Baby money...

sarahowen

Hi

I posted this on the Pregnancy thread and they mentioned that it might be better off here...

I'm due to have my second child in November and have recently been seconded to a higher paying post for six months which means I'll be earning a bit more. My question is do I pay off as much of my debt (about £10, 000 in CCs and ODs) or do I save it up to help finance going on maternity leave and being able to keep making regular payments whilst I'm not receiving my salary?

I had four months off last time before I had to go back to work because I couldn't afford to pay my share of the bills any longer. Although, I am married, I don't really want to rely on my husband contributing any extra as I am not sure it will happen.

Any advice?

TotallyBroke

It's not something that can be easily suggested.
It can depend on what your family income is at the moment and what the family expenditure will be.

What I suggest to you is use https://www.makesenseofcards.com/soacalc.html you can fill it in now as a family and see how you can cut back to make things easier and also do it again showing you on maternity with no CCs and ODs and maybe again with the added income of savings.

It will give you an idea of which is better for you as a family.

sarahowen

I suppose what I'm trying to say is I need to maintain the level of income I have now to be able to go on maternity leave - is it worth saving up some extra money to do this or should my first priority be paying off as much of the debt as possible before going on maternity leave and then just stay on leave for as long as I can afford it?

TotallyBroke

It's difficult to say without seeing the figures.

If you had no CCs debts etc would the monthly payments saved on those bring your salary up to before maternity.

How much is the debt at the moment costing you? If you continued the way you are, having saved to have the normal wage even though on maternity, when would your savings/wages be used up. Have a look at the snowballing part of the soacalc that I linked for you.

You need to factor in as well baby costs, will you be breastfeeding or paying for formula? Will you be buying disposable nappies or using washable ones?

The best thing to do is to as I suggested before fill in the soa with every eventuality of having existing wages, reduced wages but reduced debts and ofcourse extra baby costs. You maybe able to shave some money now from your budget by using 0% balance transfers, spreading the cost of big bills over the months. Careful meal planning and budgetting to save on groceries etc

needtopaymydebts

hiya,
i might not be able to offer much help but thought i'd give it a go anyway. My little one is coming up to a year now and I found that we managed to get by and to be honest are in a much better position now than we were before we had him.

I tried to sit down and budget as suggested but found that it just didn't work out. I planned to breastfeed but this is easier said than done so quite quickly went onto formula milk to save my sanity and prevent my little one being taken back into hospital as i couldn't fill him up myself. We also intended making all our own meals for him out of fresh fruit and veg but again we seemed to spend hours in the kitchen during the weekend resulting in large quantities of similar meals being made so we eventually went onto jars and although expensive these ended up costing the same and obviously took a lot less time. We also bought reuseable nappies but once he grew out of the first size we went onto disposeables due to the cost of having the washer on daily and the stress of running out of clean nappies at 3am! I think what i'm trying to say is that with babies you can't really plan for some things. We had such good intentions but it just didn't fit in with our lifestyle and we now spend much more quality time with each other and with our son.

I would say go to NCT sales and use freecycle to see what you can get hold of once the baby is here.

However, with regard to saving now to meet payments while you're on maternity leave, I suppose you need to try and work out if you'll be able to meet the minimum payments on your reduced income. If you can pay of as much as you can while you have the money available...if not, then you need to start putting money aside.

Just a quick question though, why don't you think your husband will be able to help out with your money? does he already contribute as much as possible or does he have his own debts outstanding?

Again, to bore you with my story, my husband and I were paying our individual debts until we had our son but in the end i sat us both down and said we needed to address things together. doing it this way we have now cleared 3 CC's and hopefully will be clearing our car finance at the end of May leaving only a small amount on a credit card before we intend to start making inroads into our mortgage before we start thinking of another baby!

I hope that this has been some help to you? best wishes

MrsTinks

As said then the best way to get a picture is really to do the SOA calculator with both sets of figures
However - as one of the pregnant ladies myself (with a stubborn baby who won't come out - she was due on saturday! grrrr) I've gone for the savings option myself - right now in my savings account I have about £3500 and my hubby's bonus shoudl be coming through end of this month with hopefully another £3k to add to that... although I'm basing everything on what I have - not what we might get
Now I could pay part of my debts off and that would be fantastic - but I couldn't pay enough off that I can then afford to stay at home once my works maternity pay stops and I go on statutory maternity pay. Or actually I can't guarantee it... I probably can but it wouldn't be as secure...
So we have opted for saving away every spare penny we can (including me no longer overpaying my debts which really grates... I've become so addicted to overpaying debts that I found that really really hard! At least I know that when my debts are payed off I'll easily become addicted to saving too LOL

I'd start with doing the SOA calculators and seeing if you can afford to stay home for the period of time that you were hoping to if you over paid your debts... if not then how long could you stay home if you were to save the extra money between now and when baby is due?

Swifty1982

Not sure if this is any help but.....

Golden rule is to pay off any debts with savings or extra cash before putting it 'away for a rainy day' as the interest you pay on debts is way higher than that which you will earn on any money in a bank for living expenses.

Is there any way you can move the debts to no interest (long shot!!) or at least very low interest cards? That way you can use the extra money to have a longer maternity break, without having to worry about interest racking up!!

MrsTinks

Golden rule doesn't really apply here Swifty - unfortunately the maternity pay will more than likely drop drastically after the first 6 weeks - for me it drops about 75% forexample...
The only way I could NOT do it the way I am is if I could pay ALL my debts off - that way I could afford to live of statutory maternity pay - just about... bills would actually still swallow most of it if not all...
It all comes down to how long you want or hope to stay at home with the baby after it arrives - if you are happy to return to work almost immediately then yes you should overpay - but otherwise you'd be unable to pay the minimum bills etc if you didn't have a "slush fund" set aside...

sarahowen

I see what you are saying about the SOA calculator and will try to do some adding up as admin wise, I'm a bit of a mess at the moment.

I also recognise what you mean about not being able to plan around babies! I had a similar situation with my LO when she was born. I had to go back to work after four months off because I just ran out of money. I hadn't thought about saving up beforehand, which was naive of me and I just don't want to find myself in the same situation.

I am not paying any interest on any of my debts as I am on special payment plans for most of them due to a reduction in hours and income after my first child. As far as my husband goes, to be honest, he moans now about having to pay his share (he pays the utility bills, I pay the mortgage) and last time he didn't contribute much to either the running of the household or things for the baby and I don't want to rely on something coming in if it's not going to be coming in...

Swifty1982

Sorry, yes should have stated it doesn't apply here!! Was more meaning make sure if only minimum payments are going to be met with SMP then make sure the interest is at the lowest you can get!!

TotallyBroke

sarahowen wrote: »

As far as my husband goes, to be honest, he moans now about having to pay his share (he pays the utility bills, I pay the mortgage) and last time he didn't contribute much to either the running of the household or things for the baby and I don't want to rely on something coming in if it's not going to be coming in...

This is such a shame, you chose to get married and you have chosen to have children, now you are having to sort out finances.
All money coming in should be counted as equal. No matter who earns what. It comes in and the bills and debts are paid from it. Then some gets put into family savings and other bits goes to personal spending.

It's the same as CT and CB it is there to bring up the children by providing them with food in their stomachs and warm roofs over their heads. It should be included as family income and therefore treated as such.

I hope you can get your husband to sing from the same hymn sheet as you soon. Good Luck