Swallowed up by Overdraft - Help!

JB1991 · 16 May 2018 at 8:37AM

Hello,

I have been a long time viewer of these forums, however have never felt the need to sign up to them. I have always managed my money fairly well, but recently have started renting my first home with my long term partner, and over the 6 months of rented bliss, we have both crept further and further into my account. The problem stemmed from me being certain I was going to get a payrise but unfortunately it didn't happen, and then we had an incident with the car which needed sorting.

Really I don't fully understand the options that are available to me. I have run through the usual steps of trying to get a 0% interest credit card and moving the amount over to there, however it seems because I have been in my overdraft on and off for a few years that I cant be accepted. At least that is what I was told by my bank (HSBC). I have read about speaking to the bank about it, but is this actually worth it? What steps do they take to deal with this?

Currently I take home £405 a week, and have worked out with all outgoings (Rent/car/hoursehold bills/food) I am left with £55 of that. My partner is left with a similar amount. I am in my overdraft as of Friday by £3200, with my rent/car payment this will drop to the 4k mark. The Overdraft fee is around £50 a month.

At the moment I just don't see a way out of it. There is no light at the end of the tunnel so to speak. My partner has gotten over a long stint of suffering with severe anxiety, the house was a massive massive move and we have been incredibly happy up until this point. I wake up feeling sick to my stomach and cannot focus on anything else. I know they perhaps seem like trivial debts to some folk on here, but for us it is a big thing.

Any help is massively appreciated.

JB

SWSEGirl · 16 May 2018 at 9:41AM

Hey there,

I've been in a similar position myself in the past - I lived in my overdraft for 7 years, and was too afraid to check my bank balance for 2 years

Why don't you try posting an SOA & people can help advised based on the information?

National_Debtline · 16 May 2018 at 10:10AM

Hi JB1991 and thanks for your post.

This doesn't strike me as a situation that cannot be resolved one way or another. It may end up being the case that you will need to start banking elsewhere and then negotiate to pay off any outstanding overdraft on affordable terms - however, as SWSEGirl suggests above, if you can post a Statement of Affairs (SOA) here it'll give us all a bit more insight into how best to support you.

Link if you're not already familiar with it: http://www.stoozing.com/calculator/soa.php

Dennis
@natdebtline

Dobbibill · 16 May 2018 at 11:14AM

Hi JB1991 - welcome to the forum.

I agree posting a SOA is the first step. Make sure it's as accurate as possible - use bank statements or receipts etc. There is always a temptation to create a wish list when doing a SOA which is slightly counter productive.

There is always a solution. Don't worry - fresh eyes can sometimes see things from the outside looking in that can't be seen when you are looking at a situation from the inside.

kevinb1967 · 16 May 2018 at 11:21AM

I can't speak for HSBC but we had a similar situation with Barclays (£2800 overdraft, £90 fees per month). I called them and explained that we couldn't reduce the overdraft because of the fees. They put the overdraft onto an interest free loan over 4 years. We opened up a new account, still with Barclays and the overdraft is steadily decreasing.

MEM62 · 16 May 2018 at 11:35AM

JB1991 wrote: »

Currently I take home £405 a week, and have worked out with all outgoings (Rent/car/hoursehold bills/food) I am left with £55 of that. My partner is left with a similar amount.

If we assume a 4-week month you outgoings are £1,400 per month. If you partner is in a similar situation that's £2,800, which seems very high.

You need to post an SOA so we can see where your money is going.

EssexHebridean · 16 May 2018 at 12:29PM

This was the situation that prompted us to become active on here too - not so much the being turned down for 0% cards but that thing of creeping into overdraft use.

Get the SOA posted and let's see what you can do to cut down on what is going out - I suspect a lot may be to do with thinking you could continue to live the lifestyle you lived when paying keep to parents, when your outgoings are now higher, and a sensible budget will sort things for you.

ReadingTim · 16 May 2018 at 12:41PM

The only way out of it is to spend less than you earn. It's basic maths, not rocket science:

Earn £100, spend £95 = savings of £5 = good.
Earn £100, spend £105 = debt of £5 = bad.

It really is that simple.

So, you need to do an SoA, which is basically a budget which includes every single thing you spend money on to see where you stand. Keep a spending diary to see where every single penny goes, as you're going to need to know. Armed with that information, you can see where you need to cut down to ensure the books balance - it's amazing how many people are in debt, yet pay expensive mobile phone contracts, have sky TV or gym memberships which are completely unnecessary....

fatrab · 16 May 2018 at 2:46PM

So you have a surplus of £55 per week and your partner has the same? That's £110 per week. So every 4 weeks you have a surplus of £440. At the end of each month reduce your overdraft by £400. In 10 months time you won't have an overdraft.

If you can cut your outgoings, or increase your income, you will pay it off sooner. As mentioned above, it really is that simple.

Best wishes

JB1991 · 24 May 2018 at 10:52AM

Ever so sorry for the long response guys. Thank you all for your help and advice. I think possibly when I was posting this I was just having a particularly bad day and let the pressure and stress of the situation get to me. I am usually quite a laid back person, however this has possibly lead me down the road to getting into this mess.

I have realized something needs to change however. Here is what everything looks like:

My monthly income - £1,620

Monthly Outgoings:

Mortgage/Rent - £700
Car Finance - £200
Council Tax - £165
Electric - £26
Water - 16
TV License - £12
Broadband - £16
Phone - £40
Food - £120
Car Insurance - £60
Car Tax - £12
Overdraft Fees - £45

Total: £1,412

Overdraft Amount - £4513/£5000
Amount Remaining - £208

I didn't include my partner in this as she is in a similar situation, albeit not quite as far as me. I want to focus on my situation in particular.

Unfortunately my rent/car/bills just came out which dropped me down into the overdraft a bit further. I hate being in this situation, so I am looking at making as many changes as I can.

Already I have started making calls regarding trading the car in and carrying on a new finance on something cheaper. I rung the dealership and they reckon I have about a £3000 negative equity at the moment however, so not sure how practical that will be.

I have also made the decision to look for extra work. I have a job interview lined up next week for part-time contract work which potentially could see an increase of my wages by £100-200 a week depending on how well it goes.

I have also put some items up for sale on Ebay to the value of around £200.

We managed a weekly food shop of £35 this week rather than the previous £60 as well.

Everything is coming together, and I can see how to get out, however it just at the moment seems to be a very long road ahead. I am appreciative of the fact that looking around on these forums there are people in a lot worse situations than myself, and I don't want pity because I did this to myself.

System · 24 May 2018 at 11:54AM

Okay - I think your out-goings for a person earning 1600 a month are too high. You've got some extravegances on there that I would have on that wage, namely a car on finance.

JB1991 wrote: »

My monthly income - £1,620

Monthly Outgoings:

Mortgage/Rent - £700 - very large for your earnings - nearly half of your money goes on rent. Can you find somewhere cheaper? Get a roomy?
Car Finance - £200 - huge on your wage. If this is a three-year PCP, negotiate to hand the car back and get a something that costs £1500. If it's a five year car finance and then you own it, it's probably a £15k-£20k car?...something you cannot afford on your wage.
Council Tax - £165 - again this could be lower with a smaller home
Electric - £26
Water - 16
TV License - £12
Broadband - £16
Phone - £40
Food - £120
Car Insurance - £60 - this is high. Are you a newly qualified driver? Depends what car you've clearly splashed out on!
Car Tax - £12
Overdraft Fees - £45

Total: £1,412

Overdraft Amount - £4513/£5000
Amount Remaining - £208

Swallowed up by Overdraft - Help!

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