Sorting an overdraft

User9000

Hello,

Looking to get any guidance/suggestions please on how people might proceed.

In short, perpetually living in overdraft on a monthly basis and want it to stop - ideally not dragging it out for years but fully recognise a behavioural change takes time to embed.

So:
O/d limit - £2500 with NatWest
Monthly salary of circa £3200 after tax

Contribute £2,800 to joint account that covers mortgage, utilities, nursery, food shopping, joint expenses, stuff for child, and some towards a house saving pot. Partner also puts a proportion in but working part time. Currently targeting to clear a car payment at the end of a of a pcp plan and about 1.5k remaining that will free up some monthly cash.

30 hours free childcare kicks in this year, so expecting some reduction in expenses that can catch up the difference.

Circa 600 on credit card

Leaves about 400 in my own account monthly. That covers:
Mobile, Car tax, Car insurance, visit to a medical profession, circa - £150

Add in some day to day expenses, any leisure activity or presents/life events - birthdays etc, that's leaving me with little to sort the overdraft out. I get I've mismanaged and trying to take steps to sort this out. The credit card if nothing else is testament to that and it needs to change.

First step is go to the budget tool and properly set it all out. I'm wasting plenty of what's left on nothing of value I'm sure, so needs to be identified.

Charges for it appear relatively small, as within arranged limits and not breached, however all adds up with that and credit card interest, so keen to understand if a "reset" type solution would be appropriate. Can see all in somewhere about 15 a month between the two on statements.

Which is where I'm seeking guidance - read the articles on money transfer cards, small loans etc to get me back to 0 under a new budgeted world. Are they a good idea? Do I just need to suck it up and work through the budget and chip away at it for a longer period of time? What have people done before that's worked well for them? I don't want to extend my limit. There's a feeling that one big wipe the slate (appreciating the debt is still there!) would help resolve anxiety over it to resolve mistake of the past, but want to make sure the right thing is being done.

Any guidance/stories welcomed, thank you for reading.

theoretica

How much are you putting to house savings? It is probably not ideal to be prioritising savings over dealing with the debt - faster to get rid of the interest charging debt and then put more into savings to catch up.


As well as looking at 'your' £400 you need to look at the bigger £2800 - can your household be run more efficiently?

Candyapple

Consolidation loans do not work because they do not tackle the underlying reason of why you got into debt in the first place. This forum is littered with threads where people thought they could borrow their way out of debt and what was initially a small sum to deal with, they end up with double, if not triple, the amount of their debt by the time the bleep hits the fan and they have their lightbulb moment.

You need to fill out a statement of affairs and be honest and really see where your money is going. Then once that is done, any surplus at the end of your budget needs to be thrown towards your debt in order of highest interest first, whether that be your card or overdraft until they are both gone, after which you should get rid of your overdraft altogether to remove all temptation of being in that same position again.

You say you have £400 ‘spare’ each month but this fritters away to nothing, if you managed to reduce your budget and save £200 from this, that means your overdraft AND credit card would be cleared in 17 months total. That’s just one example, I’m pretty sure you could do it a lot quicker but you need to do your statement of affairs first.