Is it wrong to use Children's savings...

amberspyglass

Hi there,
I am looking for a second opinion really...I know Martin advocates paying off debts with savings but the trouble is it's not my savings...
I have two small children and they currently each have £1500 in savings. I also have a property which I rent out and I only have 10 years left on the mortgage. As far as I'm concerned this is my children's future/university fund etc.
Currently I have a Lloyds TSB personal loan (which I took out to redocorate the flat) for £5,500 which I took out in July 2009 over 5 yrs, interest rate 16.96%. I then updated the loan in August 2012 for £5,000 over 5 yrs at 10.70% interest. I am currently paying £190 which up until now has been manageable but I am unfortunately now splitting from my partner of 10yrs and with two small children money will be very tight. I hate to even be thinking along these lines but would I be better off using the children's savings to pay off my loan - I think I owe about £3000 - and reduce our monthly outgoings by £190? I am thinking of my family's immediate situation. In the long term I can pay back the children's savings when I sell my flat. Is it immoral to even contemplate this idea?? I feel terrible about it and would value another opinion, many thanks

david78

If you can pay off the loan then do it. You can always make a fresh start and setup a regular savings account for your children to build their savings up again. At the end of the day you will all be better off doing this.

EarthBoy

Where did the children's savings come from? If it was gifted to them from grandparents etc, it might cause a family rift if you use it.

bowlhead99

EarthBoy wrote: »

Where did the children's savings come from? If it was gifted to them from grandparents etc, it might cause a family rift if you use it.

Subject to the above sensible comment, I agree with plundering the children's savings.

It will cost less for you to replenish £3000 plus lost interest to your children's bank accounts over the next few years than it would cost to pay Lloyds back the £3000 at 10%+ or even the loan refinanced with Nationwide or Tesco at 5-6% if your credit was good enough to access those.

If you can pay them back, they lose nothing ; if you can't pay them back because your household doesn't have £3000 available over the next few years, then it's a good job you don't have Lloyds chasing you for its £3000 plus compound 10% plus missed fees and debt collection agency fees plus a broken credit rating.

rpc

How are the savings held? If in trust, what you suggest may not be possible/legal.

Any

Where did the money come from?
If from you and they are in regular savings account then I think I would use them, BUT immediately set up new provision to repay it.

If it is their birthday money from grandparents etc, then I think the grandparents will see it in different way and you are going to end up in a spot of trouble. Just because they are your children you have no right to take money from them (albeit temporarily) without their or the person who gave the money permission.

Obviously if you gave the money then you are giving permission yourself.. but I wouldn't do it if you have any doubt that you will have the discipline to repay it. My mother always thought when taking our money when we were little that she is going to give it back one day.... it was always just temporary....

Well, guess what, she never did. My grandparents fell out with her over it big style.

le_loup

With a continuous loan for "redecoration" of £5K, i.e. not reducing, I would question your ability in the past to have repaid the kids, let alone under your new circumstances.
Don't do it, its not your money.

srcandas

Amber don't worry and do what is best for your family (which includes your kids). You are a team, one for all and all for one.

If your kids where adults they'd beg you to use the money.

I've always thought tying money to kids is a very bad practise. It just leads to a total lack of flexibility as your situation demonstrates.

Yes for sure a child having a piggy bank is a good education but .....

All the best Amber with your new start. I'm sure you'll go from strength to strength

Gadfium

It might be better to consider selling the property now? How are you going to manage in the immediate future if it needs emergency repairs? It sounds like the rent coming in is not sufficient to cover normal maintenance of the property.
If you can't afford to pay of a relatively small sum of £3K how are you going to be able to repay the kids AND cover normal maintenance costs?

xylophone

If you hold this money in trust for your children, you are on slippery groung legally - and the children are too young to agree to a loan.

If you use the money on the basis that you will give it back, then this money could well be regarded as gift from you to your children and therefore at some stage the "£100 rule" might come into play. (Although it could go into CTF/JISA I suppose which would protect it.)

Morally, you are on slippery ground, particularly if this money was gifted to your children by grandparents/others.

JohnRo

If the kids are wholly dependent on you then you have to find a pragmatic solution and quick, what is right for you, is right for them. I don't see the moral dilemma, any legal considerations aside.