Should I sell my house to clear my debts

Bestthingsinlifearefree

Hi Penniless,

I have seen many of Clapton posts and he / she talks a lot of sence.

lynzpower

i agree with the sentiment of "the business paying it" It in fact may well be better use of funds for the business to pay your hubby over the minimum wage.

Could he get a part time evening job or something around the business. What sort of business is it ?

D_e_n_i_s_e

Dont sell the house!

Give your business the chance to suceed say 6 months, if it doesnt bring in the returns / or you are still on the breadline. scrap the business and get your husband back into a full time job.

In the mean time visit the Citizens Advice Bureau.
They have some good financial advisors.

people can and do get by!

My husband earns just £13,000 per annum (£1100 / month inc overtime) as a call centre advisor. im a housewife with two kids and work p/t earning just £400 per month.

besides child benefit - we are not claiming for any other benefit child/ working tax etc even though we are eligible as we belive we can get by and dont have to.

we pay a mortgage of £450 / mth
water+gas+elec £100 / mth
Cable /telephones / mobiles / broadband £50 / mth (most are cashback deals!)
Council Tax £100 / mth
car / home insurance £70 / mth
car servicing and diesel fuel £100 /mth
Food Costs £200 / mth
Charities 10 / mth
Kids school costs £100 / mth
Premium bonds £100 / mth (my risk free lottery flutter!)

Clothes are bought from george / matalan / woolies and if theres a bargain sale then next or debenhams.

Holidays once a year, somewhere cheap where theres sun and sand, usually turkey, spain, tunisia and its goto cost under £149 each be at least BB!

Cinemas once a month with family on the orange wednesdays promotion.

my only sin a debit card with an overdraft limit of £1000 - that way we cant abuse it! .
currently i am £74 in credit!

So there you have it me and my family get buy on a monthly income of £1300 on average after tax per month. we are all happy, my kids are happy, we dont have any stress or anxiety and we get by. Life is too much of a rat race, and id rather make do without than get involved with any debt.

my advice is too keep the house, just minimise the luxuries, that way ul keep your sanity.

PenniLess_2

Thanks for all your input -

Bestthingsinlifearefree wrote:

This is where I am confused, if your income = your out goings (more or less).

why would you need to default on the cards ?

I have already had problem meeting the minimum payments and have agreeded a much smaller monthly amount - in some cases just £10 as a token gesture

The interest rate is important because you can target spare cash at the highest interest rate debt first ( a technique called snow balling). OK - that makes sense - thank you for that

OK read your post about your OH business "sales increasing" month on month.

Ok you need to sit down and have a real heart to heart if sales are really increasing, then his income will increase.

You and he need real PROOF / EVIDENCE that the business is improving and his income will improve.

Many people who are self employed are often in denial.

You need to set time scales / to see how soon things will turn in the business.

Maybe get a cheap accountant involved.

Is this loss making business (which it is if it only provides him £400 per month) going to pick up in the next 6 months ??????????????????????????????
The business is not loss making - but there is not much available to pay a salary

You need to have some serious financial heart to hearts with your OH and get him on this board, tackling this project as one team as it is both your financial future stake.

You're right - we do talk about it to a degree but not like we should - its scary stuff and talking about it make it seem very real!

PenniLess_2

I see what you mean - My car is a company car, and my OH car is needed to do deliveries which is why is covered by the new business (its a sport shop / with also an internet online store) the same is true for his mobile. However you have made me think - I need to do a lot of travelling and therefore use my phone as a comfort factor incase I breakdown or something - but perhaps it would be better to have a pay-as-you go for me?

Bestthingsinlifearefree wrote:

Do you really, really need 2 cars, mobile bills ??????

You say the 2nd car / mobile "is covered by the business", lets say they cost the business £500 per month.

If this cost was cut out, the business could then pay out extra in salary e.g upto £900 per month.

See the point I am making ? "covered by the business" does not necessarily answer the qu"

e.g just beacuse the business pays for it does not mean it cannot be cut back on.

what type of business is it ?

(sorry to be nosey but all info helps give good advice)

PenniLess_2

so you think it would be better to repay the debts slowly - even if it takes years and years rather than sell the house, clear all the debt and start again?

its so hard to know whats best.

Bestthingsinlifearefree

PenniLess wrote:

so you think it would be better to repay the debts slowly - even if it takes years and years rather than sell the house, clear all the debt and start again?

its so hard to know whats best.

Hi Penniless !!

Monday mornings they come round quickly !!:rolleyes:

I think the issue has been not so much your income but your spending.

If you sell your house clear all your debts.

Will you then run up a whole load of new debts as you have not changed your spending behaviour ?

If you make a huge effort to pay back the debts (and keep the house) this will give you the change in spending behaviour.

I think you need to think very seriously about your OH business if it is only making him £400 per month it is in reality making a loss.

e.g if it paid him £1500 per month, the business could not survive. The business is only "not making a loss" by not paying any wages.


The sell your house plan, clear all the debts and start again is definitely an option but could mean you just carry on as before i.e living beyond your means.


Hope that makes some sence.

Best,

PenniLess_2

Mondays come around to quickly - I think the world must be spinning faster than it used to!

That does make sense and it does worry me - right now we cannot overspend as we do not have the money, but if we did have some savings in the bank would we get carried away again - maybe - that is how we built up so much debt in the first place - consolidate to clear the debts and then reuse the card - not very sensible and now we are living the consequences of our actions :sad:

I do find the having so much debt a very heavy weight and it does prey on mind a lot.

Thank you for all your advise - it has been good just to type it all out and your replies very helpful.

quantumleap

You say the business is a sports shop / internet site.

Could your husband not meet you half way and keep the business but only have it as an on-line business. This would leave him in a position to get a full time job and do any business related work in the evening/weekends/during lunch. Then as the business progresses he can look into established a high street presence.

Believe me, a lot of people do this, and very successfully.

Bestthingsinlifearefree

You are quite perceptive Penniless, most people consolidate and then rack up fresh debts and then consolidate and run up fresh debts until they cannot get any more credit / debt.

By selling your house, you are in a way consolidating, which will help you avoid you and your OH confronting your spending patterns and by clearing all your CC / loans will enable you to run up fresh debt and carry on spending like before.

You don't want to be back here in a few years renting with 70K of fresh debt.

Though putting the other point of view if you did sell and clear all the debts you might save thousands in high IR's (interest rates) on the credit cards which you would incur by paying off the debts over a longer period of time.

Plus you may be able to find a similar place as your current property and the rent maybe cheaper than your mortgage.

You and your OH have a decent income 2k or so, from that you could rent a nice place have a good standard of living , not have the stress of the debts AND start saving again:T .

So I can see the temptation to sell.

Did you check out redemption penalties on your loan ?

There are positve reasons to sell and positive reasons to try and clear the debt by not selling.

Time for a financial strategty meeting with your OH.

Best,