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Is this financially sensible, or bananaballs?

17 replies

WonderingWombat · 10/10/2021 16:55

Currently trying to figure out life in general, and more specifically work/life balance, and would appreciate any thoughts...

I'm a single parent to a 1yo. Without getting into specifics, there is no possibility of any maintenance; finances are on me and this will not change.

Have been back at work full time for a few months and it's going... eh. I live in an area where wages are generally relatively low, but my job is actually quite well paid. I would be very unlikely to get another job that paid anything like the same amount. It's quite emotionally draining work in general, and although I enjoy aspects of it there are others I'd happily see the back of. It's also changed quite significantly recently which is inevitably unsettling.

My mental health seems to have taken something of a nose dive and I'm not sure how tenable the above is - I'm not performing well at work, have no time for myself, and am just generally plodding (at best). I'm therefore toying with the idea of making changes to make things a bit more balanced.

Currently live in a perfectly decent, relatively cheap 2-bed flat in a nice area. The mortgage payment is affordable (about 20% of my current take home pay) but it's the financial commitment I focus on most in items of 'what if?' worries.

I have a chunk of savings, about half of which is a sum gifted to me by family to put towards potentially moving up the property ladder a bit - however this currently feels very unachievable and not like a particularly good idea.

I would, if the family member who make the gift was okay with it, technically currently have enough to pay off the mortgage completely. If I did so, I'd be left with only a small amount of savings for emergencies, but my outgoings would be a little lower (and the most mentally pressing cost would vanish). In that scenario I'd potentially then be able to think about either reducing my work hours, and/or looking for another job entirely which would almost certainly pay less, but might be more manageable. I'd also, because i wouldn't have the same amount of savings anymore, be eligible for substantially more assistance with childcare costs - which take up a much larger chunk of my current budget then the mortgage does. So although I'd be earning less, I'd have a really secure place to live, and my actual day-to-day finances wouldn't be wildly different than they currently are. However, I'd have very little prospect of being able to build my savings up further, which does feel a bit wobbly.

I'm conscious, though, that I'm currently pretty anxious and depressed so I may not be thinking all that clearly, and may just be seeking an escape route. That said, balancing out work and life better might be really helpful in stabilising my mental health. Or, it might leave me just as anxious and depressed, but ultimately worse off! Any perspectives would be appreciated.

OP posts:
Cloudyzebra · 10/10/2021 17:09

I can't see how paying off your mortgage could be a bad thing. It wouldn't stop you moving and getting another mortgage in future if you wanted to and it sounds like it would take the pressure off in the short term which would really help you. I'd go for it.

RealhousewifeofBarnardCastle · 10/10/2021 17:11

It will give you breathing space. But also consider whether you can compress your hours or work from home or share childcare or reduce your stress some other way?

flirtygirl · 10/10/2021 17:13

I think your plan sounds good op. Work put all the figures and talk to the person who gifted you the money and take it from there.

RealhousewifeofBarnardCastle · 10/10/2021 17:13

Alsowhy is your job stressful? Can you make it less so?

CSJobseeker · 10/10/2021 17:15

Unless your savings are invested well, they will be losing value in real terms, while your mortgage will be attracting interest.

I would pay it off. Take the mortgage payment you would usually make, and have it go into an ISA each month by direct debit. So your disposable income stays the same, but you're building your savings back up.

CSJobseeker · 10/10/2021 17:16

Also put the saved childcare costs into that ISA too.

Once your savings are built back up - then I'd go part time. But not until you've built up a little cushion.

Jenjenn · 10/10/2021 17:18

I will just repeat what my gp advised me op, hope it is OK. Try to address your mental health first. Time of high stress isn't the best time for big decisions.

Orangejuicemarathoner · 10/10/2021 17:18

I cant imagine having the means to pay off a mortgage, and not doing so

NoSquirrels · 10/10/2021 17:23

Sounds good to me. Relative wants to help you move up the property ladder so the savings are for investing in property. You want to pay off the mortgage so investing in property. No downside there that I can see and anyone who gives you money but expects ultimate control over exactly how you use it should think again as gifts don’t come with strings attached.

Pay off the mortgage, get the childcare savings, leave the idea of changing hours/jobs until you’ve been back at work for 12 months.

Treat the anxiety and depression. Get medicated if necessary. Get some time to yourself by hook or by crook - extra childcare if needed, calling on family members etc.

Basically don’t make career decisions until you’ve got a bit more perspective and have changed /addressed other things that are causing stress.

Cocomarine · 10/10/2021 17:27

Honestly, I’d address your mental health first.
Think about it… you already have the option to do all this - be mortgage free. Not many people have that. And yet, you’re still anxious. Having that as an option should have taken your anxiety away - even before acting on it - if this was purely about housing security. So if your anxiety is rooted somewhere else, this won’t help - you’ll move on to a new “what if”. Work on dealing with all the “what ifs” crowding your mind, before taking a big action.

CornishTiger · 10/10/2021 17:33

Pay off your mortgage if you can.

No housing costs will give you such security. You can put the 20% on a mortgage you’d have paid out into savings.

Plus if things ever got bad financially those savings would exclude you from income based benefits and you’d still need to pay outgoings.

CornishTiger · 10/10/2021 17:34

Just read what you said about childcare. If you mean you’d qualify for UC then yes I’d consider paying off mortgage but be careful if you’ve already recently claimed as could be seen as deprivation of capital.

specialsauce · 10/10/2021 20:18

Pay off the mortgage! Your property will accrue value - savings won't. Spend time on yourself and with your baby - enjoy! When your child is in school and you're feeling better in general you can work more if you want. Winner all round I'd say!

Babyroobs · 10/10/2021 23:44

I'd make sure that paying off your mortgage would not be seen as deprivation of assets in order to claim benefits before you do anything.

ivykaty44 · 14/10/2021 19:52

www.cii.co.uk/news-index/articles/impact-of-insurance-payments-on-universal-credit/68004

it would appear that paying of debts, including mortgage wouldn't be seen in 2018 as deprivation of assets by UC

The key change is that Universal Credit (UC) legislation makes it clear that if a person uses their capital to pay off or reduce a debt, including a mortgage, they will not be treated as depriving themselves of that capital. Once the capital has been used to pay off a debt, it will no longer be taken into account in the assessment of entitlement for Universal Credit.

This is a marked improvement on the arrangements for the outgoing working age legacy benefits. It shows that the new benefits system being rolled out will allow people to use insurance payouts to reduce or pay off their mortgage or any other debts.

ivykaty44 · 14/10/2021 19:53

but whether it applies to other than insurance payout - you'd need to find out

ivykaty44 · 14/10/2021 19:55

medium.com/adviser/a-guide-to-deprivation-of-capital-income-3209a4b50720

here this article states it would be seen as deprivation...

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