Aligning the Stars

Starmummy

Yesterday should have been a NSD but wasn't. I had to pop across the road and get soup and tights because the air con in the office had me freezing. so £5.20 gone

I had some bad money news from HMRC. I've had a letter that says I owe them almost £400 in overpaid tax credits from when I was a single parent a couple of years ago. They request repayment by the middle of September. It occured because they paid me based on being a single mum on a salary of £x. I moved in with Mr Star and cancelled the claim, I then changed jobs and got a significant payrise so my tax year income was a lot higher than my monthly income when I was claiming. It seems a very unfair way of calculatng it but there isn't a lot I can do about that.
I'm not quite sure how I'm going to juggle that. I need to talk to Mr Star. One step forward three steps back.

We are on a skeleton budget until the end of the month with just £150 in the joint account. That still has to cover at least 3 days of childcare, 2 1/2 weeks of groceries, school jumpers....

I'm in need of a money tree...or a miracle.

Must keep plodding on.
Take care
SM

enthusiasticsaver

You should be able to pay back the overpayment over a year. Well done on for getting into the £11ks

redofromstart

That must be so frustrating but hurrah for the debt reduction anyway

Starmummy

Hi all,

I've done something money wise that has made me feel a little nervous about posting.
I've taken the decision to consolidate my debt.
I have taken out a £12k loan with the bank I bank with as the rate was the lowest (3.3%) to pay back over 3 years. The 12k will pay off all the debt and the amount due to HMRC.
The interest charge on the loan is £618. which is the interest still due on the 2 loans so I won't be paying back any more than I currently do but it does mean my monthly debt payments are £350 instead of £650 which just isn't sustainable. I spend every month robbing Peter to pay Paul to make my budget balance and it just doesn't. Paying back the debt quicker would be great but not if I'm at risk of resorting putting things on a credit card if I need things (we are talking contact lenses, child related costs etc)
With the fact that I'm not getting maintenance from SC's father and the cost of me seeing a counsellor to deal with some past issues my balance has been knocked by £400+ a month.
the lower debt repayments mean I can live easily off my salary, pay for my counselling sessions and save some money. I'm going to trya and put some extra each month in my EF (current balance £400) as well as in a regular saver (5%) so that I can pay off the loan early.

I have contacted 3 of my 4 credit card companies to pay off the balance and close the account. I've kept the one I've had the longest for my credit rating but also for purchase of big ticket items for the security (will pay off anything that goes on this card straight away. I have reduced the balance of this card to £500.
This means I owe one figure in one place and I can see the balance everytime I log onto my banking APP.

I know the issue with consolidating debt and this is something I have considered at great length. I honestly believe my light bulb is on full beam. I have completely Changed my spending habits the past 8 months and reduced my debt by almost £7k as well as having savings and upping my pension contribution.

I promise to continue posting here as much as possible to keep me on track and I am going to add a savings tracker to my signature to keep me focused.


In other news my counselling sessions are going well. It's hard emotionally but I always feel a huge blanket of releif after my weekly session.

The joint account is still a bit empty but weve had our holiday to pay for and there is food in the cupboards. Mr Star has said he will top it up if needed.

Our plans for Italy are coming along nicely, I love the planning stage. I'm l;ike a kid in a sweet shop. I feel so privalaged to be able to share these experiences with Star Child.

I think that is enough rambling for now.

Take care
SM

NelliePie

SM, if it's going to make your life easier and take a weight off your mind then do it. Of course it is always best to have as much as possible on 0% or as low as can be reasonably managed but reading some other diaries where some loans are closer to 30% rather than your 3% in the grand scheme of things its not that bad. Did you check you'd not be able to get some/all of it on 0%?

You seem focused and have a plan which is good as long as you stick to it. You're being sensible with the options you have available - using the extra free cash to top up your emergency fund so you don't need any more credit and then overpaying when you can sounds great.

I'd only question why you're saving to pay off the loan? As you'll have an emergency fund, its more financially beneficial to pay off the loan unless you're getting more than 3.3% interest on the savings.

I'm glad the counselling sessions are helping and that you have something to look forwards to. Keep posting here, even if its just to vent, update, check in, or update your signature.

enthusiasticsaver

Consolidating at a good rate is not a bad thing per se providing it goes along with budgeting and no longer using credit to live off if you are short. If paying £350 towards debt means you have £300 spare to save or use rather than put on a credit card it will work. If you don't stop using credit though it is a sure fire way to increase the debt and get you into a debt spiral.

Starmummy

Hi Nellie

The debt was currently half on 0% CC and half at about 8% on loans. So the loan rate of 3.3% now is more or less the same interest charge so I am no better or worse off.

I plan to try and save the bulk of the £300 I now have in my budget, while still allowing for flex. I have a 5% saver linked to my bank account where I will put the bulk of my savings. The interest earned will help offset the cost of the interest of the loan.once I reach a reasonable EF anything above this amount saved could be used to pay back the loan early if I wish to (there are no charges for this according to the small print)


i hope that makes sense

Starmummy

enthusiasticsaver wrote: »

Consolidating at a good rate is not a bad thing per se providing it goes along with budgeting and no longer using credit to live off if you are short. If paying £350 towards debt means you have £300 spare to save or use rather than put on a credit card it will work. If you don't stop using credit though it is a sure fire way to increase the debt and get you into a debt spiral.

all bar one CC has now been cancelled.
I have kept the oldest which only has a £500 to book flights and things for the financial protection. I will only use it if i have the money saved to pay these items off.

for example. one of my best friends has moved to Sweden. Flights to see her are £40. I have this amount saved for the trip already. i'll pay for flights using the credit card because Most purchases made on a credit card benefit from enhanced purchase protection under the terms of the Consumer Credit Act. I'll then pay the £40 from savings to the credit card straight away. so i'll have no debt but i'll benefit from the protection.
I'll also take it on trips with me for when hotels require a credit card varification etc.

I will not be using it for purchases though. It will be kept inside my passport.

redofromstart

Sounds like a carefully thought out decision to me. Do you feel better for having done it? I hated the immediacy of the huge credit card debt but ours was all at 0% so I had to stick with it.

Rachel24

I think you'll end up overpaying it. Sounds silly but I preferred overpaying my loan and I don't know if it's because it had a set end date on it and I was determined to beat that. You sound like you've thought about it long and hard. What is Mr Star saying about it?