One-third of new mothers are having the wind taken out of their sails and finding motherhood a tough struggle according to research from u-Switch.com, which suggests that their debts are being bumped up by £2500 on average, thanks to the impact of the baby bump.
14 per cent rely on credit cards, loans and overdrafts to tide them over during maternity leave, at a time when net household income drops by around £800 a month on average – especially when Mums are living on statutory maternity pay (now £135.45 per week after the first six weeks). Credit cards are used to buy essentials and extras for the new arrival at a time when soaring costs are already straining family finances.
Disposable nappies alone can be a major outlay, with a newborn typically going through 12 a day. At this rate, nappies will cost around £960 a year – and that’s buying them online, at a discount.
Things are not helped by new legislation. The Institute of Fiscal Studies (IFS) says families with children will lose £511 a year, on average, due to new tax and benefit changes.
In February 2012, TV programme ‘How to … Prepare for your baby’s arrival’ found that new baby strain can be “toxic” for a couples’ relationship. 24% of new parents surveyed already had long-standing financial problems and a baby’s arrival exacerbated these. Debt really can cause as many sleepless nights as a newborn’s crying!
Warning bells should ring as soon as the household books don’t balance or when the credit card is used to buy essentials, says debt expert , Debt Free Direct . Making minimum payments on a credit card sees the interest racking up and, with less income than ever with which to make those payments, new Mums and Dads will struggle to meet their financial commitments.
If your personal debts are spiralling out of control, you cannot just throw your dummy out of the pram and argue with your creditors. You need to strike an accord as to what you can afford to pay, based on your circumstances, through a Debt Management Plan, or an IVA, which Debt Free Direct can arrange. This lets you pay reduced amounts to your creditors, over an agreed period of time – often more than 6 years.
If your maternity leave debts are just the tip of the iceberg, sitting on top of several thousand pounds of existing debt, a Debt Free Direct adviser may recommend a more serious solution – an Individual Voluntary Arrangement (IVA). Here, an insolvency practitioner (IP), like those at Debt Free Direct, negotiates with your creditors , having analysed your income and expenditure, and asks them to accept reduced payments and freeze the debt interest. A legally binding agreement enables you to make reduced payments and you can wipe your unsecured debt slate clean within 5-6 years.
