Save for maternity or pay off a debt? Advice please!

wolveslass

A year ago I finally had my LBM. I had 8 credit cards and was in a mess. The first thing I did was to remove all cards from my purse then I shifted them all to 0% and started overpaying on those with the shortest balance transfer offers. I have set up a very detailed excel spreadsheet which shows total starting debt, all separate cards/loans/ payment dates/ end of balance transfers dates/ debt owing etc.

I had a really good 6 months then had a set back when all balance transfer offers seemed to be ending at once and I had every good card going! My response was to look at the figures and take out a loan to cover the large majority of the debt at the lowest interest rate I could find. This means less different cards to juggle (I now have just 3 to keep track of, all on 0%) and an end date for the large chunk of my debt.

I know some people hate the idea of consolidation but I was struggling to keep track of the cards and when the 0% offers had ended I would have accrued masses of interest. Not only this but by transferring debt from so many cards I was accruing a lot of fees. My loan means that I have a set interest rate (lower than the cards would be) and I no longer get charged fees.

For me it has worked well. Now my debt drops by on average £700-£800 a month. This will slow very soon as I am due to go on maternity but I am throwing as much at them as possible for now. I have a small amount of savings to take into my maternity leave, but my current dilemma is, do I keep these savings for emergency or do I pay off a debt in full?

Any comments/advice gratefully received!

wolveslass

Any advice please?

MrsTinks

Well the answer really I guess is depending on a lot more than just do I or don't I... I had the same debate with myself when I went on ML - I decided to work out how much I would get on ML and how little I could get by on and set aside £2000 over the 9 months before havign my daughter... This was enough to see us through 9 months in addition to my maternity pay - debts reverted to minimum payments during that time. However it all depends greatly on your debt/income ratio and if there is a second income in the household - I was fortunate that in an emergency I could fall back a little on my husband... If I couldn't have I would have been back at work around 6-7 months instead - that may be a path you need to look at too.

wolveslass

I to am aiming for £2000 at least and then I reckon I'll be okay. My husband is earning good money, but I am by far the bigger earner. Like you say I think I will drop to minimum repayments and anything left at the end of maternity will just go off a debt as a lump sum.

Thanks for the input.

determined_new_ms

Hi wolveslass congratulations on ur happy news! if you are the main breadwinner have you thought about taking less ML & your oh taking paternity leave for some of it? I earn more than my oh & we're planning to try for a baby & have decided I will take the first 6 months until the MP switches to SMP and then my oh will take the next 6 months. how much would you need to save to have £2000 cushion?

wolveslass

I've saved £1800 so far. I aim to take 9 months in total and the OH is an option, although I'm not sure how it would work out for his work as he is a head of subject at a large college and he would struggle to leave it behind! I really want to save another £300 before Xmas and then I am due an extra £500 from work which I can add to it. My pay will also go up by £200 per month from Jan.