Found out I'm expecting but know maternity pay won't cover monthly debt repayments

poppytattoo

Hi all, 

Title says it all really - we have just found out we are expecting our first child (very happy after previous loss and nearly two years of trying etc, but it was a bit of a surprise!)

At the beginning of 2018 I really finally took stock of where I was financially and decided to dig myself out of the hole. In total I have owed about £39k and that has steadily gone down since then as I've made a concerted effort to pay things off, but there have been slips (dental treatment that I've had to put on finance, car stuff on credit too). 

I'm currently in debt by about £21715. Although it's not ideal, I have been increasingly comfortable with paying it down over time and my overall debt stands at just over £21700.

However, I'm worried sick about what will happen when I go on maternity leave (I think baby will be due in December, but it will be a while before any dating scans). 

I will only get statutory maternity leave, which I think will come to around £600 in a four week period. This will cover my monthly bills, mortgage etc and still leave me with a bit of pocket money to spare. 

However, I don't know what I can do about the £800+ each month that I currently pay towards debts. It's currently spread across a HSBC loan, a Barclays Partner Finance loan, two credit cards, and a Tabeo loan for the dental fees. 

I figured that if I consolidated the debt, I would be able to reduce that down to about £400ish a month, meaning I would be able to save up over the next few months and use those savings to make the debt payment whilst on mat leave. Have had a HSBC account for 9+ years and applied through them as it looked quite easy and was advertised as an instantaneous decision, but then I got a note saying it would take 24 hours and then another saying it would take up to 10 working days for the decision, so that doesn't feel likely and I think I have dinged my credit report for nothing there. 

I don't think I'll be able to save up enough in the next few months to reduce/pay off any of the debts individually, so that doesn't feel like an option.

Husband wants to help but is paid not far off minimum wage and irregular hours so I really don't want to put any of this on him. 

I spoke to a StepChange advisor but they just said they wouldn't be able to do anything until my income changes when I go on maternity - I feel sick about that though as surely I can't just wait until December when baby is here and start missing payments before getting back in touch with them! 

If anyone has any ideas please do let me know, I'd be really interested to know how others have managed. 

Kakiste

Firstly, Congratulations!

Secondly I got into a massive (just under £50k) amount of debt that was made much worse by my sticking my head in the sand and not dealing with financial issues whilst on maternity leave. 

Stepchange are brilliant and Ive paid back over half of my debt in a little over 2 years. However I would strongly suggest you look at other forms of debt repayment such as going bankrupt or wait for another few months until your debt is lower than £20k and look at a DRO. 

Those options would allow you to go into your maternity leave without the debt repayments each month and wipe the slate clean. 

Whilst I am very proud of the progress ive made with repayment my debt I think in retrospect if I had to do it all over again I would declare myself bankcrupt- If I had then I would be in a much better position financially now. However at the time I was worried about my credit record being trashed for 6 years by the bankruptcy marker (not realising that going down the DMP route would mean it would be trashed anyway for the same length of time by the defaults)

poppytattoo

Hi Kakiste! 

Thanks so much for taking the time to reply. You've paid off a really impressive amount of debt! 

Really appreciate your thoughts on this. I would love to wipe the slate clean, but I wouldn't be able to get a DRO coz of the mortgage, and I think bankruptcy would potentially affect my career (regulated profession in finance, so it would come up).  Hoping I can get on top of this before baby comes. Maybe I just have a very short maternity leave

CreditCardJunkie

Firstly congratulations, secondly try not to stress as it's not good for the baby. 

I paid off debt while on maternity with a combination of mystery shopping, surveys (try prolific), keeping in touch days (you get full pay for going into work for up to 10days while you're on maternity) and a little bit of freelancing. You'll also get £84ish a month in child benefit.
 
The first thing you should do is a SOA. Cut out things like phone contracts, sky bills any luxuries that you can do without. Work out what you need exactly to cover your bills every month. Then track your spending, I use a simple Google spreadsheet on my phone. Once I started doing this it was easy to see why I was in debt, £10 here and there was adding up to hundreds of £ per month that I didn't have! You've potentially 8 months to get things in order here before the baby comes. Can your OH pick up any extra shifts? Or work another job as short term solution?

Sncjw

Have a check of your company maternith pay and see if your qualify. 

Cheese1990

May sound like a silly question but what are your minimum payments on the debts? If you've got wiggle room drop down to the minimum and save the excess which may buy you some time on maternity. Also may be worth while seeing if you can secure any payment holidays, although most of these are no longer available but a combination of this and only making the minimum payments may buy you a few months of maternity if not more if you've really been going after the debts 

enthusiasticsaver

Congratulations on your pregnancy. Try not to stress too much about this.

As I see it you have two options. Continue to pay as much as possible to debt until your pay drops then opt for a DMP.

My choice would be to drop to minimums now and save hard to get you through your maternity leave though. This does depend on interest rates though. I would not consolidate as you won't get a good rate as you already have highest debt so lending you more wont be considered favourable as lenders are tightening their lending criteria. Are the debts on cards or loans and what interest rates are you paying? Maternity leave is a common reason for debt so start trying to live on the restricted income now and just save as much as possible while still trying to clear the most expensive debts. 

elsien

Just to chuck into the mix as well, while you’ve done well to get the debt down to what it is, if you’re still wanting to put extras on credit (car, teeth etc ) then consolidation is a bad idea.
 Because many people on here have consolidated with the good intentions of never using any more credit then doing exactly that and ending up with twice the debt.
Any budget moving forwards needs to cover all the essentials, then you have be able to talk yourself out of the “wants” that come on top of that. 

poppytattoo

Hi everyone, 

Just wanted to say thank you - it was really nice to wake up this morning with all these messages and suggestions and support. I really do love this forum. 

I'm definitely worried but absolutely doing my best not to panic - I am sure we will manage somehow, and I'm determined to get myself in order as early as possible to be able to.

Going to do my best to answer all of the points mentioned above as best as I can for now - but husband and I are definitely going to sit down over the weekend and do a full overview of our finances etc so we can do a full SOA. 

Okay here goes:

- SOA - definitely need to do one of these! 
- Will definitely be asking my boss for the max amount of KIT days but I am not sure how many I'll be given 
- Husband currently holds five jobs, is on furlough for one of them, no shifts or furlough for another, is working most of the time at the third, one is a "nice to have" where it's not regular work but it pays well when it comes up, and the other he takes as many shifts as he can but it's only a couple of days a month at the moment given how closed down everything is. He really does work spectacularly hard and pre-covid was working silly hours. We've actually been very lucky that he was furloughed as we were worried he wouldn't get anything at all during lockdown but things are slowly returning to normal and as things reopen he will hopefully be able to earn a bit more
- My employer doesn't have a company maternity policy, it's a very very small business with a couple of employees, I'm the only/first woman. It's frustrating but essentially I wont know until I tell my boss in a few months that I'm expecting and see what he offers me, if anything. 
- I have a bit of leeway on the credit cards to move to minimum payment - this would take my £160 towards 2 credit cards down to £104 for both 
- I think that saving up to be able to take a few months off is going to be the most likely thing. If I can save enough to cover minimum payments on my debts whilst I'm off, the mat pay would be able to cover bills and food etc. I can't quite live on the restricted income yet as the restricted income will not cover my basic outgoings and debts, but I am going to save aggressively 
- 3 of the debts are loans with immovable minimum payments (although maybe I could speak to the lenders and see if we could reduce them?!) 
- 2 of the debts are on 0% credit cards where the interest rates will kick in early next year
- I completely get the warnings against consolidation and in the past I have fallen into the trap of thinking it was a cure all solution, but this was before I hit the lowest point where I realised how much debt I was in and started struggling to repay. I am luckily well out of that phase of life now and I really want to believe that I would do better this time around! But I know it is a slippery slope. Don't think the loan will come through for me anyway so I'm pretty sure it's out of the question. 
- I definitely don't want to put anything else on credit ever - my teeth are the one thing I have intentionally added onto my debt over the past few years as I have a chronic condition that damages my teeth/jaw and I am trying to save them. I did ask my dentist to pull them all last year and just give me dentures so I could be done with it but apparently as I'm so young it wouldn't bode well for my jaw over the next few decades. I am incredibly hopeful that I won't ever need to pay so much for them again and it was a tough decision but to be honest by this stage I didn't think I would ever get pregnant again and without the maternity I would have paid off that work by the end of 2022 and it felt worth it at the time. That is my excuse and I am aware that it is an excuse! The latest car payment however was just a straight up mistake on my part, I completely forgot the time of year my car insurance was due - just bad organisation on my part - and then £300 auto-renewed on my CC. Straight up stupidity but I won't make that mistake again! 

Very aware I need to get rid of all the extras

Aware that this is a long and very rambly post and also very aware of the work I need to put in between now and December. I was talking to my mum last night and she told me that she only had a couple of months off with me and my brother because she couldn't afford it and we turned out ok (my debt problems aside haha!) and not to feel the peer pressure of needing to take 9-12 months off just because it's what everyone else seems to do. 

This weekend will be a big one for us I think in terms of taking stock and trimming any fat in our budgets that we possibly can. 

Thanks again to everyone for your responses to this, I really appreciate it and don't feel so alone with it all. 

elsien

Sounds like a plan. 
Is there anything else you can do to make any extra money in the interim to build up towards your buffer? 

poppytattoo

Thanks, Elsien. 

I would definitely like to earn some money. I've in the past done some bits of writing etc on places like Fiverr etc and might look into doing that again - have to be slightly protective of giving myself too many new deadlines as I'm also currently finishing off a master's degree that I do in my spare time which eats up a lot of my evenings and weekends, but I think I could definitely handle the odd extra piece. 

We've also been thinking through everything that we can sell in the house - I know it's only early days but we need to make more space in the house anyway - and think we will at least get a few quid from there. I do do some survey sites but think I will need to really step up my game there! 

Think I'll revisit the MSE "boost your income" list and see what I can do.