Madness

therealdsg · 10 October 2016 at 10:45AM

After a rough couple of years I'm finally back on my feet but over this time have wracked up around £23,500 worth of debt covering 3 credit cards (2 at 0%) and a Tesco Loan at 3.4%. Between these 4 items it's costing me around £900 a month.

I own my own home with a balance of £188,000 owed. Our earnings are £46,000 which gives us a maximum lend of £230,000. According to Zoopla our home is worth £310,000.

To make things easier as we're planning on starting a family I approached my mortgage provider Santander asking to add the £23,000 onto my mortgage, I'd been over the calculations online and it would only cost me £80 extra a month. No brainer really.

But they rejected me on balance of affordability due to the debts. Even though I explained the situations, costs, reasoning for the draw down and offered to provide them accounts numbers with consent to make direct payments. Madness.

So I seem to be left with the option of a secured loan which I'm not mad on. Can anyone advise on this? I'm 30, my wife's 34 and our worry is that if this stops us having kids now it may be our last chance ...

EssexHebridean · 10 October 2016 at 10:49AM

Well done for getting back on your feet - that sounds like the first battle won, in any event.

On sorting out the debt situation your first stop is to do an SOA. (Statement of affairs - link is in the "sticky" post at the top of this board) Until you do that, you have no idea if you "need" to take out a secured loan. Consolidation without knowing what the score is regarding income/expenditure truly IS madness. Frankly, quite often even if you DO know where your money goes, it's still madness.

Do your SOA - work out where your money is going. If it shows a surplus, then do you have a surplus? If not, you need to log every penny you spend for the next month and see where the money is going.

LMJ10 · 10 October 2016 at 10:50AM

Please don't put off having babies because if debt you will regret it forever!!

I have been in debt for what seems all my life!

I went into a DMP when my first child was 2 yrs old I now have a 7 month old too, you just make it work with kids.

Have you thought about a DMP?

sourcrates · 10 October 2016 at 11:47AM

Hi,

I would view the fact your lender turned you down as a blessing in disguise, questions on consolidation abound on this forum.

In fact its the biggest single reason a lot of people get into unmanageable debt in the first place.

If say, your lender had agreed to the draw-down, and you had gone ahead and consolidated, whos to say that a year, maybe two, down the line, you wont be back in the same situation again, having run up more lines of credit.

This is what invariably happens when you consolidate, because people do not address the basic reason they are in debt to begin with, which is usually because they dont budget correctly, and they overspend.

You have a £46,000 income, you should be able to balance your budget on that amount of money, without having any debt, except your mortgage obviously.

I would suggest you do an SOA of your income and expenditure, be brutally honest with yourself, post it up, then people can see where you could make budget adjustments without the need to for further borrowing.

enthusiasticsaver · 10 October 2016 at 11:49AM

Hmm difficult one. Usually the very worst thing to do is turn unsecured lending into secured. Also if you are struggling now having kids puts massive strain on finances due to maternity leaves usually so the ideal is to be debt free with a savings nest egg prior to maternity leave. However you do need to balance that against the fact you both in 30s which may or may not be a problem with having kids.

My advice is cut all expenditure to bone and really throw all you can at debt. A secured loan will be more expensive than 0% credit cards and less risky should you not be able to manage loan and mortgage. You were probably rejected as a lot of lenders are now wary about people overcommitting and no guarantee you will use loan to pay off debt or even not build up the debt again anyway. Whatever you really must address the overspending before having kids.

Post an soa. If you are paying £900 per month then presumably it will be around 2 years before cleared.

Take no notice of maximum lend. My DD and her husband were offered ridiculous amount on their salaries but they said payments left no room in budget and they have a 1 year old.

Can you sell anything to reduce debt or take in lodger, second job to get it cleared quicker?

enjoyyourshoes · 10 October 2016 at 1:23PM

One of your first steps is to stop the spending that has got you into debt and live within your financial envalope with the recognition that this will get tighter with kids.

Pay off your 3.4% loan ahead of time if there are no erc. Also calculate what monthly repayments are required to pay off the 0% before deal concludes.

Work out psychology of spending, do you rationalise before you spend? Do you stop & consider, do I 'NEED' this or merely want it? Does it make you happy ? Is there a longer term goal that is worth condsidering that will break the spending habits?

Consolidating debts is no good unless you analyse how you can stop spending and how you can pay off the debt in fastest possible time.

Can you remortgage (not increase mortgage value nor increase term !!) to get lower monthly repayments that can ALL go off to reduce debt?

If kids, buy off eBay as great cheaper deals on cots/buggies/clothes etc or beg steal and borrow, avoid getting mother and daughter together in any type of baby shop at all costs, cheaper to send them both on a prolonged world cruise !

Smodlet · 10 October 2016 at 1:50PM

What sense is there in moving unsecured debt on 0% credit cards to interest-paying debt, let alone to secured debt? That, imho, is another definition of madness, after the one that goes, "repeating the same action over and over, expecting different results". Is that how you keep on building up debt?

What sourcrates and everybody said: Find out where it is all going and plug the leaks. "Debt is a symptom; fix the problem."

enjoyyourshoes · 10 October 2016 at 2:16PM

What is this life if, full of care,
We have no time to stand and stare.
No time to stand beneath the boughs
And stare as long as sheep or cows.
No time to see, when woods we pass,
Where squirrels hide their nuts in grass.
No time to see, in broad daylight,
Streams full of stars, like skies at night.
No time to turn at Beauty's glance,
And watch her feet, how they can dance.
No time to wait till her mouth can
Enrich that smile her eyes began.
A poor life this if, full of care,
We have no time to stand and stare.

sourcrates · 10 October 2016 at 3:54PM

enjoyyourshoes wrote: »

What is this life if, full of care,
We have no time to stand and stare.
No time to stand beneath the boughs
And stare as long as sheep or cows.
No time to see, when woods we pass,
Where squirrels hide their nuts in grass.
No time to see, in broad daylight,
Streams full of stars, like skies at night.
No time to turn at Beauty's glance,
And watch her feet, how they can dance.
No time to wait till her mouth can
Enrich that smile her eyes began.
A poor life this if, full of care,
We have no time to stand and stare.

William Henry Davis if I'm not mistaken !!!

Smodlet · 10 October 2016 at 4:09PM

So I nicked and adapted it, so deal!

Apparently, there is no Emily Dickinson poem which cannot be sung to the tune of "The Yellow Rose of Texas" so I would suggest I am in good company.

"Stealing from one source is plagiarism; stealing from many is research." Herman Brood.

Enjoyyourshoes, I was (mis)quoting your signature, for which I apologise but surely, the fact I have assimilated your wisdom and shared it is, at worst, flattery? I certainly meant no offence. Had I remembered whose sig it was, I would have given you credit for it.

MrsTinks · 10 October 2016 at 10:39PM

People say not to wait to have kids... I dont know, and I doubt anyone can truly give you the right answer for you...

34 is not ancient, friends of mine started their families later than that, others way earlier. I would say right now a year is not the longest wait... how much can you get your deb down in a year? How will your budget look with maternity pay? Child care? Extra cost of said child/children?

Do a full SOA and people will be able to tell you where you can cut back and how soon you may be able to possibly be debt free...

Madness

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