Best way to clear overdraft, please advice

giddyG2001

I have an overdraft of £3, 250 that I am always in and am desperate to get out of. In the summer, I took out a 0% credit card and did a cash transfer from there to clear it, thinking this would be the best solution. But I stupidly kept the card on the account and now it's back up to it's max again. I'm so frustrated that I can't seem to get out of it. I know my budget down to the last penny and earn enough to cover that but it just seems to be spending little bits that gets out of control, I feel very ashamed. Can I please have your advice about the best options for me? I've narrowed it down to these two.

1. Get another card to do a cash transfer into overdraft account, cut up overdraft card and only use my account that has no overdraft on it for spending on food/petrol etc. Pay off the card monthly.

2. Open another bank account with no overdraft, transfer all my direct debits to there. Cut up overdraft card and pay off monthly to the account.

I'm guessing number 1 is the best option as I won't be paying monthly interest on my overdraft, I'm just very cautious about getting stuck in the same situation as I did a few months ago where I end up back in the red. But if I cut up my overdraft card, that shouldn't happen.

Any advice welcome

[Deleted User]

Option 3 - cut costs and pay off the overdraft over time.

It doesn't sound as if further credit is the answer. Whichever course you choose, you need to generate more disposable income, so I would look to get in control of the current situation.

MrsTinks

Ideally reduce your OD bit by bit and reduce your limit each time you clear a bit off it. Remember that the bank can call back the overdraft facility AT ANY POINT so the quicker you can get this down the better.

You will also be paying for this facility, and it's not cheap borrowing! However as you have already proven then re-financing isn't the solution for you... unless you absolutely trust yourself to cancel the over draft once you have done the transfer? If you KNOW you will do it this time then yes, BT to a 0% deal, but if you have the slightest doubts then don't do it. You'll end up with 9K of debt in a flash instead of £6k...

Check and see if any of your slip ups might be items you can sell to make an initial dent in this debt - it's a lot of money to accidentally over spend...

savingfortomorrow

would it be possible to get extra money by working additional hours. can you get a temporary part time. You need to slowly reduce the overdraft and once it is down reduce the overdraft limit with the bank.

giddyG2001

Unfortunately not, I work full time and am a single parent with no additional help. I have advertised myself as a tutor (I'm a teacher) but realised I didn't have the time for that either.

I'm currently looking at getting a DMP for my overdraft, does anyone have any experience of this?

MrsTinks

Why don't you post up a full SOA first? Once you enter a DMP then the defaults will remain on your credit file for 6 years. You will also need to enter your credit card (and any debt you have elsewhere) into the DMP so as to not show preference to any creditor.

Stick up the SOA and let's have a look at how you can best deal with this

giddyG2001

Mortgage 488.36
Council Tax 67
Gas/electric 67
Childcare 250
Water 22
Car insurance 35.42
Student loan repayments (Commercial collect) 30
Tax credits (Past due) 10
Scottish and Southern repayments 20
Food 180
Petrol 60
Halifax credit card 35
MBNA 40
Overdraft 20
Life insurance 8.5
Income protection policy 30.3
Phone 18
Broadband 8.7
Tv license 12.54
School dinners 35

giddyG2001

Outgoing 1437
Income 1519

Sorry, posted that too soon. They're all my outgoings. My debts with student finance and tax credit are not accruing any interest.
It's more the overdraft as the credit cards are under control and not accruing interest either and not being spent on. Although it would be nice to pay them off early too!

EssexHebridean

giddyG2001 wrote: »

Mortgage 488.36
Council Tax 67 Are you paying this over 12 months rathe than 10? Are you getting single person reduction?
Gas/electric 67 You might be able to reduce this a little - albeit probably not much. Have you checked you're on the best tariff?
Childcare 250
Water 22
Car insurance 35.42 Where are your other car expenses covered? Tax, servicing, MoT test, tyres and other depreciation?
Student loan repayments (Commercial collect) 30
Tax credits (Past due) 10
Scottish and Southern repayments 20
Food 180Is it just you and 1 child? If so you can reduce this
Petrol 60
Halifax credit card 35
MBNA 40
Overdraft 20
Life insurance 8.5
Income protection policy 30.3
Phone 18
Broadband 8.7
Tv license 12.54 Picky I know but why are you paying a few pence more on this than the standard £12.12?
School dinners 35 Packed lunches might work out cheaper? Worth looking at.

Your figures show an £82 per month surplus - I take it you don't have this?

I think first up you need a spending diary. I have to be honest - in spite of your comments earlier re "I know my budget down to the last penny" I don't think you do. There's stuff missing from the budget you've posted like car costs, and you aren't showing anything as an emergency fund which as a homeowner you REALLY need to get in place.

If it were me I'd cut up the credit cards too - if they're not being spent on you don't need them, although until you have your emergency fund in place it might be sensible to keep one "alive" but stashed away in a safe location at home, not carried with you and easily accessible.

On extra income, look at joining survey sites - they don't pay much, but in the course of a year you could probably earn enough to negate the cost of birthday and christmas presents for your little one, at the very least.

giddyG2001

EssexHebridean wrote: »

Your figures show an £82 per month surplus - I take it you don't have this?

I think first up you need a spending diary. I have to be honest - in spite of your comments earlier re "I know my budget down to the last penny" I don't think you do. There's stuff missing from the budget you've posted like car costs, and you aren't showing anything as an emergency fund which as a homeowner you REALLY need to get in place.

If it were me I'd cut up the credit cards too - if they're not being spent on you don't need them, although until you have your emergency fund in place it might be sensible to keep one "alive" but stashed away in a safe location at home, not carried with you and easily accessible.


On extra income, look at joining survey sites - they don't pay much, but in the course of a year you could probably earn enough to negate the cost of birthday and christmas presents for your little one, at the very least.

I do have an emergency fund that I pay into. And then if there's anything needed for my car, I use my savings for that. I do it this way because I'm not sure how much my car would cost me per year and I don't want to over/under estimate

The credit cards are cut up and yes, the survey sites are a good idea.

Anything else I'm missing?

MrsTinks

You've left out things which is why I suspect you're dipping into the OD and credit cards...

What about things like
Haircuts
Clothes
Presents
Savings (You mention you put some into savings each month for car costs etc - you need to account for this!)
Buildings and contents insurance (you mention mortgage so you need at least buildings, you SHOULD have contents too)

Given you only spend £15 a week on petrol then do you REALLY need a car? Being really blunt you are spending £96 a month PLUS MOT, Tax, service, tyres etc - so I'll guess £150 is more likely as your monthly cost assuming you don't need much work doing on it for services and MOTs and that it's a low tax category.

Making a few assumptions on economy of your car and fuel cost (as that will depend on where you live but you do about 80 miles a week?

Could you save money here by using public transport and Taxi? Worth doing the maths.