Living on Overdraft....

iVillage Member
Registered: 11-19-2004
Living on Overdraft....
9
Tue, 09-27-2005 - 7:39pm

Hello! I am new, and I need some advice.

I am single/never been married/no children. I live alone. I work F/T and make about $34k a year. I do have a chronic medical illness that costs me about $100/month in co-pays and meds.

I filed Chp 7 BK in January of this year on almost $50k in debt. Most of it was medical bills, but there were also some CC and a few personal loans. Citibank had filed a lawsuit against me for a Visa card, and I had two other judgements already against me, waiting to be "satisfied" and I couldn't afford it all.

I was discharged in May.

Now I have to pay:

Rent $400
Utilities $120 (power, water, cable, dial up total)
Cell Phone $75 (doubles as a land line/long distance)
Food $100 (yes, I eat on $100/month, LOL)
Pet Care $50 (Food, flea prevention for three animals)
Visa $15
Bank Loan $73
Car $261
Car Ins $180 (The BK caused the rates to rocket. Cheapest I can get)
Medical $100 (co-pays, meds, etc.)
Gas $200 (I commute to work 45 miles one way, fill up twice a week)

That's $1574/month. I take home about $1100 a payday. Piece of cake, right?

Well, what kills me is "incidentals". The little things. Birthdays, car repairs, glasses, etc. And I am NOT an extravagant spender!!! I am the Queen of the Dollar Store, LOL! :)

I have a GREAT bank. I opened an account there while in the middle of BK. (I hadn't had a bank account for almost two years due to a bounced check/ChexSystems and bad credit.) The bank is a non-ChexSystems bank, and have been WONDERFUL to me.

I have direct deposit, and a checking and savings account. Checks, ATM card, and VISA check card.

Also, two weeks after BK, they issued me a non-secured Visa to rebuild my credit. Low limit, $400, and good APR 8.0% (for BK). They also gave me a car loan for a used car (9.0% APR) and a personal loan to pay the back taxes that weren't discharged in the BK ($500, 7.0% APR).

Anyway, MY CURRENT problem is that back in July, I was the Maid of Honor in a wedding. At the same time, I had just been discharged. My car died. I had to buy a new one. And I tore the ACL in my knee and had to have surgery. I felt like I was HEMORRAGING money.

I called the bank one day to ask about overdraft protection. I was given $300 on the spot.

A couple of weeks later, I had used the OD to cover property taxes on my "new" used car and the first insurance payment due on it. I was BROKE and payday was a week away.

The bank was super nice, and said I could get a "temporary OD" till my payday equal UP TO the amount of my direct deposits--$1100. I could get it in cash from an ATM, or to cover a Check card transaction, etc. And there was a flat fee of $14. (That beats a payday check loan fee, I know that! LOL) So I took out $50 cash to cover me, and when my next check was deposited, my account was just debited for the amount of the temporary OD.

Problem is, it has become a WEEKLY thing. I need money for gas--call the bank. Doctor's appt..call the bank. I am living on OD as I got up to $800 one payday (I know, I know) and when my check was deposited, I only had an extra $300 left. See the cycle?

I can't get a second job, as I work 12 hour swing shifts. I get paid WELL and love my job, and I DO follow a budget, but ONE MONTH got me "off track" and now....

Total, I have less than $3000 in debt (medical bills, Visa, loan). That doesn't include my car loan of $10,000. I am not about to "go under", but I want to stop living on OD and pay it off.

Any ideas? Or is it such a bad thing...I keep thinking, for $14 a payday flat fee, I am getting a cash advance from my bank. They are good to me. There are no car titles, or payday check places involved. Or family members. And I get a big tax refund in Jan (I file early) and can pay it off then. Three or four more months...Is is such a bad thing?

I don't WANT more debt. That much I know. But I have a good relationship with this bank, and a stable job. I pay my bills on time, and plan to have a yard sale soon to make money, and have some house/pet sitting jobs coming up over the holidays to make some money soon, too.

What does everyone think? Is living on OD so bad? Is it so bad to think I can wait and pay it off in Jan?

Thanks for reading.

KN

iVillage Member
Registered: 05-11-2005
Wed, 09-28-2005 - 4:48am

Hi singlescgal,

I know the problem. I live on overdraft too and I hate it. So the first thing we are doing is getting rid of it. It is hard to do that, unless you get an extra amount, like a Christmas bonus or what not. That is pretty much the only way you can do it, because there is no money left to pay it down with. Another thing you could do is, to work out a payment plan with your bank to lets say lower your overdraft 25 each month or 10 each month, whichever you can afford. What would happen is that every payment or bill that goes over the allotted amount will not get paid. I hate my overdraft and I can't wait to have mine gone, because it is a vicious cycle that is extremely hard to get out of.

Sushi

iVillage Member
Registered: 11-21-2003
Wed, 09-28-2005 - 6:29am

Hi singlescgal,

overdraft sucks, you are right. How much interest do you have to pay for the allowed od? I 'refinanced' about 3.5 k in overdraft by taking a 'real' loan on a much lower interest rate, but I doubt that would work for you.

Looking at the expenses list you posted, I can come up only with two ideas how to lower your expenses: Utilities (thogh 100$ in total looks pretty low already), and gas for the car - have you tried to car pool with someone? Maybe you have co-workers living close to you who share your shifts? Just an idea.

The yard sale and pet sitting sounds like a great idea to raise your income. If you know you will be able to pay back the overdraft money in january, and that should be okay, but I caution against taking more money from that bank. My bank is absolutely wonderful in giving out overdrafts, too, and it has brought most of my actual debt - a lot less than my use of credit cards :-)

Greetings, and welcome to this place,
Jordis

ivy_jordis

iVillage Member
Registered: 03-27-2003
Wed, 09-28-2005 - 8:21am

In my opinion, I think banks know they are trapping people into an endless cycle when they offer credit cards and loans to people who are desperate and struggling.
Here are a few suggestions;
Can you cancel the cable - even temporarily?
Can you review your w-2 and see how much you are withholding in taxes? If you get at return at the end of the year, it might be better for you to decrease your withholdings and have more cash every month. $34,000 per year is $2833 per month before taxes. It seems odd that you are loosing 60% of your pay to taxes.
Carpooling or vanpooling (if it is offered in your area) are a good way to reduce expenses.
Can you work overtime or get a part time job?

Good luck,
Sandra

iVillage Member
Registered: 11-19-2004
Wed, 09-28-2005 - 6:45pm

Thanks for the reply.

I make $34k gross, not net. So net is about $24, $25k a year (varies). It's about 25% of salary that goes to taxes, and that is about right. I have an accountant (my dad pays for him) who does all my W-2's and stuff.

I can't work another job, although I wish I could! I work for state government, 12 hour shifts, which swing (from 1st to 3rd shift) every 30 days. Yes, it is crazy! LOL I get about 12 hrs of OT on each paycheck usually. That is nice. And one day of OT is about equal to what I would get working 20 hrs/week PT somewhere else, you know? Unless I waited tables, but with my knee injury, I can't put weight on it. I can't even exercise right now...

My cable is basic. $30/month, and it includes dial-up Internet. Most expensive utility is power...I live in the South, and it's been hot, LOL. My a/c is set on 78, but I do keep it on 75 when I sleep. I know, I know. But I cut my food expenses back to pay the power bill...I would rather be a bit hungry than hot and not sleeping well.

I would LOVE to carpool, but nobody I work with lives anywhere near me, and I work such weird hours, nobody I know (I even put an ad in the paper!) could work around my hours.

But THANK YOU for the suggestions! It means alot that you took the time to respond.

KN

iVillage Member
Registered: 11-19-2004
Wed, 09-28-2005 - 6:49pm

Hey Sushi! (Love the name, LOL!)

THANK YOU for replying. God, it is so nice to know that I am not alone. Ever feel like you are the ONLY one in your situation? LOL

I called my bank today. I can't cancel the OD, as I #1) can't pay it all off right now, and #2) am LIVING on it, LOL. But what I AM going to do, is every payday $50 of my direct deposit is going to go to my savings account. I asked that the account be "blocked" from withdrawals via ATM, etc. I am going to try and save up enough to pay off the OD (currently at $800) before Jan, or at least a good chunk of it.

I feel SO much better. Thank you again, and good luck to you.

KN

iVillage Member
Registered: 11-19-2004
Wed, 09-28-2005 - 6:55pm

Jordis:

Thank you for your response!!

I don't pay interest on the OD, thank goodness. It's a flat fee if I use it. $14 per pay period. With two pay periods a month, I am paying $28/month on about $1600. So I guess percentage wise, that is...........like .015% of the money borrowed.

I mentioned in another reply about gas...can't carpool (although I have tried--ran an ad in the paper looking for someone) due to my weird hours and swing shifts. And my utilities are bare bones....hopefully, with winter power will be cheaper as I won't have to run my a/c so much.

I feel weird thinking that OD at $28/month is "better" than racking up CC debt...but I didn't realize that other people used OD like I do, too. My CC, BTW, has a zero balance. I am saving that for an emergency....

I did call the bank today and set up an automatic savings deposit (to help pay off the OD) and they mentioned in a couple of months, I will probably be eligible for a renewal of the personal loan I took out in May (it will be paid off by then) so a loan may not be out of the question totally...

BUT THANK YOU AGAIN for responding. I appreciate your ideas.

Take care!

KN

iVillage Member
Registered: 05-11-2005
Thu, 09-29-2005 - 1:15am

Hi KN,

I love sushi... so the name really goes with me :). Haven't eaten any in a long time, no money...go figure, lol.

Anyway, great plan. Save and then put it back in the overdraft. I live in Germany and over here having an overdraft is something normal. Just about everyone has a certain amount they can overdraw their account, I think usually up to 3 times your income. Jordis, correct me, if I'm wrong. Anyway, it is a cycle that is so hard to get out of, cause sooner or later you start living on the stupid thing and then you are caught and the banks love it. I have a Christmas bonus coming in November and then some more in March, which will take care of my overdraft. As soon as it is down, I'm gonna go to the bank and have them limit it to 500 Euros, so that a) it will be easier to pay down and b) I have something to fall back on in case of emergencies. Eventually, when we are out of debt, I want it all gone.

Another thing I do is, I have a piggy bank and I save everything I can and then have it emptied and put toward the credit card. I'm beginning to think that saving as much as possible and then making payments on things is pretty much the only way to get things done. So I snowflake my piggy bank will get emptied once a month, regardless of whether it is full or not and whatever is in there will go to get that stupid CC down. Man I can't wait to be out of debt... it sucks....

Okay got to run, time to go to work it is 7:11 am here and boss wants me to be at work by 8. Luckily I live close to my work and it only takes me 15 minutes on the bus and walking (5 minutes on the bus, 10 minutes walking) cause I don't have a car, which is actually better for my wasteline. LOL. Gotta find something positive in all of this.

Have a great day.
Sushi

iVillage Member
Registered: 09-25-2003
Thu, 09-29-2005 - 2:45pm

I have to say, i think your system of living on overdraft seems to be better than mine, which is credit cards right now.

I know what you mean about incidentals. It feels like there's a slow leak somewhere, and I can't quite catch them all. I am trying right now to keep a log of everything we spend money on, down to the dime. (The depressing part is, it's stuff like toilet paper, laundry soap, food, and lightbulbs).)

Sorry I don't have anything helpful to add, but I thought I'd pipe in with a me too.

iVillage Member
Registered: 12-05-2004
Thu, 09-29-2005 - 5:19pm

This is what I try to do with our budget, also. If my dog's nails need to be clipped, I budget for the small $4.00 that it will cost (I don't do it myself because my sweet little toy-breed turns into cujo when it's nail trim time ;-D). If I know I am running low on postage stamps, I will budget for those too. Not a major expense, but it all adds up.

My problem is with 'expected' but 'came too soon' expenses. LOL! For example, I knew my son was going to be in a karate tournament in mid-November. It was out-of-state, and I knew I'd have to make my hotel reservation well ahead of time, but I knew that registration for the tournament would be on-going until the tournament date. At least that's what I thought, considering the last five tournaments that we've been to have allowed people to register up until 2 hours before their event started. So I budgeted the $70 that I'd need to pay for his registration for early November. Imagine my surprise when I arrived at his karate school and found out that registration payments must be made by October 15th!! Why such an early cut-off, I don't know. But that was $70 I didn't think I'd be parting with so soon. Put a dent in the budget.

Pat :-D