Overdraw on creditcard or overdraft??

C

Chinaflower

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my husband is out of work since 2009 (just got low paying partime work) & I only work partime. We are fortunate (due to his previous earnings) to have overdraft facility 25K & credit card limit 15K. Our mortgage is half my pay, and despite cutting back we are short approx euro 1000 each month. We are nearly very much overdrawn & I dont really understand how interest works. Would I be better to start using our credit card (paying only min monthly balance) rather than continuing to use our overdraft? Both are 10% rates. any advice would be great.
 
Really you shouldn't use either of them to pay the mortgage, have you approached the lender to try and reduce the payments. You will only end up worse off when you have maxed out card and overdraft and are trying to pay it back at 10%
 
my salary pays the mortgage, but with whats left we just cannot survive so have had no choice but to use overdraft/creditcard in recent months. I have opened dialog with bank (NIB - very sympathetic) who have suggested restructuring mortgage and a loan to pay off overdraft but with him only having temp job for 3 months I then could not pay the loan so would be back to square 1. sounds like I should pursue the restructruing mortgage route sooner than later...........its just that its so final I am concerned that this is my last option.
 
Go for as much restructuring as you can get, do not if at all possible use the card/overdraft to prop up the household income, I know it is hard but it will just be worse in the long term. The mortgage payments are the ones that will have to be reduced to leave sufficient funds for your other day to day requirements. I presume you have reduced all expenses that you can, bank will want to see that you have taken all steps you can to reduce costs but I would push them to change payments to what can realistically be afforded.
 
Chinaflower said:
...who have suggested ... and a loan to pay off overdraft but ... I then could not pay the loan so would be back to square 1. ...
Click to expand...

Don't forget that the exact same thing goes for credit card or overdraft. If you couldn't pay back a loan then you won't be able to pay back an overdraft or credit card (both of which presumably will have far higher interest rates than the loan would).

Have you had a look at the money makeover section? If you were to post more details people might be able to come up with other suggestions for ways out of this for you. I'm struggling a bit to understand, for example, how you have a shortfall of 1,000 euro every month after you pay your mortgage. Or have I misunderstood and it's before you pay your mortgage? But obviously I don't know your situation - maybe you have twenty kids, four dogs, ten cats and a goldfish to take care of. Often an outside viewpoint can help you find ways to cut back that hadn't occurred to you though. Here's the key post on which info it's useful to give.

As someone who got into debt through just not managing money properly and spending a little bit more every month than I earned, this during the 'boom' years and I'm only now coming to the last few months of finally clearing everything, I would strongly recommend doing absolutely everything you can to not use your credit card or overdraft to finance your life if you cannot pay them off immediately or within a few months (which you say you won't be able to do). About two years of being careless when I was younger led to eleven years of debt (and I'm not talking about having gone wild buying designer gear every week, more like spending an extra fifty quid in the supermarket every few weeks).
 
"About two years of being careless when I was younger led to eleven years of debt (and I'm not talking about having gone wild buying designer gear every week, more like spending an extra fifty quid in the supermarket every few weeks). "

How could it possibly take 11 years to pay off that level of debt?
 
It's actually very easy. But my answer became very long and I don't want to hijack this thread so I have started a new thread instead, which can be found here.
 
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