My Secret Debt

tycooncico

Hi all,

Wondering if some people with previous experience or relative tips would be willing to give me some advice.

I'm 23 and now working full time, having been in University studying computers for 4 years. I lived at home throughout uni and my parents paid my course fees. When i started uni (nearly 5 years ago now), my dad told me to take out a loan, place it in ISA's and gather interest on it, with the view of paying it all back once my course finished. He put a lot of trust in me, as we agreed i would not spend any of this loan as they would support me throughout uni. The problem is i did spend it, and not just a bit of it, all of it, £14k of it!

I once admitted to spending some of it and he hit the roof, and now he is pressuring me to pay the whole loan back. The bigger problem his he thinks i have the lot, and the truth is i havent. I have been trying pretty unsuccessfully to save to pay it back, but i am slowly getting back on track.

I feel like i've betrayed my parents and cannot bring myself to tell them, they'll be so dissappontented in me i can't even begin to imagine. I really dont know what to do, i know most people would probably say i should tell my parents, but really i want that to be a last resort, and if i have to, who do i tell them??!?!


Thanks for listening (or should i say reading!)

Broken_hearted

You are right people will say tell your parents. The stress of lying and hiding it will do you more damage than the half an hour of being screamed at you will get for owning up. At the end of the day they love and support you. All they want is what's best for you.

Bellie_2

Hi,

Sorry if this comes out harsh, i really dont mean it to be. But...

Your finances are yours, it is not up to someone else when or how you pay them back. That is up to you. And you are doing really well managing to pay of bits here and there. Most people dont do that with student loans. Well done for graduationg and remeber, you dont have to tell anyone anything you dont want to.

nicola1982_2

Is it the student loan then? Perhaps you could promise to put it gradually back in the ISA now. It still gains less interest than ISAs so you still have a chance to really save some money.

Joe_Bloggs

This is a tricky situation. your problem may be that whatever you say they will not believe you because you have avoided telling the whole truth in the past.
Perhaps the best thing to do would be to produce an account for the money ,in a non judgemental way, to say where the money went. This is a way of putting the record straight but it does document that you were in the wrong for a long period of time. Perhaps get together a current statement of affairs (SOA) to work out what you can realistically afford to pay back.
This is only my opinion. You know your parents better than me. Perhaps arrange alternate accomodation before you break the news if you are living with them. What is done is done ! Don't bottle this up and create additional stress, illness and badwill for all parties.
Divide the debt by the number of years it took to build up. It looks better already.

Will.Power_2

Is there a family friend or relative in whom you could confide, help you work through your financial plans, and help you break the news which you dread?

Tell them; sort the consequences; make the most of what you've studied for...

Most parents forgive most things that their children do, sometimes it takes a little while. The opposite of love is indifference; if you're Dad hits the roof, it's because he cares.

scottishspendaholic

Hi tycooncico,

This post really struck a chord with me as I did something very similar.

This was a really stupid situation to be in, but my partner and I both had savings, taken from a joint loan that we had agreed would help us pay off the loan balance over the 6 year term. Confused? I am, I can't remember why we thought this was a good idea.

Anyway - we had £3k each and gradually over about 4 months of last year, I spent the lot. Anyway - I had to fess up. For more on this story, please see here:- http://forums.moneysavingexpert.com/showthread.html?t=183766.

You are not alone - as for advice - I'd have to say, tell them. My OH was so kind and nice (and I SO didn't expect it), sometimes people can surprise you. It'll be worth it in the long run as the reality is that it will take you YEARS (potentially) to save up £14k, whereas if you can be honest, and pay it out of your salary (if it is a student loan) then you are in a better position than most people on here.

Best of luck

scottishspendaholic x

Mumofthreeboys_2

Will.Power wrote:

Is there a family friend or relative in whom you could confide, help you work through your financial plans, and help you break the news which you dread?

Tell them; sort the consequences; make the most of what you've studied for...

Most parents forgive most things that their children do, sometimes it takes a little while. The opposite of love is indifference; if you're Dad hits the roof, it's because he cares.

Couldn't agree more. Personally and from a parents' point of view (as you can see from my username I have 3) I would be very, very upset if I found out my boys had avoided telling me because they felt they couldn't talk to me.........

Your Dad may well blow his top, but he will calm down and think more of you for facing up to this. Good luck, keep us posted xx

littlejen_3

What are you earning? Is the loan in your name or your parents? If it's in there name take out a low interest one to pay it back yourself then they have no need to know. It would be good to tell them but my parents don't know about my debt and I wouldn't want them too. Parents like to only see the good things in their children and I know I couldn't face the disapointment they would see in me.

Snich

Sorry littlejen but that's a really bad idea.
If the loan is a student loans company one, APR is only 3.2% so no other loan would ever match this rate.

Up to you whether or not you tell your parents... however, you do need to address whether or not you can live within your means and how you can either save up in an isa or make overpayments to the loan.

Good luck with it all.
Snich x

muddled_midget

I don't know about your relationship with your parents, but you're 23, and it's your money you've spent, therefore it's up to you to work out how you want to go about paying it back. I can see how your dad put his faith in you by paying your way through university, and why you feel guilty about letting him down, but your finances now really are your own business. I'm 21 and graduate this summer. My parents have no idea how much money I've spent while I've been at uni, and as far as I'm concerned it's not really any of their business.
Maybe for your own sake you should sit down and work out what you've spent your £14k on. If at the end you can justify all your purchases and are now living within your means then that's alright. Work out how much money you can afford to pay each month into savings, and stick to it, and try and build up the lump sum again as quickly as possible.