Baby on the way - how to organise finances?

startingout2016

Baby due imminently.

I officially start maternity leave beginning of June and will be paid SMP with no enhancements.

My usual salary before leave was £35k per year. Other half is on £30k per year.

We live in the South East and have just got our first mortgage together on a 2 bed terrace. We had savings of approximately £15k on top of a 10% deposit which allowed us to buy a 'do-er upper', which we have managed by doing a lot of the work DIY.

When I found out I was pregnant I put money in savings each month knowing that SMP would not be enough to sustain us throughout my leave and that I really wanted to take minimum of 9 months but ideally 12 months off with our baby. I did multiple budget sheets and set a target of £6k in savings before baby arrives which I have now reached.
This will enable a comfortable level of maternity leave for 12 months, or if I go back at 9 months will leave a small emergency fund spare.

However, the new house we bought has had some issues and we have had some set backs along the way which has cost us.

Because of that, we each have approximately £2k on credit cards. (And potentially are down another £1670 if our Visa Chargeback claim gets declined - see other thread).

I hate the idea of debt and i was on track to have my credit card cleared last month, so that I didn't need to worry about it during maternity leave. My otherhalf is not as concerned about credit card debt and feels its just a small amount and has been necessary and can be dealt with later. Something which I feel is always going to be unlikely now, as money will be tighter once baby is here.

I want to use £4k of my savings to pay off the credit cards. This will then leave me with just £2k savings. Which based on my budget sheets would mean that if everything is tightened up to the max I would just about be able to afford to take a 6 month maternity leave.

I am conflicted, as I know deep down I really want to take 9-12 months, but understand and keep being told this is a luxury. But also that emergency's do crop up sometimes, so I could end up clearing the credit cards to find that the car needs work, or the boiler breaks down, and then I would be back with credit card debt anyway.

What should I do? Am I overlooking other options?

balletshoes

how about a compromise? clear half the credit card debt from your savings, that way you still have enough to be on maternity leave for 9 months. Would this make you feel the debt was a bit more manageable?

eta - and wanted to also say, congratulations and well done for planning so well for your maternity leave.

pinkshoes

Look at other cut backs you can make. I kept my own phone and now pay £5/month via BT instead of £30/month to Vodafone.

Over a two year contract that saved £600!

Could you run a cheaper car? Save money on food shopping by shopping at Aldi?

Amazing saving so far!!! Well done!

professor~yaffle

Well done on your savings, you sound like you're good with money and budgetting etc

Going by relatives who've had maternity leave, most weren't ready to return to the workplace until the baby was 9 months to one year old. (Not everyone! One went back when the baby was 6 weeks old, but she had her parents to look after him, so slightly different to just dumping him in childcare with complete strangers).

Baby's only a baby for a very short time, and I think people are mistaken when they call maternity leave a luxury! Can you share any parental leave with your other half?

Happier_Me

Hi OP

Congratulations!

In your situation, I would try to aim for a minimum 9 month maternity, it's not essential but you only get this opportunity once and I would do what I can to protect this. In respect of the debt try to move this onto a decent 0% cc deal (assuming it isn't already). There are cards out there with no balance transfer fees, if you can get your hands on them.

Rework your SOA ensuring everything is reduced to a minimum, including entertainment, clothing and holiday costs and minimum payments on the cards.

Keep spend on the house to essentials while you're off. If it breaks and it's necessary, fix it!

Do NOT use your credit cards again unless it's absolutely essential. Once you have reworked your budget, how much time can you afford to have off?

And finally what are your plans for returning to work? I think the most expensive thing about babies is the impact on household finances longer term, especially if there are plans for a second child. Someone has to look after the children, after all, and that usually results in reduced income or childcare costs or both. I went back to work 3 days a week initially and paid childcare costs. We saw a reduction in disposable income of around £1,300 a month. 13 years and two children later we still pay around £200 a month in after school clubs and I work 4 days a week. And I'm told the most expensive years are yet to come:eek:

startingout2016

I am so undecided about returning to work.

I want to go back 3 or 4 days a week.

Have discussed trying out me doing 4 days a week and other half also doing 4 days a week with midweek help mixed between family and childcare.

Igottawii!!

Could you not transfer your credit card debt to one of the low fee long term 0% interest balance transfer cards available at the moment? You could pay a monthly amount that would clear it before interest starts being charged?

Igottawii!!

http://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards#halifax33

jaidyer1980

Just a thought, savings interest is negligible these days so why don't you pay of your credit card and use your credit card through maternity when and if needed i.e....

Use 4 k of savings to clear balance then set your credit card limit to 4k that way you have no cc interest to pay unless you need the money

Kynthia

You only get that time once and childcare once you go back to work means you probably won't be that much better off by cutting your maternity leave short. Don't let your fear off debt ruin this time as while I don't think k people should be lax about debt I do think it is a tool to be used at times, like mortgages.

Move the debt onto 0% credit cards, take longer to do up the house apart from essentials (live with poor decor and ugly but functional kitchen/bathroom, etc), and enjoy your time with your baby. Then once you're back at work you can gradually save enough to pay it all off once the 0% deal comes to an end.