Should we do this?

warren80

Hi, 
We have been talking about options to reduce our highest interest debts as much as we can. We have a couple of nasties - Very and Aqua. 0% balance transfers don't appear to he an option right now. 
Our kids both have some money that we have saved for them over the years totalling about 6k. This is money that they won't have any access to until they are 18. We have discussed the possibility of using this to clear 5k off these high interest debts and then setting up a standing order to put the money back in over 3-4 years. It would be like a kind of interest free loan I guess! 

My wife thinks we should just do it as the kids are still young and the money will be back in long before they have acess to it. I feel a bit weird about it. What are your thoughts?

fatbelly

Very and Aqua are both high interest and best avoided really

Do you know why 0% BTs are not available to you? Does your credit file have anything nasty on it?

Have you tried a soft search on this?
https://www.moneysavingexpert.com/eligibility/credit-cards/search/?goal=CC_BALTRANSFERV2

Maybe post a statement of affairs on  this board.

My concern with the plan to raid the kids' savings is that that may just be a sticking plaster over a more serious problem.

warren80

fatbelly said:

Very and Aqua are both high interest and best avoided really

Do you know why 0% BTs are not available to you? Does your credit file have anything nasty on it?

Have you tried a soft search on this?
https://www.moneysavingexpert.com/eligibility/credit-cards/search/?goal=CC_BALTRANSFERV2

Maybe post a statement of affairs on  this board.

My concern with the plan to raid the kids' savings is that that may just be a sticking plaster over a more serious problem.

Hi, Our eligibility is poor. We have scoured our credit files and the real issue our affordability due to the high balances. We applied for a couple of 0% cards but we were declined. We don't want to keep applying as this will only further reduce our chances of getting one. We are planning to look at it again in 12 months when the balances will be lower. 

In terms of the very and aqua payments. We are making the payments now and also overpaying, however a big chunk of this is going on interest. Our rationale was to borrow the kids savings to reduce these debts, save on the interest and then use the money we were paying to put the savings back. I guess it's what we would do if we had savings of our own!! 

Naomim

How have the debts built up? Was it just general overspending, holidays etc? Without a handle on knowing how you got into debt and how you will avoid it in the future, are you likely to be able to afford to replace the savings without going back into debt again and carry on going in this spiral?

BabyStepper

Ethically, I see no problem with you using the kids' savings. You couldn't afford to save for your children, so now the cash has to be reshuffled to where it's needed. It's a shame, but times are hard and using those savings to pay debt off is better than paying extortionate interest. 

As others have said, a SOA would be a huge help in sorting out a long term plan to pay your debt off (and return the kids' savings). If, for example, you can't afford your debt, a dmp might be the answer and you can sort this out without touching the kids' savings. If you're going to use those savings, it needs to help, not just kick the emergency down the road by 6 months. 

If you post the numbers we'll try to help. 

 

warren80

Hi Folks, thanks for the responses. I should have mentioned that we actually started our journey to debt freedom last Autumn. I have already posted my SOA etc here https://forums.moneysavingexpert.com/discussion/6229077/just-need-to-get-on-with-it/p1

We are actually doing pretty well and we have both fully committed to sorting out the uncessesary mess that we created. neither of us can imagine going back to how things were. Thankfully we had our LBM at a point where the debt was scariy high BUT still manageable with debt management. We are aiming to clear it all within 48 months. 
Borrowing the kids savings would just reduce out interest a a bit. 

Naomim

Then it makes sense to use it. The interest being earned is no way near as high as being paid out.

fatbelly

Agreed....

warren80

I think we are going to do it. It makes sense. It will actually help us to get debt free a bit quicker. One of our priorities when we are debt free is to save more for kids future

enthusiasticsaver

If you are in debt then obviously you could not afford to save for the kids future and if there is a way to avoid the high interest then you should take it.  Sort out the debt then make a plan to save for your children. 

Coffeekup

I remember reading your other thread a few weeks ago Warren. I was excited about your spare cash and how quickly you could pay down your debt. You also posted your numbers were wrong and you debt was 10k lighter that what you thought..
Maybe update the SOA help you get a better grip on things, and you'll get better advice from others on here.
What did you do with the spare £1570 from last month, where did you pay it off, it should have 75%  cleared the very account. 
You want a new kitchen, the odd takeaway coffee, trips out and to pay off you debts. You also want to raid money you had saved for your kids so save a few £ in interest, stop the coffees in the meantime would be my suggestion.

I'm not 100% certain you've had your LBM yet, I think your aware there is an issue. Winging it for another few months might get you through, however life throws things in your way, and things can go south very quick.

Personally I'd leave your kids savings for when something really does go wrong, and pay off what you got. Maybe in 12 month's time when you got some of the debts paid off, you could take from the savings, but I'm the meantime feel the burn... No pain no gain.