📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Miracle - how to use best

Options
2»

Comments

  • Please try thinking about this differently as you try to figure out what to do. You are not paying off anything, you are effectively moving £6k of your debt to 0% interest with a 12 month deferral before payments are due. You still have the debt. You will not be in a position to buy a house in 1-2 years, you'll still be paying off your dad. You are in a very precarious position and without a soa we really don't know exactly how precarious.

    If you still can't afford to pay all the debt off, and you end up with a dmp anyway, the cash you owe your dad will not be included in the dmp and will still be due. There is a poster on here who was loaned a LOT of cash by parents which unfortunately means lenders were not able to see what she truly owed, and is now in a terrible position and struggling year after year.

    Don't want to scare you but please be careful!!! This is a loan and not a gift.
    Emergency fund £8,500/£8,500
    Mortgage overpayment £260
    Debtfree!
    £21,228.07 paid off in 22 months
  • enthusiasticsaver
    enthusiasticsaver Posts: 16,062 Ambassador
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Skintmum86 wrote: »
    I have just got off the phone to my Dad who I had asked the other day to loan me £13000 to clear all of my debt. When he said he couldn't I decided it was time for a DMP.

    I was feeling so scared about defaulting on payments etc that I just spoke to my Dad again and....

    He is going to lend me £6000 :eek::j:eek::j:eek::j:eek::j:eek::j

    Safe to say I burst into tears.

    So I now have £6k to pay off my debt reducing the minimum payments and meaning I can overpay. Then in 12 months I will start paying my Dad back. I have been warned that the bank of Mum and Dad is well and truly closed and never to ask again.

    So my debts are as follows, what would you put the money towards and would you clear whole debts or bring amounts down? I'm going to play about with the whatsthecost snowballing calculator too and see what pays it all off the quickest.

    Next: £2686 interest rate 23% minimum payment currently £146 PM

    MBNA £1741 interest rate about 19% minimum payment currently £48 PM

    Santander credit card 1 £4161 interest rate 18% minimum payment currently £110 PM

    Santander credit card 2 £2661 interest rate 18% minimum payment currently £62 PM

    Santander overdraft £800 interest rate ?? Ipay about £27 a month in o/d fees

    Very £1700 interest rate of 39% £1400 of it is on BNPL 0% but all within quick succession from May. Current minimum payment is about £20 a month but will be £120 from Jan to pay some BNPL before the interest hits.

    Thank you all so so much for your help so far when I was going to go on a DMP. :money:

    I would start with the overdraft then cancel it as that can be withdrawn at any time. Banks are tightening up on these and are now starting to remove overdrafts from being included in available funds. It will also save you £27 a month in fees. You really have to stop using it though to stop you falling back into bad spending habits.

    I would reduce the Very card by the amount charging 39% interest as you have six months before the 0% expires and you have other more urgent debts.

    I would clear the next and CLOSE it. It seems to be too tempting for people to use it as that is a common expensive store card account on here. Supermarkets are much cheaper or eBay/charity shops for clothes. That also gives you a massive £146 back to snowball towards the other debts. I would also pay off the MBNA card in full and that is the highest interest charging debts taken care of. That will take £5527 leaving you £473 to put towards the Santander credit card.

    So you should be left with £1400 on the Very card on 0% until May so you have six months to get your finances in order and to keep to a strict budget before having to repay that and again I would close it. Very is another card so many people seem to owe money on which leads me to the conclusion it is easy to spend on it. People see BNPL without actually working out how they will repay before the awful rates of interest kick in.


    You will also have £6349 left on the Santander credit cards but 18% is not too bad a rate and you may stand a chance of getting a BT offer in 6 months time. You also owe £6k to your dad of course so you are not repaying debt but moving it. I think you need to sort out where you have been over spending to incur that level of debt and do a new soa.

    You will save a minimum of £221 per month by getting rid of Next, MBNA and the overdraft so should have more to tackle Santander with over the next year and Very. I would tackle the debt agggressively for this next year as the following year you will have to start paying back your parents.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

    The 365 Day 1p Challenge 2025 #1 £667.95/£301.35
    Save £12k in 2025 #1 £12000/£8000
  • enthusiasticsaver
    enthusiasticsaver Posts: 16,062 Ambassador
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Please try thinking about this differently as you try to figure out what to do. You are not paying off anything, you are effectively moving £6k of your debt to 0% interest with a 12 month deferral before payments are due. You still have the debt. You will not be in a position to buy a house in 1-2 years, you'll still be paying off your dad. You are in a very precarious position and without a soa we really don't know exactly how precarious.

    If you still can't afford to pay all the debt off, and you end up with a dmp anyway, the cash you owe your dad will not be included in the dmp and will still be due. There is a poster on here who was loaned a LOT of cash by parents which unfortunately means lenders were not able to see what she truly owed, and is now in a terrible position and struggling year after year.

    Don't want to scare you but please be careful!!! This is a loan and not a gift.
    I think Babystepper makes a good point. If all this £6k is going to do is kick the can further down the road and you end up on a DMP anyway your debt to your dad will not be included so will make things even more difficult. As sourcrates says the interest on Santander will still need paying as will the interest on Very (if you follow the plan I advised) whereas on a DMP it would be frozen. I think you are being very optimistic in thinking you can buy a house in a few years time if you and your partner are both low earners as not only will you need to repay the £7.7k to Santander and Very but also the £6k to your dad and save up a deposit. I would essentially take buying a house off the table as that will not happen anytime soon. You have to do what is right for you just now.

    If you decide to take up your Dads offer a disciplined soa will help but you need to make sure your partner is covering his fair share of bills because as I recall when you posted an soa a while ago he was paying a pittance which barely covered food let alone rent, utilities etc. You will also need to start living a life without credit so that means saving for emergencies and only living within your income. If you can do that and really make a dent in the remaining £7.7k interest bearing debt then you can focus on repaying your Dad. Or have a think and maybe speak to stepchange about your situation as it stands. A DMP would be the cheaper option as all £13.7k debt would be interest free rather than just the £6k your Dad is lending you. The repayments would also be affordable. Have you spoken to your dad about a repayment plan?
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

    The 365 Day 1p Challenge 2025 #1 £667.95/£301.35
    Save £12k in 2025 #1 £12000/£8000
  • Ideally you would look at highest interest rates first etc etc.
    I think you need to look at it from a completely different angle before you decide what to do. Look at your SOA and see how much you can afford to pay each month to your debts whilst still living/building an emergency funds. Then look at what progress you will realistically have made in 12 months and what the options then are for paying back bank of mum and dad. If you can pay off some debt and make serious headway in 12 months then this idea might be an option. If moving debt to mum and dad at 0 interest still means it a long and rocky road to pay of the rest it might just be prolonging the inevitable.
    Have a go with your soa and post back as sourcrates and fatbelly will give advice on the different options available without having to borrow from your dad
    Jan 18 Joint debts 35,213

    Mortgage Jan 18- 77224 May 25- just under 65k

    June 25 Debts in my name only £5170. DH can't keep track...
  • You might be celebrating but it doesn't sound like your dad is. In fact it doesn't really sound like he can afford it... £6k loan and a warning that the bank of mum and dad is closed! Has he bailed you out before? It sounds like he has and if that is the case then there are massive alarm bells ringing here. You need to take responsibility for your own actions This may be harsh, but it is genuinely meant with good intentions.

    Forget buying a house in 1 to 2 years...you don't just have a debt to pay off, you have a deposit and fees to save for too. Sometimes you have to play the long game and a DMP may be the cheapest solution for you in the long run.

    So take a deep breath, put up an SOA (analyse the last three months of your spending to ensure its correct) and ask the very knowledgeable people on here for some more help and support. And please don't accept the £6k until you have fully considered all your options.
  • Happier Me makes a great point about your dad...he doesn't sound too pleased. Borrowing from family comes with many emotional strings attached unlike borrowing from a bank. Are your parents close to retirement? What were their own plans for this money? What happens if you needed to slow down payments at some point for a while? When does he need it back by?
    Emergency fund £8,500/£8,500
    Mortgage overpayment £260
    Debtfree!
    £21,228.07 paid off in 22 months
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Santander overdraft £800 interest rate ?? Ipay about £27 a month in o/d fees

    £27*12/£800 = 40%
    its actually £27pm so monthly rate is
    £27/£800 = 3.375% or 48.93% APR
    https://www.lemonfool.co.uk/financecalculators/apr-rate-converter.php

    that's if your OD is £800 all year if you are putting money in(wages) and then using it the APR will be a LOT HIGHER
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351.1K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.6K Spending & Discounts
  • 244.1K Work, Benefits & Business
  • 599K Mortgages, Homes & Bills
  • 177K Life & Family
  • 257.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.