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    • LavenderBlue
    • By LavenderBlue 17th Jul 17, 11:36 AM
    • 1Posts
    • 1Thanks
    Moral Dilemma
    • #1
    • 17th Jul 17, 11:36 AM
    Moral Dilemma 17th Jul 17 at 11:36 AM
    Hi All,

    I have got myself into some credit card debt, it's 2800 but it's at 0% until January next year. I'm paying it back at 65 a month.

    I am on a decent wage bringing in 2200 a month with minimal expenses (husband pays the bills) but due to a recent employee tribunal and crippling childcare costs of 900 a month (which will last until my youngest leaves nursery in 2 years), I am 1700 in my (authorised) overdraft.

    I want to get this debt paid off and I can afford to pay 500 a month. So do I..

    1. Wait for my wage to go in which will take me (temporarily) 500 in the black, but then when childcare comes out, I'll be -400, then the cc takes me to -460 - then try and spend as little as possible, creeping out of debt that way but only taking the min off my cc

    2. Take out a loan to clear the lot at 3.6% APR for 5,000 then pay that off at 500 a month over 10 months (I'd still be in debt but the APR on the loan is less that of my overdraft, and I could cut the cc up)

    3. I have a savings account with 6000 in it but it's money I've saved for my 2 young children (both under 6). Do I borrow that, pay the debts off and then repay it over 10 months (I'd never ever be reckless and spend it on anything else). My plan is in 2 years to pay in 500 a month anyway when the childcare costs end, so I'd just be doing it a bit sooner. I feel awful thinking of this but they want for nothing, they don't know they have the money and it seems ridiculous taking a loan when I have this savings account, though the money isn't morally mine.

    What should I do
Page 1
    • Jenjenjen17
    • By Jenjenjen17 17th Jul 17, 11:46 AM
    • 8 Posts
    • 44 Thanks
    • #2
    • 17th Jul 17, 11:46 AM
    • #2
    • 17th Jul 17, 11:46 AM
    Hi Lavender

    This seems like a no brainer to me, get any interest accruing debt payed off with your savings otherwise you are paying unnecessary interest and will cost you more in the long run.
    Last edited by Jenjenjen17; 17-07-2017 at 11:58 AM. Reason: missed out words
    • ReadingTim
    • By ReadingTim 17th Jul 17, 11:50 AM
    • 2,551 Posts
    • 3,642 Thanks
    • #3
    • 17th Jul 17, 11:50 AM
    • #3
    • 17th Jul 17, 11:50 AM
    You have 6 months of 0% on the CC and can afford to pay 500 per month. 6 x 500 = 3,000, which is slightly more than the CC debt. Therefore, you'll have cleared the debt before it costs you any money - seems like a no-brainer to me.

    You can then put that 500 per month into getting out of the overdraft - but this time next year you'll be out of the red completely, without taking on any more debts, or "borrowing" from the children. What's not to like?
    • Tammykitty
    • By Tammykitty 17th Jul 17, 11:54 AM
    • 570 Posts
    • 1,194 Thanks
    • #4
    • 17th Jul 17, 11:54 AM
    • #4
    • 17th Jul 17, 11:54 AM
    Is the overdraft interest free?

    If the overdraft is interest free then as follows

    1700 overdraft debt - at 500 a month, this will be gone in Sept (or Oct)

    500 a month then goes towards the credit card - so Oct, Nov, Dec, Jan - that's 200 of it gone before the end of the interest free period

    That only leaves 800 - so pay this out of your savings before the end of the interest free period
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    • StopIt
    • By StopIt 17th Jul 17, 11:59 AM
    • 1,395 Posts
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    • #5
    • 17th Jul 17, 11:59 AM
    • #5
    • 17th Jul 17, 11:59 AM
    I think people have missed the bit about your overdraft having an APR, meaning it's not interest free.

    So, a hybrid solution.

    1: Use your savings to clear the Overdraft, saving any interest.

    2: Pay the 500p/m into the CC and clear it before the 0% expires.

    3: Then continue saving for the children.

    You say that childcare is "crippling", yet if you bring in 2,200 yourself and have little other expenses to worry about, where's the money going? There's 1,300 p/m unaccounted for here.
    • kazwookie
    • By kazwookie 17th Jul 17, 12:11 PM
    • 9,621 Posts
    • 121,665 Thanks
    • #6
    • 17th Jul 17, 12:11 PM
    • #6
    • 17th Jul 17, 12:11 PM
    Move the child to a cheaper nursery?

    Use a child minder instead?

    Where is the rest of the money going?
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    • zippygeorgeandben
    • By zippygeorgeandben 17th Jul 17, 4:41 PM
    • 801 Posts
    • 1,025 Thanks
    • #7
    • 17th Jul 17, 4:41 PM
    • #7
    • 17th Jul 17, 4:41 PM
    and don't put anything else on the CC!
    End Sep 2016 End Mar 2018
    8236.57 0
    (Tesco 4.8%) 0pcm
    6185.75 0(Zopa 4.0%) 0pcm

    1910.04 (Sainsburys 0% until 06/19) 140pcm
    2000.00 533.37 (Sister 0%) 133.33pcm

    Total debt
    19.766.82 2443.41 Original DFD May 2019.
    • enthusiasticsaver
    • By enthusiasticsaver 17th Jul 17, 8:06 PM
    • 6,254 Posts
    • 12,386 Thanks
    • #8
    • 17th Jul 17, 8:06 PM
    • #8
    • 17th Jul 17, 8:06 PM
    Use the savings to pay the overdraft off and repay it over the 10 months or whatever. No brainer. After all the money was used for childcare so not totally unrelated to your children.
    Debt free and mortgage free and early retiree. Living the dream

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    • Number75
    • By Number75 17th Jul 17, 9:39 PM
    • 184 Posts
    • 194 Thanks
    • #9
    • 17th Jul 17, 9:39 PM
    • #9
    • 17th Jul 17, 9:39 PM
    There's no moral dilemma here.
    Would be, if the 6K was grandparent birthday gifts, or similar.
    This is your money that you've saved for the kids but now can't afford. No more a moral dilemma than if you were saving for a car then needed a boiler instead.

    Clear the debt with YOUR savings.

    But do work out why on 2200 with minimal outgoings except the 900 nursery, you can do this without touching the savings.

    If you've 1300 to spare every month, you should cut back and have that overdraft paid off in two months.
    • EssexHebridean
    • By EssexHebridean 18th Jul 17, 11:15 AM
    • 8,624 Posts
    • 45,380 Thanks
    As above have said, but also: cut up the credit card, and reduce the overdraft down as you clear it off. If your budget works and you have the amount of cash each month that you think you do, then all you need in the way of an OD is a "buffer" to avoid unauthorised charges if a credit goes in a bit later than expected or a debt comes out a bit earlier.

    I guess the question is - DO you have the amount of spare cash each month that you think you do?
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