Do I use childrens savings to pay off debt?

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  • Thanks for you imput guys. Money is still tight and we are on a budget I am keeping a diary on here to keep track. Have included a holiday for them and have over the last few years made sure thay have had a break each year because I want them to have good memories and fun growing up. Probably shouldnt have done some looking back now/. Even though they were budget camping trips it still adds up.

    I have just the one debt a large loan I really want to see the back off but interest at 6.8% isnt extortionate and even using the monies I am a fair way off. Have just brought a cheap run around and plan to sell other car to make some profit to throw at the debt.

    Have some savings but these are for planned spends later in the year. Also have some shares so need to look at them to see if worth selling at the current low market price or to keep for later.

    Just thought - I guess I could use the kidsmoney and use the shares later on to repay them? The shares are c2-3kbut only £400 touchable at the mo. In a few years time they will have built up even more. I get them thorugh work annually. What do yo think? Certainly will be able to pay kids back. Might discuss it with the girls and OH.
    :j
    May 2013 new beginnings:j
  • Merlot wrote: »
    I'm going to say use the childrens savings (only if they don't know how much they have in) to repay your debts, it will bring your DFD forward and to be honest £650 per child in 6 years time, when your eldest is 16 will be the equivalent of a couple of hundred quid now, they won't be able to do much with it.

    If you are not having a holiday or haven't had a holiday for some time I would also consider using the money for this, childhoods are precious and limited, the children will remember the memories and won't give it a thought why you haven't given them a wee handout, I never got a handout, and neither will my children, they will need to learn that money is too be earned.

    If you do want to keep the savings, the Halifax have a regular childrens saving account which did pay 10%, (I'm not sure of the rate now), Martin recommended it last year, I'll try and find the link, if you put the money into the regular saving scheme, use the interest received to throw at your debts.

    The link to the Halifax childrens saving account - 10% interest http://www.halifax.co.uk/savings/childregularsaver.asp

    Merlot.x.

    Thanks for the link I will look into. Sounds much better than the current rate. Unfortunately the girls at least do know roughly how much they hav so will need to discuss anything I do even moving the accounts with them. Hopefully it will help them learn a bit about home finances.

    DD1 told me to by a chicken shaped time the other day from Mr T instead of the nice stainless steel one because it was £1 cheaper. How could I argue with that!!
    :j
    May 2013 new beginnings:j
  • Yes we have borrowed money from my daughter's savings accounts (money from grandparents etc) to buy a car but treated it as a proper loan and paid it back at loan interest rates (7%)

    However this meant that in order not to hit the tax snafu on money paid in to children's accounts (if the interest on money paid in over the years by parents comes to £100 or over the account interest is taxed at parent's rates) we had to pay it back in the form of NS&I Childrens Bonds. However this still meant that she earned 7% interest on her initial loan and then got another 4% or so tax free from the repayments.

    (As your kids are still young the tax snafu won't bite much as yet but at 5% you only need £2000 paid in by parents over the years to generate £100 per annum of interest.)

    It was still hard to pay it back regularly and it will need to be included when budgeting.:A
  • englishmac
    englishmac Posts: 137 Forumite
    With respect to money saved by the parent(s), I wouldn’t have any problem with using the ‘kid’s’ savings. Kids cost a fortune to raise and any money saved on their behalf by their parents is a privilege and a bonus – it was the parent’s money in the first place. It’s a modern approach that kids should be given a ‘leg up’ on the ladder of life as it were. By all means reimburse the account – what’s the point in saving it in the first place if your raid it without a second thought? – but don’t feel guilty about it. We’re not talking a grand world tour at the expense of the kids. Talking to the kids about it, explaining the background and the plan for returning the money to the account will hopefully teach them about life and how it can be hard sometimes too.

    Money from other people eg gifts or earned (paper round etc), worth asking the kids for help, again explaining the background and the difficulty. But it is up to them in that case whether they loan you the money and it would be a nice touch to pay them back with additional interest at the rate you would have paid. Keep it in the family: share lessons learned, teach mutual support and demonstrate mutual benefit (the interest gained is an illustration of the cost of borrowing they could expect to pay; better to invest it back in the family than give it away).
    Cheap and cheerful. Preferably free. :T LBM - more a gradual rude awakening.
    DFD where the light is at the end of this very long tunnel - there, see it? Its getting brighter!! :o

    DFW Nerd Club Member no. 946. Proud To Be Dealing With My Debts. :D
  • WorkingHardDFW
    WorkingHardDFW Posts: 1,324 Forumite
    When my OH was out of work a couple of years ago for a few months I did take the cash out of the childrens accounts to help us stay solvent for another month.

    This was a last ditch resort but I am glad we did it since not doing it would have had far bigger implications than the guilt from doing it.

    What I didn't touch was their savings in Childrens Bonds.

    I don't regret doing it but we've not been in a position to pay it back. We will do though as soon as we are debt free next year (I can't belive its next year!!)
    Working Hard to be Debt Free - one day :A soon
    DFW Long Hauler 74; Mortgage overpayments MFiT-2 challenger 100
    Total Nov07 £36000, Sep10 £1623:o:)
  • QuickKeith
    QuickKeith Posts: 18 Forumite
    Personally I wouldn't touch my daughters savings however I 100% agree with other posters that if needing to pay rent etc as a last resort I would be looking at the option of using the money.

    I remember my father telling me when he was growing up his mother gave with one hand and had to take the money back all the time, this stayed with my father through his life and could never save. Having said that he always (ALWAYS) encouraged me and my sister to save.

    Therefore if you take from your child(s) saving they may never learn how to truely save.

    Just my take on this issue, sorry for rambling.
  • I would definately use DS's savings if it made financial sense.
    He is 14mths old and has over £500 saved already from gifts.... It would do would certainly cut my DFD down if I used it now, but as it is earning a higher rate than my debt is costing, there's not much point.

    When my sis and I were kiddies, my Mum cleared out both our savings accounts, because she had to... when they were handed over to us, she put £100 in. I didn't think 'where is all my money gone?' - I thought 'bonus, £100!' then went and blew the lot on clothes :o

    Still, I was 16 at the time!
    'We are all in the gutter, but some of us are looking at the stars' - Oscar Wilde
  • amazamum
    amazamum Posts: 287 Forumite
    I have personally used my 2 childrens savings accounts to offset my mortgage,
    They are still in their individual names,2 seperate accounts but instead of getting the interest on the saving from the bank I pay them the interest.
    At the moment between the 2 of them their savings are saving us 30 pounds a month in interest.
    I feel this is the best of both worlds,individual accounts but helping the family finances.

    Good luck whatever you decide.
    Mfit member no 13 original balance £44000 :mad:
    current Mortgage balance 13537:T
  • chappers
    chappers Posts: 2,988 Forumite
    Whats the point you might as well pay the interest to the bank and leave your kids cash alone. I would never touch my kids savings even to save us from losing our house.
    So you use your kids savings to pay the mortgage for a couple of months"just short term like"..."I'll pay it back honest guv".You then lose your house anyway and feel bad because you have deprived the kids of their savings by spending them on a fools errand.
  • Tiger_greeneyes
    Tiger_greeneyes Posts: 1,377 Forumite
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    Personally, I wouldn't hesitate to borrow - especially if it's saving you money (overdrafts, interest etc) as I'd rather keep a note of what it's saved you and pay the fees and interest into the kids accounts when you're more flush. My parents borrowed from me and my brother - they asked our permission first - and we were more than happy to help out. We were about 10/11 at the time. We got it all back (we refused the offer of interest) and it made us feel grown up and happy that we were able to help our parents.
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