Loan for childcare. Am I the only one?

[SofiaE]

Hi all!

I decided to take a loan to cover some of my 2-year-old childcare fees.

I find gov help useful but limited (I am using all available options) when it comes to covering the childcare costs that a full-time working parent should pay monthly. Makes sense to me because I can continue working, and will pay off the loan over time. Btw I find the terms of the loan quite good for a relatively small amount.

Have you ever tried to borrow (like friend’s money, credit card, anything else) to cover the extra costs because of childcare???

Knowing I am not the only one out there would boost my confidence....

I can see why a single parent would turn to this, nursery fees can be huge especially full time and taking time out of employment can be damaging.
Assuming the loan covers the fees until it's not needed, the monthly payment are low enough and employment is secure (nothing is 100% but accounting is fairly desirable) then I wouldn't discount it.

On the back of this I've very quickly worked out that a years nursery fees for my dc is around 11k. With tax free childcare and 2 reasonable incomes it's fine but for a single parent, or even a 2 parent household on lower incomes that is a huge amount!

I didn't take a loan out but as a single parent I needed a nanny (midwife working 12 hour shifts). I got some help from tax credits, but as my earnings were classed as "too high" the amount I received back was about half the total cost. Anyway, the final year I spent about 4k on my credit card just to get by. 18 months later (children both now FT at school and I moved to a community job) I have now paid it off and have some savings back instead. So I guess it was worth it, but sure felt crap at the time. I cried many a tear.

I used interest free credit card to pay the deposit and first month as it was lots up front as they wanted all the pick up and drop off fees paid upfront too.

I don't understand the OP. What would be the point of paying out more than you're earning to cover childcare?
Eh... because extreme childcare fees are for only a couple of years, and you might want, you know... to keep your house, feed and clothe your children, for example?

If you claim UC then you get 85% of you childcare costs back - it works a month behind though but you do get it back. Go to your journal and select "report childcare costs" upload proof such as an invoice showing what you paid.

@WorraLiberty

Makes sense to me because I can continue working

In what field?

Journalism?

Research?

First one was my immediate thought.

I’ve never heard of anyone doing this, but that may be my limited social circle.

Is it really a good idea? Are you not eligible for free hours or tax credits to help you if you’re struggling financially?

@shouldistop

It really doesn't make any sense to take a loan to pay for childcare. You're having to pay the loan back monthly too. I don't see how this could make financial sense.

Of course, it can make financial sense, depending on the terms and conditions of the loan. In my case, I was around £700 short a month in my overall budget to start with, and needed around £20K to fund the shortfall until the break-even point (roughly - one in nursery with 30 hours, one in school). Borrowed a little bit more than that for 5 years to cover the additional strain from the monthly repayments, now almost at the end of paying it back, with around £8K extra overall cost. It made much more financial sense than having to sell the house and then spending money on rent for 5 years, never mind potentially facing bankruptcy and losing the right to practice in my area for life.

I've definitely seen posts on MN before from mothers saying they were struggling to afford childcare and were thinking of going on benefits for a couple of years til their kids started school. They were almost unanimously torn to shreds for even considering it.

Yet this is the alternative - people having to take out loans to subsidise working and keeping a career.

Not saying either option is better or worse, but you can't flame people for not being able to afford to work and then tell people like op that it's pointless working if childcare costs more than you earn

Sounds like a good plan.

It would be daft to leave a job with a good salary to be a stay at home parent to avoid full time childcare costs - as some PPs are trying to suggest you should do.

Just because an income doesn’t FULLY cover everything you need doesn’t mean you should just Jack it in for 4 years until child is safely at school!

Do what you need to to keep yourself employed, progressing in your career and building your experience and salary expectations. This is without of course considering the positive social and personal development aspects of working for you, and nursery for your child.

I would absolutely do this.

Yet this is the alternative - people having to take out loans to subsidise working and keeping a career.
Yes, this. No one is surprised when people take out mortgages, student or consumer credits and no one is accusing them of taking out loans to subsidise living or studying.