UK overdraft - not offset, can anybody advise?

Hello all! I've tried YNAB over and over for ten years and never managed to stick with it longer than a month, sadly. 

part of the challenge is that in the UK overdraft is not at all like the US, and it's not an offset account either - it's just a capacity for checking account to go negative. It's not a separate account if anything. And it isn't an offset account. It's the same one. Lots of people stay in overdraft permanently, unfortunately. Monthly fee for it varies but can be like £35 , and low interest rate - so can be cheaper credit than credit card - although of course it varies a lot. 

anyway of course I want to get out of overdraft - which is why I keep trying YNAB - but it's tricky because the standard YNAB rules don't seem to let you budget at all while checking is in overdraft - and so the whole thing crumbles. 

I have read some forum posts about UK and Canadian style overdrafts and workarounds using a tracking account - I don't quite understand it though :/ and would be so grateful for a basic explanation. 

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  • Silver Deer said:
    Lots of people stay in overdraft permanently,

     I don't have the answer for you but wanted to say we lived in overdraft for decades.  But now, thanks to sticking with living on cash for the first couple of years and then moving into using YNAB, we now have over $5000 cash in that same account. 

    YNAB isn't magical. I would recommend trying to live paying only cash. Literally use envelopes and put cash in them. It is a real pain but it forces you to stay within your means.  Of course things like mortgage, electric bill, etc. were still paid from the bank account. But groceries, clothes, Christmas, spending -all done in cash. 

    Have you tried writing down your budget on paper? Start at the top with the balance you have in your bank account? If it is negative, then I would start with the maximum overdraft limit you have less the current overdraft. That's the maximum you can spend before money goes into the account.  Then write the next item that needs to get paid. And keep going until you run out of money or you run out of expenses.  If you run out of money, then you have to figure out what can wait.  Perhaps the cell phone bill gets paid a week late. Only you can make that list.  

    Have you tracked all your expenses in YNAB? What is the total for the month? Is it more than your income for the month? uh oh. That's a problem.  I am not going to write any more right now because I don't have enough detail.  

    If you want, I can help you with the above exercise.  I cannot describe the awesome feeling of having a positive bank balance.  Well I tried to describe it in this post

    Here is a YNAB help article for getting out of overdraft.  I haven't read it all through so not sure how helpful it is.  BTW, I am in Canada so our overdraft works like yours. 

    Like 1
  • Hi Silver Deer , see this response Hope it helps

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  • It's kind of you to reply  MXMom. But I think the issue is that writing it put on paper isn't really budgeting with YNAB... there as this amazing YNAB forum article I found that explained how to use YNAB to handle budgeting so that you could actually still budget and not just "don't budget anything in YNAB yet " which is the  usual  YNAB answer . I will try and find the page.

    • here it is - it's such a useful thread because it describes how people in this situation can actually sti use YNAB - it sounds so empowering and people on the thread we're very happy 

      Oh gosh why is it not linking 


      anyway the thread was very detailed but it says something about  accounts and I didn't understand it - hmm 

    • Silver Deer 

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  • I'm not sure if it will help or not, but being in the UK I understand the issue from an account perspective.

    So we have credit card debt, but also still use the credit card for daily purchases, which we pay in full when the statement is due. For me, I almost count the credit card as 2 accounts. One is a debt (this is the balance we have been carrying) and the other is standard credit card portion which is budgeted for in YNAB to prevemt further debt coming on. We then also budget a small amount to pay down the debt portion every month.

    Its the budget that matters more than the account balances. So maybe try this approach with the current account, as essentially having an overdraft and being in the red is very similar to having credit card debt.

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    • Hammett98 

    • Silver Deer thank you ! 

      I have found the thread and looked at it again and it's easier than I thought. 

  • Silver Deer said:
    writing it put on paper isn't really budgeting with YNAB...

     yes dakinemaui  is always very helpful.  I am sure that their advice will help you work through the overdraft situation.

    I guess I wasn't clear.  I am not saying DON'T budget in YNAB. What I am saying is do it on paper first because that eliminates the need to understand how YNAB handles certain things and gets the allocation of money out of the way. It is my suggestion for many people who get overwhelmed with setting things up in YNAB (regardless of overdraft) and they want to throw in the towel or do Fresh Start after Fresh Start.  It is the fundamental concept and can be done on paper but people get all confused and freaked out by the software.   

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    • @MXMOM I definitely think that is a good concept. I have made a basic list of our income and then all the expenses - trying to write the True Expenses basically - I haven't got all the outgoing expenses quite identified yet tbh so it might take a month to find out what our current bills are (I have been absolutely not ever glancing at bank statements), but it will be empowering to know.

  • That is brilliant - thank you !

    The 19th of the month will be helpful because it will show how low the overdraft goes (is it terrible to admit I haven't even looked at our account for months - I just ignore it Cos so stressful! Not to mention ignoring the credit cards! But I have found the courage from somewhere now so that is good).


    our paycheques start coming in on 20th - partner first , and then we are out of overdraft. And then my paycheque takes us even further into the black on 28th. But by 19th we are down again I think. Honestly even being able to say this is progress, because I didn't even know any of this until two days ago, I was that detached from ever looking at it, lol - so this YNAB attempt is already helping! 


  • Navy Blue Camera said: Hope it helps

     Aha YES! Genius! Thank you 

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