To pay off my own debts on mat leave?

[PhoebeGeebee]

Due to go on mat leave in December. I'll get six weeks at 90% then down to stat. I've been a bit anal about spreadsheets and savings and making sure we'll have enough to cover us each month. We have, not massively but enough for the odd treat and that's without dipping into savings.

However, I realised the other day that I'd calculated my take home wrong and forgot to add my stat mat payments. Taking this into account leaves us about £500 a month better off. I could put that into our savings, or we could just fritter it away OR I could pay off an old credit card that I've just been making minimum payments on. It would only take 4/5 months to totally pay off, and when I go back to work, I know I'll not be able to make huge payments to get it down.

So, bearing in mind that I'll be responsible for making sure we stick to a budget and don't go over every month, would I be unreasonable to use my own 'wages' to pay off my own debt and not use it for the family?

(We have no other debt btw)

YANBU. you are right to tackle your credit card debt while you can.

Have work confirmed what your mp will be. Any omp often includes smp. I'd wait until you are actually on ml before committing. Outgoings do change but perhaps not as you may anticipate.

Pay the debt off! It makes no sense to have savings in one account, probably earning next to nothing in interest, and a much more expensive debt elsewhere.

How do you manage money as a family anyway? everything in one pot, or do you and your DH/DP keep anything separate?

I would. I was actually finicially better off on SMP as DH covered all bills and did not expect 50/50.

I managed to pay off my Masters fees that were sitting on a 0% credit card (make sure any debt you have is on a 0% deal and keep an eye on when this runs out), plus paid for baby classes and clothes for DD and lunch out twice a week.

I'd start paying the credit card off now before you start maternity leave. It's unlikely, unless you have a massive outgoing that will cease when you're on mat leave, that your maternity pay will mean no lifestyle changes and I think I'd prefer to keep some safe in order to take a whole year off (last 13 weeks unpaid remember).

Your payroll dept should be able to give you a breakdown of what maternity pay you would be entitled to.

Currently we both pay into the joint account for bills, both pay a set amount (based on take home) into savings and then both have a couple of hundred a month for our own spends. Whilst I earn more, I pay £250 a month in petrol so our spare cash each is fairly equal.

I've done my calculations based on standard smp of £138 a week after I drop down from 90%

I guess I feel guilty that I'm using this money to pay off my own debt when all of DH's wages will be used to support the family. However, I also know that it will reduce my own monthly outgoings which will make it easier for me when I go back to work.

Yes do check you're definitely getting the SMP on top of the OMP. Most maternity policies have a line like 'as long as this does not exceed OMP' or something like that.

Crisscross - I'm paying it, but only minimum payment as I'd rather build the nest egg of savings so that I know we have security if the boiler goes or the car dies.

My calculations are based on the three periods, the one where I'm on 90, the one where I'm on stat and the last portion (which DH will be taking shared leave for) where we get nothing. But like I said, we can definitely manage and we've done this by drastically reducing our outgoings. I see this as another outgoing that can be removed if I have the chance to pay it off.

I'd pay off debt before putting any money in savings, even if it's 0%. Where did the debt come from? Your own frivolous spends or household things? If it's the latter, your partner should help pay it too.

I'd love to say household but it was mostly frivolity and a little bit of wedding stuff when we got married a few years ago and I wasn't earning as much as I am now.

It usually makes no sense to save while you have debt, because you'll be paying more interest on the debt than you'd get from the savings. Stop saving, divert all that to paying off the debt, then start paying into savings again.

The obvious question here is, what does your DH say?

I can see an argument for both options but the way you've written, it sounds like you wouldn't tell your DH that you were paying this debt off which is wrong IMO.

You're right, I probably wouldn't. I don't know why because I genuinely don't think he'd mind, I guess I feel a bit guilty that his disposable income will be less because I'm paying off my own, and not joint, debt.

OP if that debt isn't already on a 0% card, shift it before you pay it.

Is the credit card 0%?
If it is I wouldn't pay anything more than minimum payment until end of 0% deal.
If it isn't I would pay it off with any savings you currently have and start building your savings up again.

It sounds as though you'll be spending all your SMP on the credit card- wouldn't you prefer to have some of your own 'pin money' for trips out with baby etc?

Flowery - I guess I'm looking at it from a 'long game' perspective. This time next year, we'll have savings AND I'll have no debt, but mentally it makes me nervous not to use these few remaining months of full time salary to save as much as possible. I know I can reverse this plan, pay off debts now and save the extra mat leave money, but my worry is that I wouldn't, that I'd waste that extra money.

I pay £250 a month in petrol so our spare cash each is fairly equal.

Do you drive a Boeing 747?!

Yes pay off your credit card debt.

Crisscross - all calculations are done on giving us an extra bit of money each a week for our own bits

Nope Aye, just a long ass commute to work

Clear the debt as a priority

"I know I can...pay off debts now and save the extra mat leave money, but my worry is that I wouldn't, that I'd waste that extra money."

Set up a standing order for the relevant amount then.

Personally, if there's going to be any 'wasting' of money, I'd rather waste it on the odd little luxury than on paying interest to a credit card company...

clear the debt now and save what you can afterwards- that way the savings are family money and the debt is cleared with your income.

I don't understand why you'd prioritise savings over repaying debt- they are not true savings, it's your net position that counts.

If your debt is on an interest charging credit card then pay it off ASAP! You are not benefiting by saving as you are paying interest on the debt but not earning enough on the savings so overall it is costing you money! Once debt is paid, you can start to save. Do a standing order into a high interest account (if there is one!) or change to an account that pays interest &/or cash back. Can get money for transferring your account too - £150 in some cases. Moneysavingexpert.com has good advice.

I think it's a great idea! Paying off debt should always be a priority.

Won't your petrol bill go way down once you're on mat leave? One of the first things DH and I noticed when we retired is how long a tank of petrol lasted when you aren't commuting every day!

The extra £500 a month you'll have, is that including the £250 you'll be saving on petrol when you stop work?