What to do if you've overspent – Martyn James

As regular readers might know, I’m a huge fan of the Eurovision Song Contest. Fabulously, I just got to fulfil my dream and spend a week reporting live from the event, attending the parties and – yes – watching the shows too.

If you only need a short breather to get back on top of your cash, ask your bank for a temporary overdraft for a month

Now the glitter and headaches are fading in to the past, I’m looking at my bank accounts and acknowledging the fact that I’ve seriously overspent. So in the spirit of practising what I preach, I’ve decided to write the column this week about what to do when you’ve hit the plastic too hard.

Acknowledge the spending

Ignoring the bank accounts and credit cards doesn’t make the problem go away. ‘Ostriching’ – sticking your head in the sand to avoid overspending – is pretty common and weirdly, the worse our situations get, the less likely we are to acknowledge it.

Keep your initial bank account check short. I’d set a timer on your phone for ten minutes while you go through your online banking. The first step is to face the truth. Don’t sit in silence, panicking about it. Play some music or leave the television on and look at what you’ve spent. Then get up, walk away and do something else.

Book some time out in your diary for the budgeting. Making a diary booking means committing to a time to do something that otherwise you might avoid. Don’t attempt to do this at work either. It’s easy to get distracted and end up stuck on the phone to your bank when you should be in a meeting. And don’t be too hard on yourself. Even the most cautious of us can be taken by surprise by unexpected bills and additional costs at expensive times.

If you had a shopping frenzy using store credit, make sure you’ve factored that in to your accounting. It’s easy to forget about ‘buy now, pay later’ deals, so add them to your budgeting spreadsheet or list.

How to tackle the overspend

Okay, so you’ve overspent. Knowing that there’s a problem is the first step to dealing with it effectively.

In the first instance, make yourself a simple budget so you know what your regular monthly commitments are. You can download free apps, watch gimmicky guides on social media or check out lifestyle blogs. But budgeting is best when it’s basic. A simple spreadsheet is all you need – or a blank piece of paper.

If you have online banking, you can get a list of direct debits and standing orders with one or two clicks. List out when your regular payments are due each month and total up the cost, then compare it to what’s coming in. In a separate column, include things that you pay as you go, like the food shop, travel and lifestyle spending on things like entertainment and food.

You’ll be amazed how quick this is to do – however, prepare yourselves as you’ll discover how much money you have left over each month in rather stark terms.

Getting help

If you only need a short breather to get back on top of your cash, speak to your bank to see if they can give you a temporary overdraft for a month.

If you don't meet their criteria for credit, then take some time to tell them about your situation.

If you explain you’re experiencing some difficulties, your bank has an obligation to do what it can to try to help not make the situation worse. They aren’t going to write off anything you've spent, but they can give you a break on charges and interest until you're back on top of things.

If your problems are more long term, then give the bank or lender your mini-budget. They can help you with a tailored plan to get your finances back on track. You can also go to free debt charity StepChange if you need help negotiating with your other creditors.

If your bank or credit provider refuses to help you, or makes the situation worse, make a complaint to the Financial Ombudsman for free.

Martyn James is a leading consumer rights campaigner, TV and radio broadcaster and journalist.