bothers me 2) I can see you have made excellent progress with paying this off which is inspiring for me as I have taken on the role of managing our finances collectively 3) I am interested in YNAB but not sure we can afford it (the irony) however your mention of it alone and what you have said about it again makes me umm and arr and finally the idea of doing a diary really appeals to me too of the debt free journey.


Well done to you and what a wonderful feeling that must be to be so nearly out of your overdraft...not long to go...