Would you borrow money from your child's saving account??

iwannanicerlife

Hi all. I'm a long-time lurker, but this is my first post.

Quick bit of background, I'm married with two children (aged 4 & 6). My husband works full-time, me part-time, and our combined income is in the region of £29k.

We owe around £5k in total on two credit cards. We've been trying to clear them but rarely manage more than our minimum payments. We have around £4k in savings, but this is really seen as an emergency fund, in case my husband ever lost his job......

Our kids have got healthy saving accounts, approximately £10k in each. We have been toying with the idea of borrowing around £1500 from each of them (total £3k) to go some way to paying off our cards, and then moving the balance to a 0% interest card. We could then target this more manageable sum, as well as setting up a standing order to pay the money back into their account.

Would you ever consider doing this?

Gemmzie

Possibly but I think you should do this as a last resort. You need to make sure you've done a solid budget, you can even post your SOA on here and we can see if we can save you any more.
Not being able to clear £5k on a fairly good salary makes me think we might be able to save you some money!

piglet6

My questions would be:

- How much interest are you paying on your credit cards?
- How much interest are you making on the savings accounts – both yours and the children’s?

If the answer to the first question is higher than the second, then I would definitely use savings to pay them off. However, I would use your £4,000 first and only take the extra £1,000 from the kids afterwards (either £500 from each, or, if you are going to be penalized for removing the kids savings, just take £1,000 from one account so that you don’t get penalized twice over just for the sake of “equality”!).

However, I would say then that you have to cut up or cancel the credit cards, so that you definitely can’t put more on them (which would defeat the object of clearing them using savings!) and work like crazy to replace those savings so that you have your emergency fund again, and the kids savings are back up to where they were.

In the interest of “complete fairness” I would make sure that you pay back the kids with interest (at least what they would have got on their account if you hadn’t “borrowed” the money). Better still, why not pay them back with the interest rate that you were paying on your credit cards – way better that your kids get the extra in their accounts than MBNA/Barclaycard/Capital One/whoever get it in their accounts!!

This is just my opinion, and I know there are some who disagree with this view, but I think for kids as young as yours, who are unlikely to “need” their savings in the near future (for further education or whatever) it would be better for Mum and Dad to be debt-free and working to make new savings than struggling to make ends meet debt-wise while money sits in savings accounts!

Piglet

piglet6

Have just re-read your post...

If you are happy that you can BT to a 0% card, then the same 2 questions apply, and if you are paying more on the cards than you are making on the savings, then I would use £3,000 of your savings to clear the debt, and work to replace your emergency fund asap.

If the worst came to the worst and your hubby lost his job, you could look at "borrowing" the kids savings then...

But I wouldn't touch their savings while you still had your own to use. I would use my own first, if that makes sense?

Piglet

poet123

Depend where the money in the kids accounts came from.....if from you, by way of regular savings,CHB etc then I would be quite comfortable using the money and replacing it as you describe.

If it has arisen from a legacy or other source then I would not be as comfortable. However, if you set a time limit on repayment and stick to it ,then IMO a couple of less stressed parents would be better for the kids than savings in an account they do not yet need, and which will be back in place when they do need it.

THE_LONE_RANGER_4

Yep Borrow It Cut Up The Cards And Pay Your Kids Back Over Time Interest Free Hey Your Bringing Them Up Family Look After Each Other.

thriftymomma

piglet6 wrote: »

Have just re-read your post...

If you are happy that you can BT to a 0% card, then the same 2 questions apply, and if you are paying more on the cards than you are making on the savings, then I would use £3,000 of your savings to clear the debt, and work to replace your emergency fund asap.

If the worst came to the worst and your hubby lost his job, you could look at "borrowing" the kids savings then...

But I wouldn't touch their savings while you still had your own to use. I would use my own first, if that makes sense?

Piglet

I'd go with this answer!

doodledo_2

I wouldn't touch my kids savings unless it was absolute last resort.

I would use your savings to clear the cards and then clear any remainder with my own money over the next few months.

Jacks_xxx

:wave:Hi sweetie,

I'd take the money out of whichever account was accruing the least interest and clear the whole card in one fell swoop. No fannying about with getting another card. :rolleyes:

then I'd cancel the CC and be disciplined about paying the money back in.

It's ridiculous to be struggling with a debt when the money is there to pay it off.

It doesn't hurt your kids to dip into their accounts as long as you pay it back - although I'd be inclined to use my own money first to be honest. In a real emergency you could dip into the kids savings if you had to.

Love Jacks xxx

Keeping_Positive

I have borrowed my kids savings to use against a loan. I have shares via work that in five years will be enough to pay them back with a better rate of interest in five years.

If it benefits the family in the long run and you have a good budget thats can be stuck to to ensure no more overspending then I would use your savings then the kids with the remaining kids balance to be used in an emergency.

Do look at doing an SOA even if your not confortable in posting it. If you do people generally have really good ideas about saving.

Keeping_Positive

http://forums.moneysavingexpert.com/showthread.html?t=878649

A link to a similar question I asked a few months back.