Overdraft help

js2017

Hi, I'm after some advice!

I racked up a load of debt whilst I was with my ex, we had 2 children, she didn't work and after years of spending a couple hundred more than we had I'm well an truly in the hole!

Overall I'm about 12k down, 6k bank loan, 5k overdraft which I limit every month, 1k loan with another company.

I'm in a much better position these days, I'm making about 10k more and living off much less (went sim only, pack lunches, think very carefully before every purchase), I would be able to clear these debts but the interest is absolutely killing me. This has been made much, much worse this month with the changes to my bank overdraft fees, they're now charging me 6.50 a day (paying about 3x more). I live in the south east where rent is expensive, I have my children 50% of the time so have the costs they bring + child support and so on.

I have an appointment with my bank booked in to come up with a long term plan, I phoned today to try and get the overdraft put on my loan but it wasn't accepted due to something on my credit file (checked noddle and not a red mark?).

Could anyone that's done similar let me know what to expect, or what I should ask for? Absolute aim is to have all debt gone but short term I just don't want to worry about money and know that my debts are going down.

Thanks, Jason

Dannii75

I would advise you to call the National Debt Helpline who'll give you unbiased advice! Your bank could well suggest you consolidate your loans into one loan... then they're making even money from you!
Have you been on the StepChange website? Have a look on there too.
You sound like you're doing really well with cutting back so much so that's great! You just need help with the debt!
Good luck & keep us informed about how you get on!

js2017

Thanks, it took a while to trim everything right down, my plan was to just live off less until the overdraft went but now with these new charges I'll be worse off. I went from spending £4 a day on lunch, to making packed lunches, now getting charged £6.50 a day for the overdraft, real kick in the teeth.

My repayments were at about £400pm, will be at about 520 with this change, tbh if the bank said you can get your bank account back in the black and you'll have one loan at 3-400 I'd jump at it.

Thanks for pointing me to stepchange, I didn't know about that, I'll be sure to call the debtline as well to see what they can recommend.

fatbelly

Your bank may not give you unbiased advice. By all means see what they say but don't commit to their products at the moment.

Without a full statement of affairs it's difficult to give good advice but if you are trying to avoid interest while not harming your credit file then the best source of information is probably moneysavingexpert, not stepchange.

A money transfer card would wipe out interest for maybe 3 years at a one-off fee and put the money straight into your bank account. I recently needed to do this and Virgin gave me 8k ridiculously easily. I balance transferred another £500 and make monthly payments around £84.

https://www.moneysavingexpert.com/loans/cut-loan-overdraft-costs

You could also look to switch your bank

https://www.moneysavingexpert.com/banking/cut-overdraft-costs

For example, new customers with Nationwide's FlexDirect get a year's fee-free overdraft (as long as you haven't had a FlexDirect account in the last year). This can be 1-2k.

If you wanted to post a statement of affairs we can go into more detail.

js2017

I do see your point, if they offer me something I'll see how long I have to take the offer up. Do you know if it's likely they will offer me something? I've not experienced anything like this before, in fact I've been avoiding the bank at all costs (stupid I know).

Unfortunately I don't think the money transfer card is a go for me, brilliant idea, but my credit is obviously not good enough, I'm going to have to check Experian and Equifax, I have no red marks on Noddle.

I do like the sound of the bank account switch, providing they let me open one. I'd be worried that I'd start getting my salary paid into the other and my bank would then demand the overdraft be paid off... do people do this often?

SOA below

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2423
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2423

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 950
Management charge (leasehold property).. 0
Council tax............................. 114
Electricity............................. 85
Gas..................................... 0
Oil..................................... 0
Water rates............................. 18
Telephone (land line)................... 0
Mobile phone............................ 20
TV Licence.............................. 12
Satellite/Cable TV...................... 20
Internet Services....................... 20
Groceries etc. ......................... 200
Clothing................................ 10
Petrol/diesel........................... 50
Road tax................................ 12
Car Insurance........................... 0
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 30
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)...... 40
Haircuts................................ 14
Entertainment........................... 20
Holiday................................. 10
Emergency fund.......................... 0
Kids activities......................... 60
Child Support........................... 240
Total monthly expenses.................. 1945


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 0
Total Assets............................ 3000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Bank loan......................6124......200.......18.9
Pounds to Pocket...............714.......134.......0
Overdraft......................5000......0.........0
Total unsecured debts..........11838.....334.......-


Monthly Budget Summary
Total monthly income.................... 2,423
Expenses (including HP & secured debts). 1,945
Available for debt repayments........... 478
Monthly UNsecured debt repayments....... 334
Amount left after debt repayments....... 144

Personal Balance Sheet Summary
Total assets (things you own)........... 3,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -11,838
Net Assets.............................. -8,838

EssexHebridean

OK comment on the SOA in red as usual...

js2017 wrote: »

I do see your point, if they offer me something I'll see how long I have to take the offer up. Do you know if it's likely they will offer me something? I've not experienced anything like this before, in fact I've been avoiding the bank at all costs (stupid I know). Bear in mind that the likelihood is that if the bank DO offer you something it will favour them rather than you - so that's something to bear in mind.

Unfortunately I don't think the money transfer card is a go for me, brilliant idea, but my credit is obviously not good enough, I'm going to have to check Experian and Equifax, I have no red marks on Noddle. Sign up to the (free) MSE credit Club for a good idea of what you might be eligible to apply for.

I do like the sound of the bank account switch, providing they let me open one. I'd be worried that I'd start getting my salary paid into the other and my bank would then demand the overdraft be paid off... do people do this often? If they do that's not a lot worse to be honest - they can demand, you say "no can do but I'll pay you £X per month until it's cleared" - they either say yes or they pass it to a DCA who will say yes.

SOA below

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2423
Partners monthly income after tax....... 0
Benefits................................ 0 If you have the children 50% of the time should you not be getting a 50% split of the child benefit? it obviously depends what was ordered when you spit with your ex though.
Other income............................ 0
Total monthly income.................... 2423

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 950
Management charge (leasehold property).. 0
Council tax............................. 114 Single person discount? Paid over 12 months or still the traditional 10? If 10 ask to switch to 12.
Electricity............................. 85 What are you doing, heating a glasshouse to tropical temperatures?! We use electric for everything aside form cooking and pay around £35 a month for the electric (Gas is negligible at under £2) Go round turning EVERYTHING that doesn't need to be on, off. Start using a timer for showers. Think about everything in your home that uses power and try to work out what the energy guzzlers are.
Gas..................................... 0
Oil..................................... 0
Water rates............................. 18
Telephone (land line)................... 0
Mobile phone............................ 20 you can save a bit on this by shopping about for a better SIM only package - I'm with EE as an example - pay just over £11 a month for 4gb data, u/l calls & texts, use abroad and super fast 4G.
TV Licence.............................. 12 £12.37 or thereabouts I think you'll find?
Satellite/Cable TV...................... 20
Internet Services....................... 20
Groceries etc. ......................... 200 High for a single person - although I'm guessing this includes a bit extra for when you have the children with you?
Clothing................................ 10
Petrol/diesel........................... 50
Road tax................................ 12
Car Insurance........................... 0 How come you don't pay anything for car insurance?
Car maintenance (including MOT)......... 20 This seems low - are you sure it covers everything? Service/MoT Test, depreciative items such as tyres and wiper blades/screenwash and oddments like that/a contingency amount for the odd blown bulb or minor repair needed...
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 30
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0 Get this sorted as a priority - it's a false economy not to have it.
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 40
Haircuts................................ 14 Every month? Does this cover a contribution for the children's haircuts as well?
Entertainment........................... 20 Are you sure this is right? It seems pretty low - so you're spending no more that £5 per week on anything not included elsewhere on the SOA?
Holiday................................. 10 Are you actually saving this? It's a very low amount to look to use for a holiday
Emergency fund.......................... 0
Kids activities......................... 60
Child Support........................... 240
Total monthly expenses.................. 1945


Assets
Cash.................................... 0 This should show the amounts that you say you're saving for car maintenance, holiday, presents etc - are you actually saving those amounts?
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 0
Total Assets............................ 3000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Bank loan......................6124......200.......18.9
Pounds to Pocket...............714.......134.......0 Is this really 0%?
Overdraft......................5000......0.........0
Total unsecured debts..........11838.....334.......-


Monthly Budget Summary
Total monthly income.................... 2,423
Expenses (including HP & secured debts). 1,945
Available for debt repayments........... 478
Monthly UNsecured debt repayments....... 334
Amount left after debt repayments....... 144 Do you physically have this amount left over?

Personal Balance Sheet Summary
Total assets (things you own)........... 3,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -11,838
Net Assets.............................. -8,838

I'm going to say for a start do NOT get talked into consolidating with your existing bank - anything they offer you is highly unlikely to be the best deal you can get. Try to negotiate something on the overdraft even if that "something" relies on you stopping using the account. Before you accept that sort of deal though you MUST go and open a new basic bank account with a provider not linked to your current one - and organise to get your salary paid into that new account. That stops the existing bank setting off income against debt.

Step 1 is to look properly at that SOA and establish whether it's perhaps a wee bit aspirational? You're saving £70 a month towards the car, holiday and presents, yet there is no cash shown in assets - so you need to work out whether this money is actually being saved or whether you think that's what you ought to be doing. if the latter then start physically doing it from right now else your SOA is useless. You currently show nothing for car insurance so that needs budgeting for I imagine. Car tax if you're paying monthly then that's a more expensive way of doing it so try to get the money set aside to pay upfront and then save monthly towards the following year.

The bits I can see that you can reduce a bit are: Mobile - an easy fix. Groceries - with a bit of work you can probably shave that a bit. Haircuts: If that's just for you then you can reduce that I'd think. Presents - think of ways of doing cash-neutral bits and bobs for the children - is there an activity idea you can come up with that can be done on a shoestring yet they will love for example? For everyone else it needs to be a "Sorry but I'll not be doing presents this year" scenario. Can you cut petrol costs at all? Are you close enough to work to walk for example? Your mileage clearly isn't all that high currently as you're using less than a tank of fuel a month.
That electricity bill ought to be able to come down a fair bit - check you're on the best tariff for a start.

If the Pounds to Pocket loan is a payday type thing then I suspect the interest is high so look at throwing every penny at that first assuming you can get the interest frozen on that O/D. I agree that if you do qualify for any of the money transfer cards then trying to get some of that O/D transferred over is the best plan for that.

La_escocesa

Hi JS - I probably wouldn't even go to the appointment with your bank as they will only be flogging their own products like the others have said. They'll take your £6k 18.9% loan and £5k overdraft and offer you a £15k loan (or something like that...) for less than your current monthly payments...

I guess fatbelly means you would pay off your current overdraft with the new bank's interest-free overdraft, then pay off the interest-free overdraft while it's still interest free... So you may be able to get rid of it as soon as you open the new account. I'm not sure many banks will give you a £5k overdraft straightaway though...

My vote would be for opening the new bank account and selling your £3k car. I did this a while ago when we couldn't afford the £400 MOT bill - best thing I did! Got hire cars whenever I needed them and had a healthy taxi fund (probably about the amount I spent on petrol a month but with no other expenses). Also joined city car club - all in all much cheaper than having my own car.

That's great you've posted your SOA. Are those guesses or have you gone through last year's statements? If they're guesses then it might be good to start a spending diary just to see. I've added some comments below.

HTH

js2017 wrote: »

Statement of Affairs and Personal Balance Sheet
Monthly Income Details
Monthly income after tax................ 2423
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2423

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 950
Management charge (leasehold property).. 0
Council tax............................. 114
Electricity............................. 85
Gas..................................... 0
Oil..................................... 0
Water rates............................. 18
Telephone (land line)................... 0
Mobile phone............................ 20
TV Licence.............................. 12
Satellite/Cable TV...................... 20
Internet Services....................... 20
Groceries etc. ......................... 200 Could shave off some here
Clothing................................ 10 Is this accurate?
Petrol/diesel........................... 50 do you need a car with only spending £50 a month on petrol?
Road tax................................ 12
Car Insurance........................... 0 What is the monthly cost of your insurance (even if you pay it annually)?
Car maintenance (including MOT)......... 20 Do you save this every month? If not, how many months do you have to go until it's due again?
Car parking............................. 0 Never?
Other travel............................ 0 Never? Could it be cheaper than keeping your car?
Childcare/nursery....................... 0
Other child related expenses............ 30
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0 You should probably think about this. It'll only be a few quid a month and if something were to happen you will end up in more debt trying to get back on your feet.
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 40
Haircuts................................ 14
Entertainment........................... 20 Is this accurate? How do you spend this/stick to this?
Holiday................................. 10 Is this booked or are you putting this away for future? How much do you have saved?
Emergency fund.......................... 0
Kids activities......................... 60
Child Support........................... 240
Total monthly expenses.................. 1945


Assets
Cash.................................... 0 You'll start building this up saving for annual expenses - car, holiday etc.
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 3000 My vote is for selling the car.
Other assets............................ 0
Total Assets............................ 3000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Bank loan......................6124......200.......18.9 How long do you have left on this loan?
Pounds to Pocket...............714.......134.......0 I guess this is a really high APR and not zero?
Overdraft......................5000......0.........0This is the BIG expense and not zero
Total unsecured debts..........11838.....334.......- This isn't accurate as it looks like you pay nothing to your overdraft


Monthly Budget Summary
Total monthly income.................... 2,423
Expenses (including HP & secured debts). 1,945
Available for debt repayments........... 478
Monthly UNsecured debt repayments....... 334 Plus around £200 to your overdraft?
Amount left after debt repayments....... 144 This will be negative when you factor in your overdraft payments unfortunately

Personal Balance Sheet Summary
Total assets (things you own)........... 3,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -11,838
Net Assets.............................. -8,838

js2017

Hi La Escocesa - Ok, I will keep that in mind, I'll hear them out but won't jump at any thing they offer.

Yes I think that's unlikely, but I wonder if I could get 2k, I'll be 100's better off without the O/D intereset to pay.

I have thought of it, it's the most expensive thing I own but it gets me to work, gets my kids to school, gets me and the kids about on the weekends, seeing family, friends, going to parks, forests etc. I don't live in an area where I could go without I don't think.

There may be bits that are slightly inaccurate but built it going through pay slips etc.. my response to your comments;

Groceries - It's likely that I could perhaps but this is shopping at Aldi and includes literally everything I eat and my children that are with me half the time, includes my packed lunches, I make picnics for my kids to save on food when we're out etc.

Clothing - I left it blank and it told me to divide estimated yearly spend by 12, I don't have the money for clothes, I usually buy a paid of shoes a year, primark t-shirts if I need them and maybe a paid of jeans.

Petrol - Touched on the car further up, I don't think I could do without.

Insurance - missed, this is 68pm

MOT - I don't save, but MOT at £45 plus I usually need something done like brake pads this year, shocks the year before. Averaged it out and divided by 12.

Parking - I'll walk 10 minutes to save on £5 parking, usually find somewhere!

Travel - Very, very rare.

Contents - Always in the back of my mind but best quote I can get is 18pm, feel I can't afford it.

Entertainment - Sometimes a little less, sometimes a little more but I don't go to many things that cost money, I'll go for a beer or coffee a couple times a month with friends or whatever, limit myself a lot.

Holiday - Cost of taking my children camping this summer divided by 12.

Debts
Wasn't sure on the interest, I couldn't track it down, definitely not 0!

EssexHebridean

js2017 wrote: »

Hi La Escocesa - Ok, I will keep that in mind, I'll hear them out but won't jump at any thing they offer.

Yes I think that's unlikely, but I wonder if I could get 2k, I'll be 100's better off without the O/D intereset to pay.

I have thought of it, it's the most expensive thing I own but it gets me to work, gets my kids to school, gets me and the kids about on the weekends, seeing family, friends, going to parks, forests etc. I don't live in an area where I could go without I don't think.

There may be bits that are slightly inaccurate but built it going through pay slips etc.. my response to your comments;

Groceries - It's likely that I could perhaps but this is shopping at Aldi and includes literally everything I eat and my children that are with me half the time, includes my packed lunches, I make picnics for my kids to save on food when we're out etc.

Clothing - I left it blank and it told me to divide estimated yearly spend by 12, I don't have the money for clothes, I usually buy a paid of shoes a year, primark t-shirts if I need them and maybe a paid of jeans. All of which have to be paid for - you NEED to start putting something aside for this

Petrol - Touched on the car further up, I don't think I could do without.

Insurance - missed, this is 68pm Yes - that makes quite a big impact on the SOA doesn't it! Have you used the comparison sites as per Martin's guide to make sure that this is the best you can get as that is a VERY high figure for insurance!

MOT - I don't save, but MOT at £45 plus I usually need something done like brake pads this year, shocks the year before. Averaged it out and divided by 12. Again,
all of which has to be paid for. You also need to factor in a service even if not annually bearing in mind you're on low mileage, but even every two years it's still going to be £75 - £100 a year to put aside to cover. Not servicing a car is a bit of a false economy.

Parking - I'll walk 10 minutes to save on £5 parking, usually find somewhere! Good for you!

Travel - Very, very rare. But happens occasionally - so has to be paid for?


Contents - Always in the back of my mind but best quote I can get is 18pm, feel I can't afford it. Seriously? I've NEVER paid over £100 a year for ours - follow Martin's guide re getting the best deal and make sure all the details you're putting in are correct. Honestly - you can't afford NOT to have this -
just imagine if the worst happens how much worse your situation would get overnight.

Entertainment - Sometimes a little less, sometimes a little more but I don't go to many things that cost money, I'll go for a beer or coffee a couple times a month with friends or whatever, limit myself a lot.

Holiday - Cost of taking my children camping this summer divided by 12. That covers site fees for a week, all food, travel to get there, any activities you do while there,
the odd ice cream or cold drink etc? Even a non-electric pitch on an average site will set you back around 315 a night now at the best so check the costs on this or you'll get there and end up spending money you've not got again!

Debts
Wasn't sure on the interest, I couldn't track it down, definitely not 0! No -
it most cetainly won't be. Look back at old paperwork on this to check, but their website suggests: 277.5% APR Representative :eek::eek::eek:

I totally hear you on the car - but bearing in mind you have it, might a move a short distance away make a difference to what you pay in rent? In our town you can rent a 2 bed flat for £700 PCM for example - but stray a few miles away closer to London and you can easily add 50% to that. A small saving on the rent would really help in exchange for potentially only a small increase in travel costs, and would make better use of a tool you already possess - the car. how close to work do you live currently?

js2017

Hi EssexHebrid -

I'll keep my wits about me in the bank, was feeling like I'd go for any deal to get me out but I'll be cautious.

It's not that I'm saving those amounts, just what I can end up paying over the year divided. If I'm hit with a £200 bill from the mechanics it just went further into overdraft.

Mobile - an easy fix. I'll be sure to look around next renewal instead of sticking with o2.

Groceries - with a bit of work you can probably shave that a bit. I probably can, I used to spend 320 easy, but I'm sure I can trim more.

Haircuts: If that's just for you then you can reduce that I'd think. Possibly, I'll look around, I've been tempted to just buy clippers and buzz cut, but daunting though.

Presents - think of ways of doing cash-neutral bits and bobs for the children - is there an activity idea you can come up with that can be done on a shoestring yet they will love for example? For everyone else it needs to be a "Sorry but I'll not be doing presents this year" scenario. That's what I do day to day generally, they're just as happy with a trip to the park and a picnic as they would be going somewhere else, I'll be doing xmas as cheaply as I can.

Can you cut petrol costs at all? Are you close enough to work to walk for example? Your mileage clearly isn't all that high currently as you're using less than a tank of fuel a month. I'm about 7miles from work, so close, but not walking distance, I have thought about getting a bike but don't have the money lying around to get one.

That electricity bill ought to be able to come down a fair bit - check you're on the best tariff for a start. Will be looking at this today

If the Pounds to Pocket loan is a payday type thing then I suspect the interest is high so look at throwing every penny at that first assuming you can get the interest frozen on that O/D. I agree that if you do qualify for any of the money transfer cards then trying to get some of that O/D transferred over is the best plan for that. It's not quite a payday loan, but is one of those horrible high interest providers that market to desperate people for crazy interest.

Benefits - The whole process is geared toward the mum unfortunately, she gets the benefits + my child support.

Council tax - paid over 10, I'll look into the 12, hoping I can just call and ask.

Electric - I actually thought that was good, it literally powers the whole house, appliances, heating, water. I'll check my tariff out.

Mobile - I'll shop around, I think I can actually change it again in a couple months.

Groceries - Already shopping at Aldi, but yes includes everything I eat, including packed lunches and about half of what my kids eat.

Car Insurance - I missed, this is 68pm.

MOT - I don't save, but MOT at £45 plus I usually need something done like brake pads this year, shocks the year before. Averaged it out and divided by 12.

Contents - Always in the back of my mind but best quote I can get is 18pm, feel I can't afford it.

Haircut - No this is just me, hair cut about once every 5 weeks.

Entertainment - Sometimes a little less, sometimes a little more but I don't go to many things that cost money, I'll go for a beer or coffee a couple times a month with friends or whatever, limit myself a lot.

Holiday - Cost of taking my children camping this summer divided by 12.

Pounds to pocket not 0%, I found a representative APR and another one, I wasn't sure which to use so I left blank.

js2017

I wish I could move somewhere cheaper but I'm to the SE of London, about 30 miles out, it doesn't get cheaper and my children, family, friends, work are all here, + I have no deposit!