Money management is something we can never be too good at. Maybe we’ve been hit with unexpected payments or just given in to the many discount codes from ASOS, Missguided and PLT and found ourselves in that dreaded overdraft.
We then come around to try to pay it off and it seems to be a never-ending struggle. Hopefully some of these tips will help to prevent this and get you out of your overdraft quicker and relieve some pressure.
Internal standing order
Set up an internal standing order to your bank account with the overdraft. Look at how much money you have coming in and how much you have coming out. With the money you have left, wisely calculate how much you can afford monthly and set up the amount.
It may seem disheartening to see that money leave but just remind yourself that it’ll be temporary. Short term pain for long-term gain. It will also show you an amount that you’ll be able to regularly save when you’re out of your overdraft.
Get a new bank account
If your overdraft is not interest free see if you can open another bank account with an interest free overdraft. You can then use that to pay your original overdraft. Helps to relieve a bit of the pressure as your overdraft amount shouldn’t increase (provided it’s paid off within the interest-free period).
Be sure to try to pay it off within the specified interest free period as this will also help prevent damaging your credit score. If this isn’t possible, try to find a bank account offering an overdraft with less interest than your current one and apply the same principle.
Get some more money
Increase your income. This may be easier said than done but there may be ways. You may be fortunate enough to be eligible for a promotion with a pay rise. Have confidence in yourself and go for it.
If you’re not in that position, there are other ways to increase your income, even if it’s just temporarily.
For example, you could do some freelance work or ask for overtime at work. Any money you earn from this you should put towards paying off your overdraft.
Reduce your spending
Cut out unnecessary spending. More often than not, we like to treat ourselves. There’s nothing wrong with treating ourselves especially as life can get difficult and stressful and we all deserve enjoyment.
However, ‘treating ourselves’ can be used as an excuse for reckless spending and often involves using money we don’t actually have. As I’ve mentioned before, short-term pain for long-term gain.
You may just have to ignore the next notification you get offering discount on items you don’t currently need. There’s no point borrowing money for that short-term satisfaction when there are cheaper ways to also treat yourself.
Maybe you can freeze or cancel that subscription service temporarily until you’ve paid off your overdraft.
Do you need an overdraft?
Get rid of the overdraft option. For some people, knowing that they have an overdraft available is too much temptation. If you find it difficult to avoid using an overdraft and struggle to pay it off, don’t have one for your account. Once you’ve paid it off, contact your bank and ask for it to be removed.