Fear of overdraft

Donz71

This might sound ridiculous but I'm a 47 year old care worker so on quite a low income and scared to go a overdrawn. Every month I struggle to make my wage stretch yet I've a £1000 overdraft and the first £250 is fee free yet I'm scared to go a penny overdrawn. The thing is from a young age my parents have drummed into me to live within my means and never go overdrawn but my kids are grown now so I don't get tax credits or child benefit anymore to subsidise my income so it's harder. They are both at university now. I'm good at budgeting and my credit score is good but I go without a lot. Should I stop feeling fear and guilt and just use it if i need to?

Neil_Jones

It's there if you need it. But if you were living in it then you would have a problem.

[Deleted User]

Maybe speak to a doctor about your anxiety or ring 111.

dreaming

My advice would be to only use the overdraft in an emergency. The reason for this is that once you are overdrawn, unless you increase your income or decrease outgoings, you will always be playing catch-up.

For example, say your income is £1000 per month and your outgoings are the same if you budget carefully. If you are tempted to use the overdraft one month, even just to the fee-free limit, then next month you either have to live on less than £1000 in order to repay some/all of the overdraft, or you live on the £1000 and accept the overdraft will not be paid off, or (worse case scenario) you exceed your income again and increase the overdraft. Now, not only do you have fees to pay but there is a chance the bank could decide to withdraw the overdraft facility and you would really be struggling. The best thing, if you are able, is to increase your income, decrease outgoings , or better still do both if possible. I would only use it in a real emergency and pay it back as soon as possible.

Willing2Learn

Hi Donz71 and welcome to the forum

Donz71 wrote: »

This might sound ridiculous but I'm a 47 year old care worker so on quite a low income and scared to go a overdrawn. Every month I struggle to make my wage stretch yet I've a £1000 overdraft and the first £250 is fee free yet I'm scared to go a penny overdrawn. The thing is from a young age my parents have drummed into me to live within my means and never go overdrawn but my kids are grown now so I don't get tax credits or child benefit anymore to subsidise my income so it's harder. They are both at university now. I'm good at budgeting and my credit score is good but I go without a lot. Should I stop feeling fear and guilt and just use it if i need to?

Generally speaking, an overdraft should only be used in an emergency, when there is no other alternative. A temporary 'sticking plaster'.

Maybe there is something that can be done to your monthly budget to help your money go further. You could post up your monthly Statement of Affairs either on this board or on the DFW board.
https://www.lemonfool.co.uk/financecalculators/soa.php

Donz71

Thanks for your reply but I would never use the whole £1000. That literally is for emergencies. An example is my funds are low now and I'm going away this weekend and worry about spending money. It's not an emergency but I'd like to use my overdraft without feeling guilty. Maybe about £200. I get paid next week so it wouldn't be for long. I know this is a petty anxiety compared to others. I guess what I'm asking is is it ok to do this every month as long as I'm sensible.

Willing2Learn

Donz71 wrote: »

I guess what I'm asking is is it ok to do this every month as long as I'm sensible.

There is no definite answer. Using an overdraft every month could indicate that you are not able to live within your means. It can be a rocky road ahead and sometimes difficult to navigate through. You have to think about this decision, considering all pros or cons.


That would probably be the main reason I would do an SOA (without sharing). I would be able to easily identify where funds are possibly leaking out from my monthly budget...

dreaming

Donz71 wrote: »

Thanks for your reply but I would never use the whole £1000. That literally is for emergencies. An example is my funds are low now and I'm going away this weekend and worry about spending money. It's not an emergency but I'd like to use my overdraft without feeling guilty. Maybe about £200. I get paid next week so it wouldn't be for long. I know this is a petty anxiety compared to others. I guess what I'm asking is is it ok to do this every month as long as I'm sensible.

Not a petty anxiety at all, but I would still not use the overdraft if at all possible. A lot of debt starts out as a temporary measure with people thinking that they will pay themselves back next payday, but then what happens if something else comes along next month and you do the same thing? Then in the event of a real emergency when you do need to use it then you could find yourself up to the overdraft limit very quickly.
However, it is not for me to tell you what to do. All I (or anyone else) can do is to say what I would do in your shoes, and I would not have booked to go away unless I knew I had the funds in the first place.

eskbanker

Donz71 wrote: »

It's not an emergency but I'd like to use my overdraft without feeling guilty. Maybe about £200. I get paid next week so it wouldn't be for long.

But if your monthly cycle normally involves starting at zero, then being paid, then spending it all down to zero again, then every penny of your salary is normally spent.

Where would you find the extra £200 from to repay the overdraft while making all your normal monthly purchases?

I don't wish to be alarmist or to feed anxiety, but a comment like "I get paid next week so it wouldn't be for long" seems to miss the point....

scaredofdebt

I know it's easier said than done but try to save some of your money when you can into a separate account and use that instead of the overdraft.


You can get apps that are quite useful for this type of thing, they just put the odd £1 or two aside when they think you can afford it, Moneybox, Chip etc are OK, worth a look.


Moneybox takes about a week to get the money back out so just make sure you are OK with the timescales, or just use a bog standard savings account with your bank.

Ergates

Donz71 wrote: »

Thanks for your reply but I would never use the whole £1000. That literally is for emergencies. An example is my funds are low now and I'm going away this weekend and worry about spending money. It's not an emergency but I'd like to use my overdraft without feeling guilty. Maybe about £200. I get paid next week so it wouldn't be for long. I know this is a petty anxiety compared to others. I guess what I'm asking is is it ok to do this every month as long as I'm sensible.

Honestly - that doesn't sound like a very good idea. People who end up in debt don't generally do so all in one lump, it happens in increments - a couple of hundred here, and couple of hundred there.