Help me get out of my (fairly small) overdraft!

Chucky1234

Hi all. I was wondering if somebody could give me some help and to try and stop me living payslip to payslip!

For around the last year or so I have fallen into a habit of just spend everything in my account. I have long been trying to change that but my willpower isn't very good!

Currently I have a £1,500 overdraft with the bank. At the end of the month I will be about £1,100 in my overdraft.

My income is £1,350 per month after tax.

Expenses are;
Car payments £220pm (stupid I know)
Fuel around £110pm
Car servicing £21pm
Board (live with parents) £120pm
Food £40pm
Phone £45pm
Phone contract £21pm
Gym £17pm
BT £22pm
Cineworld card £17pm
Haircut etc £40pm
Football (play 2 or 3 times a week) £40pm
New clothes etc £100pm
Going out/gigs/events £100pm

TOTAL EXPENSES £913.00

Money which should be left over = £437.00pm

So I should have roughly this amount left over after every month but this never works out. I always seem to go back to my overdraft limit. If I am asked to do something or feel like buying something new I just have no urge to say no.

On top of this my insurance is due at the start of November which will cost around £800 (probably means I will have to increase my overdraft)
I start a new job next month (income is based off this) and I need to buy some suits as a result, probably going to cost around £150. Then its Christmas...

I appreciate by situation is not as bad as others are in however I want to break this cycle, start saving a solid amount every month, have a bit of funds saved up for a rainy day (if I lost my job or had a car accident I'd have no chance).

I know the simple answer is 'have more willpower, learn to say no' but I've been trying that for months and I can't. I would be very grateful if anybody had any ideas for me!

If relevant, I am a 20 year old male living with parents!

DCFC79

Use this link

http://www.debtadvicefoundation.org/personal-debt-analyser

But car payments of £220 a month, £800 for the insurance, that's a lot.

Chucky1234

DCFC79 wrote: »

Use this link

http://www.debtadvicefoundation.org/personal-debt-analyser

But car payments of £220 a month, £800 for the insurance, that's a lot.

Thanks for that - just filled it in. Said I have more of a money management problem rather than a debt problem - which is probably kind of true.

The car payments are high yes, I took this decision when I was 19 and weren't in my overdraft.

The insurance at £800 is high but thats due to my age and location - its the cheapest I can possibly get it.

With the insurance, I took out a £1000 overdraft to cover last years insurance and I told myself I would gradually pay off my overdraft - it has just never happened. I pay £6 fee and around £8 in interest a month to use my overdraft.

I am concerned I'm going to increase my overdraft to £2000 to cover the cost of this years insurance and then I will be in a similar position next year.

I'm not even sure of the specific question I'm asking - mainly how can I manage my money better, how do people set (and more importantly) stick to budgets? Maybe I need to open another bank account for my disposable income and set a certain amount aside to paying off my overdraft? All thoughts are welocome

[Deleted User]

Chucky1234 wrote: »

Thanks for that - just filled it in. Said I have more of a money management problem rather than a debt problem - which is probably kind of true.

The car payments are high yes, I took this decision when I was 19 and weren't in my overdraft.

The insurance at £800 is high but thats due to my age and location - its the cheapest I can possibly get it.

With the insurance, I took out a £1000 overdraft to cover last years insurance and I told myself I would gradually pay off my overdraft - it has just never happened. I pay £6 fee and around £8 in interest a month to use my overdraft.

I am concerned I'm going to increase my overdraft to £2000 to cover the cost of this years insurance and then I will be in a similar position next year.

I'm not even sure of the specific question I'm asking - mainly how can I manage my money better, how do people set (and more importantly) stick to budgets? Maybe I need to open another bank account for my disposable income and set a certain amount aside to paying off my overdraft? All thoughts are welocome

Why are you so sure that the bank will increase your overdraft?

If the costs of running the car are £1130 and you're only earning £1300 there's no way any bank is going to fund it.

Chucky1234

beebrook wrote: »

Why are you so sure that the bank will increase your overdraft?

If the costs of running the car are £1130 and you're only earning £1300 there's no way any bank is going to fund it.

It's a one off payment in November for £800. I could choose to pay for it monthly but then it would cost me more as not all insurers offer that option and at my age and location there aren't many cheap ones.

I'm not certain the bank will fund it, I have just assumed. Even more reason to sort myself out sooner rather than later.

National_Debtline

Hi Chucky1234


A lot of people find it useful to keep a spending diary. You know what your statement of affairs (SOA) shows you should have left each month, but in reality this isn’t happening. A spending diary should help you see where the money is going.


You need to be careful your overdraft increasing over time and then finding yourself in a position where your debts are no longer affordable, so well done for trying to do something about it now.


A separate bank account (with no overdraft) could be a way to help you budget if you put money aside for your essentials, or just use one account for your disposable income. Another option to consider is asking your bank to reduce your existing overdraft by an affordable amount each month to make sure you are starting to pay it off. I hope it all goes well.


Susie
@natdebtline

StokieBecks

If you should have over £400 a month left but don't then you need to start a spending diary first and foremost, logging every single penny you spend to see where it is going

Cheaper haircuts, less clothes spend a month (do you really spend 1200 a year on clothes?) and a reduced entertainment allowance for a few months to allow you to save up.

Insurance is a yearly thing so you need to set aside an amount a month that will allow you to pay it off when it is due for next time (probably a bit late to start it for this year) Do you put the car service amount away monthly that you have budgeted?

Are you using the gym and cineworld memberships enough to justify them?

If you can avoid it you need to avoid trying to increase your overdraft (don't try for a loan either) there is no sense to getting yourself more into debt. If this means you have to make 12 months of monthly payments this time around then so be it as it will help you to start to budget knowing that money has to come.out every month.

How many pay days until your insurance is due? If you have a very frugal couple of months and set aside that 400 spare from each month you could just about cover it. Obviously this takes a lot of willpower to only pay out what you need to and don't spend over your budgets you have set out above

Chucky1234

National_Debtline wrote: »

Hi Chucky1234


A lot of people find it useful to keep a spending diary. You know what your statement of affairs (SOA) shows you should have left each month, but in reality this isn’t happening. A spending diary should help you see where the money is going.


You need to be careful your overdraft increasing over time and then finding yourself in a position where your debts are no longer affordable, so well done for trying to do something about it now.


A separate bank account (with no overdraft) could be a way to help you budget if you put money aside for your essentials, or just use one account for your disposable income. Another option to consider is asking your bank to reduce your existing overdraft by an affordable amount each month to make sure you are starting to pay it off. I hope it all goes well.


Susie
@natdebtline

Hi.

Thanks for this. I think I definitely need to start a spending diary. How do I do this? Obviously every time I spend money I write it down in the diary. Then what? Do I analyse it after a week to see how much I have spent on 'going out' or 'food' and try and reduce it from there? Then check it on a week by week basis to ensure I am sticking to my budget? Is that the general idea of it?

I think having a separate account for my disposable income is a good idea. I am thinking transfer a certain amount each month into this bank account and use this for all my day to day spending, and then leave my direct debits to come out of the bank with the overdraft, which will start to decrease then.

Another option I considered was getting a credit card and using that for all my day to day spending, and then I could better manage how much I am spending and pay it all off at the end of the month, but I think getting more credit is probably a bad idea.

Chucky1234

StokieBecks wrote: »

If you should have over £400 a month left but don't then you need to start a spending diary first and foremost, logging every single penny you spend to see where it is going

I definitely agree I need to start a spending diary. Is this a case of logging everything I spend, analysing it after a week, seeing where I can spend less, and then comparing it to the following week?

Insurance is a yearly thing so you need to set aside an amount a month that will allow you to pay it off when it is due for next time (probably a bit late to start it for this year) Do you put the car service amount away monthly that you have budgeted?

Agreed I need to start setting money aside for it. As soon as I sort myself out I am planning to do that. Hopefully when I get back in the green I should be able to stick to this more!

Are you using the gym and cineworld memberships enough to justify them?

Yes to both.

If you can avoid it you need to avoid trying to increase your overdraft (don't try for a loan either) there is no sense to getting yourself more into debt. If this means you have to make 12 months of monthly payments this time around then so be it as it will help you to start to budget knowing that money has to come.out every month.

How many pay days until your insurance is due? If you have a very frugal couple of months and set aside that 400 spare from each month you could just about cover it. Obviously this takes a lot of willpower to only pay out what you need to and don't spend over your budgets you have set out above

So are you suggesting it may be better for me to pay my insurance off monthly, even though it would be an increased cost (cheapest I could find paying monthly was £1050) as this will help me budget better? I haven't considered this but I've always thought I'd be better off finding the absolute cheapest quote and then finding the cheapest way to finance it (which in last years case was by overdraft - which weren't the wisest choice because of where I am now!). Definitely appreciate your thoughts, thank you.

Wookey

Why so much for phone, mobile contract and BT? If i was in your shoes i would just sit in for the next 2 months with no spending on clothes, this would probably be more than enough to wipe out the overdraft, sitting in might be boring but it's zero effort.

KxMx

Spending diaries are very much an individual thing.

I for example get my income fortnightly but keep an overall monthly spending diary.

Weekly might be a good place to start. Use the first couple of weeks for fact finding then start the analysis.

Often a bit of illumination is required!

I found out cash was being spent rapidly so I set a monthly limit. I withdraw that amount out at the start of the month. Then no more withdrawals. I also opened a second bank account purely to save for unexpected occurances.

Then I re-assessed my spending generally. Some things I cut down/out, others I kept, until I found the right balance.