Massive Win for me today


(Jamie 🏳️‍🌈) #21

Congrats @LifeofRiley super job.

A couple of tips, if you’ll allow me.

Firstly, consolidation often ends up doubling the debt of folk who aren’t wary of it. It’s very difficult to borrow your way out of debt, but getting it on a 0% is the best start. Although I’d advocate a low overdraft limit, so you’re not charged by companies if you make a small error and inadvertently bounce a DD (Monzo won’t charge, but companies will, and possibly record something on your credit file) choose a manageable £50 or £100 overdraft limit and reduce your overdraft facility to this. Then you won’t get into a situation where you get back down to your full overdraft usage AS WELL AS your consolidation.

If you’re paying minimum payments on the CC, consider adding £1 – your credit file will be looked at less favourably if you just seem to be paying minimum amounts every month. Adding just £1 will make sure that particular flag isn’t applied every month to your file. Remember it’s best to divide up the balance into monthly amounts that will pay the balance off by the end of the deal.

Also, on the CC, don’t spend on the same card as your deal. You’ll find interest gets complicated if you’re not paying back your full balance every month. If you need a CC, for the Section 75 benefit for example, think about a different one with a small limit, and cut up the 0% card so you’re not tempted to use it again.

But well done on getting your debt under control. For every pound you stay in the black it’s money in your pocket, because it’s the opposite of my mantra of “if you borrow money today you’ll have less to spend tomorrow”.


(Richard) #22

Hi Hugo, don’t mind at all.

I think the first thing I should state is that I treated my overdraft like another debt. So I opened my Monzo account and manually moved everything across, with the exception of my overdraft, and treated my Nationwide account with the overdraft as a Credit Card.

(Should point out here, Nationwide have a deal whereby you get your overdraft for 12 months interest free, so I took advantage of that too)

Using Monzo, I generally set up different pots. All my bills (including Credit Card payments) are paid out of a joint account so a set amount go out to that and then I place the money into different pots, ie Food, Petrol, Christmas, Birthdays, Holidays etc. And before a weekly food shop for example I move the money from the pot into the main account, then put any left over back straight away. The ease of being able to do this has meant that I don’t spend money set aside for the weekly food shop on something it should not.

Anything that is then left, I used to pay off my overdraft. Every £100 I would reduce the overdraft limit down to that point so I couldn’t go over.

I was getting to a point where I was struggling to pay off my credit cards before the interest is due. So I managed to get approved for another credit card which I’ve used to consolidate all my debt onto and that has included my overdraft.

I then immediately closed the overdraft facility :slight_smile:

One thing I do like is the categories (although they should be more defined) based on the transactions, I know I have spent too much on eating out. That has helped me target where I may be overspending and those savings have gone towards debt.


(Hugo Cornejo) #23

That’s an excellent strategy, many thanks for sharing it!


(Richard) #24

Thanks @j06. I am always happy to take on more tips.

I like to think that I am quite good at consolidating my debts, in the last 2 years I’ve managed to pay off about £10k of credit card debt by constantly swapping over to cards with 0% interest and I’ve always ensured that I can pay them back. Never missed a payment either :slight_smile:

I understand your point of having a small overdraft but truthfully that is how all of this started for me, granted I was an immature student at the time but I don’t want to have the temptation at all. Would rather calculate my money monthly and ensure I have it in there.

However, I appreciate the tips. Truthfully I can’t wait to get the debt under control and to then start thinking about alternative ways of making my money work in my favour :smiley: :smiley: :smiley:


(Richard) #25

Sorry only just seen this.

There is also my wife’s debt too. I haven’t fully thought it out yet as it’s Xmas soon and my daughters birthday so money is being tightened up over this period.

But ideally I would like to ensure I have enough money to save as well. I understand what your saying though…both my wife and I have spent a few months literally doing nothing but paying off debt and it is unsustainable. You need to be able to treat yourself as well. So we will need to find a balance. Completely agree.

How did you get in control of yours?


#26

Yikes, currently a student and I’ll be being even more careful with using credit products from now on. Might give Nationwide a shout and ask them to lower my overdraft since I don’t actually need it currently.

If it’s not too much to ask, could you elaborate on the whole overdraft being a temptation thing? Was it just that you could spend more money than you have with essentially no short-term consequences?


(Steve Daniels) #27

When I was a naive student, I just treat my student overdraft as additional money to be spent at the pub. I was lucky and got a good job after graduating so was able to clear it before it became an issue, I think NatWest gave me three years iirc, which gradually reduced to help me pay it off, interest free.

It’s definitely a do as I say not as I do (or did) kind of thing, because I got to be honest and say I wouldn’t change how much about my uni days.


(Eve) #28

Congratulations!! Well done!!

Some of my friends at uni relied on their fee-free overdraft to pay rent and bills while at uni because their part time jobs didn’t pay enough, and since leaving uni get told they have only 1-3 months to pay it back… they’re now paying a ton in fees :cry: I’ve been trying to get one of them on Monzo since she’s paying so much in fees but she says it’s ‘effort’. She’s working 2 jobs and other freelance work to pay it off. I really hope this will be her story eventually!


#29

What bank were they with @evangelskies. I’m a little curious as normally student accounts have cooldown periods after you finish (Graduate Accounts) which lower the overdraft on a yearly basis to make sure you’re not screwed with paying it off.

What about Monzo would actually save them fees? Curious

That sounds pretty rough. Best wishes, working 2 jobs doesn’t sound fun.


(MikeF) #30

Well done for digging yourself out.

As a first year, my daughter is quite reticent to use her overdraft and I’m far happier with that approach than the alternative. Equally, her ability to maintain that for the entire course isn’t just about controlling spending but depends on her ability to work and my ability to give her money. There are potential hard choices to make and I don’t envy anyone in that positio.


(Jamie 🏳️‍🌈) #31

Sounds like you’re on top of it and I congratulate you. Well done, and enjoy your overdraft–less life.


(Richard) #32

Exactly that. I remember getting £500 interest free and I just utilised all of that on nights out. I had a job which kept me afloat but no-where near enough to pay it back (so I kept telling myself at the time)

Then one Christmas I got it increased to £700 to pay for presents for my family. Then after that it was to £1000 and it just kept snowballing and Barclays were more than happy to keep letting me take out more. I was too naive to think that it would cause me so much mental anguish after Uni. Truthfully, being in my overdraft didn’t cripple me financially like it would do others, I’ve managed it but I’ve been quite lucky in that regard. But it’s caused more mental pain than anything else.

It didn’t help that I graduated about a month prior to the financial crash in 2007 either, getting a job at all in Journalism (my degree) after that was beyond difficult. So my master plan to pay it off had stopped before it started.

All I would advise now really is go out and enjoy yourself, spend the money because Uni is going to be the best time of your life! But ultimately, have a back-up and one eye on what the future may hold after uni because it can be a shock.


(Richard) #33

Eve I’m sorry to hear that. It sucks it really does.

Please advise your friend to switch to Nationwide. It doesn’t take effort and she can get an interest free overdraft for 12 months, obviously depending on Ts and C’s though, she might not get approved but with auto switching she shouldn’t have to put in much effort at all and it will give her some respite.

Then I would genuinely open a different account, like Monzo and treat that as a main and the interest free overdraft account as credit card or loan. Every 12 months, use this site https://www.moneysavingexpert.com to see if there are other different overdraft deals she can get.

Can you give me her number so I can talk sense into her? (Mostly joking, partly serious, I know how much it sucks and it sounds like she has it worse than I did) :frowning:


(Jack) #34

Congrats!

Hard work pays off :slight_smile: :raised_hands:t2:
Hopefully this post becomes inspiration for others that one day they’ll get there :arrow_up:


(Richard Cook) #35

This is so great to hear, thanks for sharing @LifeofRiley :clap: :clap: :clap:


(Kieran McCann ) #36

It’s always amazing to hear people working hard to become debt free. Congratulations @LifeofRiley you deserve it.


(Eve) #37

She’s with Co-op. Think they gave her 1 month then extended it to 3 months as ‘goodwill’ by what I remember. She’s paying like £22-26 monthly in overdraft fees, so even if she maxes this out with Monzo she only pays £15.50. It’s a tiny decrease, but this adds up yearly. Plus, she doesn’t actively budget so I think their in-app tools would help. It’s frustrating since some months she can nearly clear it but then when all the bills come in she’s back on a huge sum again.
@LifeofRiley She’s quite resistant to tech though and doesn’t have any passwords on her phone, use Apple Pay, or have very much apps. I’ve tried recommending various fintech or budgeting apps but she isn’t keen! Don’t want to dictate her decisions so I’ve refrained from meddling since. Nationwide sounds like a better option if it’s fee-free, let her move over and give her sometime to get out of this cycle! I’ll tell her about your recommendations and ask her if she’s open to talking about it. She might be more receptive to someone who has been in her position! :blush:
Edit: I just remembered being incredulous over the fact that she didn’t take out an arranged overdraft and was just repeatedly dipping into an unarranged one last year. I’m not sure how exactly she’s managing her finances now.


(Richard) #38

I would definitely recommend she looks into switching. It’s so easy and everything is done for her.

Even if she doesn’t get out of the overdraft with Nationwide, its 50p a day so still cheaper than most other banks.

First Direct also offer interest free overdraft upto £250.

Show her this forum page :wink:


(Eve) #39

I will do, this is really helpful! Hope she takes up your advice!


#40

Thanks for informing me that the co-op are indeed trash.

Like, she finished her course and there’s no graduate account afterwards with a gradual overdraft decrease? That’s so strange. Both Barclays and Nationwide and Santander all have these last I checked.

That’s quite scary, it’s the first time I’ve seen a Monzo overdraft be cheaper than a normal one.

Yeah, actively budgeting is probably a good idea regardless of one’s financial situation, to be fair. Certainly stopped me from spending my entire paycheque. Although I do this just by feeding money into a Revolut and not allowing myself any more.