Savings/ISA's/Getting out of Debt

fatboyslim1

I have got myself into a bit of a financial pickle at the moment. I am currently well over my overdraft, have 2 loans and paying off 2 cards. Needless to say I cannot take out another loan, am getting whacked with bank charges, etc. My parents set up an ISA for me when I was young and now being 27 I want to use that to pay off all my debts and be debt free and start a savings account. My father is a financial advisor and he is going to find out when I withdraw the ISA as he is my agent. Is there any high savings accounts that I can say that I am going to be using so that it doesn't come across as a complete shock for him.

Bit of a ramble so sorry about that.

Pollycat

Hi - and welcome
Martin does say if you have both savings and debt you should use the savings to pay off the debt as you will likely be paying more interest on your debts than you are getting in interest on your savings.

Read this article, it explains it very well:

http://www.moneysavingexpert.com/cards/pay-off-debts

Why not show it to your Dad too?
Being a Financial Advisor he should understand the reason why you want to get out of debt and stop paying charges.

However, are you 100% convinced that, once out of debt, you WILL start saving and not run up credit card bills and your overdraft again and be back in the same situation but this time without a lifeline?

fatboyslim1

I can't speak to Dad about it as he will be disappointed and start asking questions about it. That is why I am just going to send the letter to withdraw the funds and hope that if I am asked to go along them to talk that I can assert that I am 27 and show that I have set up a savings account.

I need to start taking responsibility for my own actions and want to be independent. I want to start saving so that I can sell my flat and but a bigger house so that me and my partner can start a family.

DarkConvict

if you have had the same isa account for that long the rate may have dropped so he would expect to see a transfer not a withdrawal to another isa.

end of the day the debt costs more than money made on an isa, the financial decision is to pay off the debt

fatboyslim1

I am hoping that my father doesn't say anything as the money is in my name, it is a lot and I feel guilty about it but I can't carry on the way that I am going.

I would far rather pay a large sum into a savings account and see it grow rather than paying out money and seeing only the interest being paid off.

I have my own property and car so it is not as though I am still a child.

DarkConvict

Yes you are not a child, your taking some steps of responsibility here, pay off your debts as it is only wasting you money.

Pollycat

fatboyslim1 wrote: »

I am hoping that my father doesn't say anything as the money is in my name, it is a lot and I feel guilty about it but I can't carry on the way that I am going.

I would far rather pay a large sum into a savings account and see it grow rather than paying out money and seeing only the interest being paid off.

I have my own property and car so it is not as though I am still a child.

It might be me but I'm a bit confused about what you're saying here.

If you've read the link I gave you, you'll know it makes sense to pay the debt off with the savings you have - as Dark Convict agrees (twice).

If you don't want your dad to know the truth about what you're doing with the ISA money, check out this link for best buys on savings accounts:
http://www.moneysavingexpert.com/banking/

fatboyslim1

Sorry, that is my fault, I was meaning that I would rather pay a large sum monthly into a savings account rather as paying even larger amounts towards my debts and only seeing the interest being paid off.

Thanks for that link, is very helpful x

DarkConvict

I think you need to do this http://www.whatsthecost.com/snowball.aspx

Put in all your debts, your APR, min payment allowed and how much you are paying per month in total.

It tells you how long it takes to become debt and how much money it has cost you instead of paying your debts off in full.

EG.
£10000 @ 21% APR (credit card), paying £500 a month.
It will take you 25 months to pay off these debts if you snowball correctly. During that time, you'll pay £2,154.00 in interest.

£10000 @ 21% APR (credit card), paying £200 a month.
It will take you 114 months to pay off these debts if you snowball correctly. During that time, you'll pay £12,711.00 in interest.

Interest is dead money!

Happytogetdebtfree

Just a curious question if you used your isa funds to clear the debt, how would your dad know that you have withdrawn from it? best to pay debts off than have savings, it may just be best to be honest with your dad all the best and chin up x

fatboyslim1

When I phoned to enquire the balance I asked about withdrawing and whether my agent would find out as on the statement I noticed that it had who my agent was in the corner and they said that he would be notified if there are any withdrawals or pay-ins.

I feel that I can't speak to him about this because he thinks that because he is good with money that I should be completely too butI think because it has been drummed in since we were kids that I have completely rebelled against that.

Have written the letter to the ISA company and going to post it tonight saying that I want it transferred into my current account. Does anyone know how long this should take?