Mortgage payment difficulty advice

ILW

incogni2 wrote: »

Yes, that is precisely what I'm hoping. I accept that there is a high chance that my hopes won't materialise but the level of pessimism surprises me. When you say “that isn’t looking too likely”, what evidence are you basing your assessment on? The current lack of employment opportunities? The fact that I’ve been looking for nearly 3 months without success? Clearly there may be some probabilistic correlation between the amount of time spent searching and the chance of finding but I’m certainly not clear as to that connection. After all, what are my chances, say, of getting in job within the next few months? 99%, 1%, somewhere in between? I don’t really know. All I can do is consider my skills, the apparent current demand for them, a reasonable knowledge of the marketplace within which I’m operating, conversations with various domain experts etc.

There is also a possibility of winning the lottery, but basing current spending and lifestyle choices on that is probably not a sensible option.

incogni2

All seems logical but even though you thought you were earning enough you were not, you have other debt besides the mortgage so even that last bit of work bringing in £14k was not enough to pay all that off, you were spending ahead of your earning.

Yes, or rather the 14K may well have paid that debt off but then the debt would have risen again to fund the ‘needs’ described above. So income was diverted directly to expenditure without going through a specific debt reduction, subsequent debt increase cycle.

Clearly people buy things which they cannot afford or when they cannot afford them – apart from convenience, that is what justifies the existence of credit (over the course of hundreds of years). In fact, that is exactly what a mortgage enables me to achieve, I am borrowing based on an assessment of future income. I could have sat down and saved £250,000 but I didn’t. I found someone who would lend me the money for something I couldn’t, at that point, afford. They were willing to do so in the expectation of significant profit. Spending what you do have, then borrowing for what you’d like to have seems, to me, to be pretty much the global economic model amongst (both at a personal and industrial level).

Working less so you don't pay some tax is a mugs game

I’m sorry, I didn’t mean to imply this, why would I work less to avoid paying tax? I meant to talk about how owners of limited companies structure wage payments, dividend payments and share ownership to pay less tax and NI. The requirement to pay employer’s NI contributions in addition, essentially, to employee’s contributions does cause some resentment; primarily because we are practically self-employed but legally employed (not self-). This is the mechanism by which our clients (or agencies depending on how we are paid) shift their tax/NI burden on to us and is why I am compelled to run as a limited liability company.

I think a minimum you should aim to earn net each year is the same as the wife so you are at least contributing equaly, certainly looks like you have been living off her income for some time by choosing to be part time(unless she has some major personal spends). this net can include the longer term stuff like pensions.

Why would I seek to contribute equally? What percentage of wives earn the same amount as their husbands? If I was a teacher, for instance, and therefore earning far less than my wife, would I be contributing equally?

Certainly, over the seven years of our marriage, she has been the major earner. She is extremely driven, by comparison with me, in terms of her career. She accepts the sacrifices she makes because she believes in the ends. I believe that to be her choice and offer my support; her choices however don’t compel me to make identical ones and she would be mortified if they did. The wage she earns (despite the fact it would be much higher, at a similar level of seniority, in the private sector) is a side effect of what she is trying to achieve.

Incidentally, her level of personal expenditure is probably slightly higher than mine. However, almost the entirety of our expenditure is joint.

You need the support and agreement of your wife for any choices you make

I think if you have not allready you should show the wife this thread

I already have the support and agreement of my wife for the choices we make together. I will consider showing her the thread but I am reticent to do so because of her likely reaction. Amongst people who know us, I probably have a reputation for being willing to listen to advice and then ignoring it. My wife doesn’t believe in asking for advice, would refuse to follow it (even if sensible) and, in my experience, is extremely aggressive to the purveyors of the advice. Although I object to most of the advice given and deny that I asked for it, my wife would resent it. Showing her the thread is likely to ensure that none of it is implemented – she is very stubborn. I’m afraid that your idea of one-size-fits-all advice will fail to refresh the parts that other advice cannot reach!

incogni2

ILW wrote: »

There is also a possibility of winning the lottery, but basing current spending and lifestyle choices on that is probably not a sensible option.

There is no possibility of winning the lottery if you don't play it.

Since, even at 1%, the chances of me getting a job, in any given week, are over 140,000 times higher than my chances of winning the lottery jackpot (if I did play it) then I may be prepared to gamble on one in preference to the other.

ILW

incogni2 wrote: »

Yes, or rather the 14K may well have paid that debt off but then the debt would have risen again to fund the ‘needs’ described above. So income was diverted directly to expenditure without going through a specific debt reduction, subsequent debt increase cycle.

Clearly people buy things which they cannot afford or when they cannot afford them – apart from convenience, that is what justifies the existence of credit (over the course of hundreds of years). In fact, that is exactly what a mortgage enables me to achieve, I am borrowing based on an assessment of future income. I could have sat down and saved £250,000 but I didn’t. I found someone who would lend me the money for something I couldn’t, at that point, afford. They were willing to do so in the expectation of significant profit. Spending what you do have, then borrowing for what you’d like to have seems, to me, to be pretty much the global economic model amongst (both at a personal and industrial level).



I’m sorry, I didn’t mean to imply this, why would I work less to avoid paying tax? I meant to talk about how owners of limited companies structure wage payments, dividend payments and share ownership to pay less tax and NI. The requirement to pay employer’s NI contributions in addition, essentially, to employee’s contributions does cause some resentment; primarily because we are practically self-employed but legally employed (not self-). This is the mechanism by which our clients (or agencies depending on how we are paid) shift their tax/NI burden on to us and is why I am compelled to run as a limited liability company.



Why would I seek to contribute equally? What percentage of wives earn the same amount as their husbands? If I was a teacher, for instance, and therefore earning far less than my wife, would I be contributing equally?

Certainly, over the seven years of our marriage, she has been the major earner. She is extremely driven, by comparison with me, in terms of her career. She accepts the sacrifices she makes because she believes in the ends. I believe that to be her choice and offer my support; her choices however don’t compel me to make identical ones and she would be mortified if they did. The wage she earns (despite the fact it would be much higher, at a similar level of seniority, in the private sector) is a side effect of what she is trying to achieve.

Incidentally, her level of personal expenditure is probably slightly higher than mine. However, almost the entirety of our expenditure is joint.




I already have the support and agreement of my wife for the choices we make together. I will consider showing her the thread but I am reticent to do so because of her likely reaction. Amongst people who know us, I probably have a reputation for being willing to listen to advice and then ignoring it. My wife doesn’t believe in asking for advice, would refuse to follow it (even if sensible) and, in my experience, is extremely aggressive to the purveyors of the advice. Although I object to most of the advice given and deny that I asked for it, my wife would resent it. Showing her the thread is likely to ensure that none of it is implemented – she is very stubborn. I’m afraid that your idea of one-size-fits-all advice will fail to refresh the parts that other advice cannot reach!

This all seems very well, but to me it seems you are currently up to your waist in the Doo Doo and getting deeper every day. I think you could do with addressing some issues before it gets to your neck. Only my opinion for what it,s worth.

Trying_to_be_good

You are obviously an intelligent person, with a strong sense of logic, and apply that to your circumstances in the way you see fit.

You have acknowledged that the model on which you had previously built your spending plans (i.e. earning enough to allow the spending, on the assumption that would always be the case) is now flawed, as the income is not so easy to come by in the current economic climate.

I wish you well and sincerely hope you do have a new contract soon. I agree that there's no need for you to strive to earn the same income as your wife, but a marriage is a partnership, so you must agree between you what you each think is acceptable to contribute - by no means is all contribution financial!

The figures you have posted would seem to imply a somewhat extravagent/expensive lifestyle, and this is no problem at all whilst you can continue to afford it. But there is a time when you/we can't, and that's when you have to be prepared to prioritise needs and wants.

By extending the term of your morgtage you would, indeed, end up paying more interest in the longer term IF you didn't reduce the term accordingly when/if you are in a better financial position. You can phone and ask them to shortern the term, not just overpay the £500 per month Nationwide allow. I've done this in the past, so it's not a decision that has to leave the mortgage that long forever.

I really hope you sit down and take stock again, and at least know what you could cut back on should you the situation deteriorate further. As I said before, best of luck, for the short and longer term.

Spartacus_Mills

incogni2 wrote: »

Hi,

Sorry JayZed, there were just so many points, it was inevitable that something would be unintentionally ignored. My wife’s net income is £2500 after final salary pension contribution and rail season ticket costs (which are paid by her employer and charged monthly against her wages). This leaves £950 per month. Direct debits for council tax, mobile phone, landline, an additional bank loan, gas, electricity, tv licence, buildings/contents and car insurance total another £698 and the business costs (which covers ADSL, website hosting, online backup and various insurances) involve another approximately £100 (current paid from my current account). About, £250 remaining. Food is say £300 and petrol about £60 (when I’m not working). Already a deficit of about £100!

You are in a fortunate position compared to alot of people. In fact reading your self-pitying whining has really rather annoyed me.

You have to get off your a*se and get work whatever it may be. I had three jobs in the late eighties to keep a roof over my head. I did not sit on a website seeking pity.

Get a job in a pub or a supermarket stacking shelves.

Cut out unnecessary expenditure such as Sky. That does not mean you got to the pub to watch the football. CAN'T AFFORD IT THEN DON'T DO IT. If you were to go down the pub to watch the footy then you would be a rather selfish person.

You need to work backwards. Take your wife's earnings. Deduct your mortgage, council tax and utilities and that is what you have to live on and cut your cloth according to your means and stop whining.

Cat_Wasilewski

incogni2 wrote: »

Hi,

How can one base expenditure on a worst case scenario? That would be if neither my wife or myself had work and both were unable to acquire any. ...

“The bold B]increase income to meet spending[/B is why you have had problems in the past and have them again.”.....

This really is extremely presumptuous though, again, no doubt well intentioned. The CCJ (my past credit problem) was passed down at a time when I had no non-State income for a period of some years and so was unable to even theorise about increasing income to meet spending.....

I was fortunate enough to make that amount very quickly and spent the remainder of the 12 months having a good time!

I don't think the poster was suggesting you base expenditure on worst case scenario but on most probable worst case scenario - which doesn't involve imagining your partner to lose her job in the next few months (although that could of course happen in the second depression - it could happen to all of us so should not be ignored and saving for a rainy day should be encouraged as a result) and the most probable worst case scenario - just by looking at the news and seeing all of the redundancies and cut backs (including in IT) would be that you don't find another job in the time you need to. You have to assume this rather than just cross fingers and hope for the best. Not having a go, but that is the prudent way forwards and the only way to consider your finances without being reckless or setting yourself up for a painful fall if the 'gamble' doesn't go your way - think of the phrase 'prepare for the worst but hope for the best' - anything else is just being an ostrich and sticking your head in the sand.

If you are on a 700 quid a month shortfall you really need to consider what are needs and what are wants and nice to haves on your monthly expenditure. I know families of six that live on less than the two of you (and in expensive places). Really deep down, there is money being wasted there. Setanta is one. Any mobiles is another - particularly as you are unemployed and at home - lets face it, recruitment agencies can contact you on your landline or leave a message. Sorry harsh but true. If you want to cut expenditure you HAVE to make painful choices as some of the very sensible posts above suggest. Do you take energy bills as a given? Have you made any attempt at energy efficiency? And no I don't mean changing a few bulbs I mean living in a tough environment wearing lots of jumpers rather than wandering around in short sleeves in January (not saying you do this but lots do!). Energy is not a fixed cost, we waste over a third of it in every home.

And finally the other poster is entirely correct to suggest that basing income on spending is irresponsible. It's not nice to hear but it's true - I know we've all been encouraged to do it by lax attitudes to credit and rampant advertising but following the herd doesn't make it right or responsible. It should be the other way round - doing it your way implies assuming that there will be bags of work around forever, period. Which in a global depression - just isn't the case. Live within your means. Because you know what L'Oreal lied when they said 'you're worth it' sometimes actually you just can't afford it - and you have to separate reality from wishful thinking. So much of overspending is to do with attitude and failing to differentiate what you can really live without from advertising spin. This next year is going to be nasty (and I wish it were otherwise) - hoping for the best isn't going to cut it. I really do wish you the best but I think you need to reappraise where you are and realise that you are not about the stuff you consume or how affluent you appear to others. You can afford to live on 20 quid a week food for a couple - particularly with you at home you can make food from fresh. Relying on credit card debt to tide you over the next few years (your worst case scenario) will anihilate (sic?) you should interest rates rise - and considering interest rates are at unprecidented historic lows, that is the most logical assumption.

OK I am expecting to be flamed for not being huggy enough, but none of this advice is unsound.

Cat_Wasilewski

"Major expenses are fish tanks which require 12 hour, high intensity lighting and 24 hour filtration, aeration and heating (compounded by the fact that there is no heating in the living room which means that several 300W aquarium heaters are continuously active)."

This counts as a want / nice to have not a need. I've had aquariums in the past - they EAT money. Get rid. Sell them. Sorry. You enjoy the fishies but you can't afford them. Smoking too, what's that 200 squids a month... add that to the Sky 45 quid and you are someway toward your total (if you seriously think that Setanta is a need then I am really worried by the entitlement culture in this country and doubt that we'll pull through this recession). You are not the lifestyle that you have seen on TV...guess what the pesky media lied to get you to spend money you didn't have. Without credit you have to live within your means. Wants and needs - it all comes down to that. Would you really rather lose your house over sky sports and a fish tank?????

Spartacus_Mills

Cat_Wasilewski wrote: »

"Major expenses are fish tanks which require 12 hour, high intensity lighting and 24 hour filtration, aeration and heating (compounded by the fact that there is no heating in the living room which means that several 300W aquarium heaters are continuously active)."

This counts as a want / nice to have not a need. I've had aquariums in the past - they EAT money. Get rid. Sell them. Sorry. You enjoy the fishies but you can't afford them. Smoking too, what's that 200 squids a month... add that to the Sky 45 quid and you are someway toward your total (if you seriously think that Setanta is a need then I am really worried by the entitlement culture in this country and doubt that we'll pull through this recession). You are not the lifestyle that you have seen on TV...guess what the pesky media lied to get you to spend money you didn't have. Without credit you have to live within your means. Wants and needs - it all comes down to that. Would you really rather lose your house over sky sports and a fish tank?????

Excellent post.

Spartacus_Mills

incogni2 wrote: »

TotallyBroke

Thanks for your ideas, I have turned them into headings and responded...

Sky

The cheapest tv mix I would consider is single entertainment pack + sports + HD. This would be £45.25 per month (and would save me £2). I cut movies, kids, music etc. several months ago.

The cheapest broadband is capped at 2GB per month which is not acceptable (I probably use that in a couple of days).

This alone tells me you are a 24 carat pratt. You are not working, your wife is, and you expect her to fund this when you are incapable of doing so and you are whining about not being able to afford anything.

Sky is not essential, it is a luxury, so is broadband.

I hope for your sake you get a sense of persepective, cut your cloth, and hope your wife does not get tired of living with a freeloading sponger.