Living in an overdraft
It's a depressing experience. The arrival of the payslip which may in the past have been greeted with much pleasure (or relief!) is now a reminder that most or all of it really belongs to the bank. We live in an overdraft.
Most overdrafts cost us money. We pay for the provision and we may face charges and/or interest payments for the use of it. Make no mistake - most of us pay for the privilege. The overdraft that was offered or requested is a normal bank facility and perhaps initially we thought was a good idea for an unexpected emergency. But somehow over the years it has become the norm. Our pay cheque may clear the overdraft but of course we have until the next one to survive - so we have to live in the overdraft.
There may be a special reason for us to extend our overdraft facility - a special occasion or a real emergency. We are accepted by the lender for an extension to our overdraft limit. We make full use of it, but we may be less determined to reduce the facility later. And the lender may be quite happy to prolong the arrangement as they are making money from the overdraft. Quickly we have a new norm - our pay doesn't even clear the overdraft and we are increasing our debt.
Living in an overdraft can make budgeting more difficult. It's not a question of how much do I have in my account that I can spend - strictly speaking we have nothing so what's the point in limiting myself? It's just an addition to the negative balance and we're out of control with it anyway.
Some people make paying loans and credit cards a priority and together with living costs find that they are increasingly dependent on their overdraft. It may be that we think all is well as all the debts are being paid - but don't forget to factor in the overdraft. If the figures just don't add up we may need to take more decisive action. Overdrafts are real debts that can be included in debt solutions. It will mean stopping using that account, and in all likelihood opening a basic account with a different lender with no overdraft facility, but it creates the opportunity for a fresh start and means we can start looking forward to payday again.