Newbie...

WannabeMortgageFree_2

Hi, I'm new and not really sure what to say but thought I'd try and jump in. I'll apologise in advance for either repeating questions (well actually I don't have any that I can think of at this point!) or being boring!

I had what you all refer to as a lightbulb moment today. I'm fed up with feeling guilty, ashamed, embarrassed and angry about the fact we never seem to have any spare money, we're constantly fighting the debts and bills, our mortgage repayments are high, our income unstable... It's depressing for both me and my other half.

So I want it gone. All of it. I want it gone and I never want it back!

I haven't properly calculated everything yet. My intention is to do that tonight, although I have started doing it now. So hopefully by tomorrow I will have a SOA that you can all see if you'd like. We think we have about £30k in loans and other debts. At any rate we don't think it's any higher then that as we cleared a load off and then had to buy a car which seemed sensible at the time but probably wasn't! (It was a Smart forfour, cost about £9k but saves us loads on petrol and running costs.)

Anyway, the most worrying thing is the fact my other half runs their own business. So the income is very up and down. He has the ability to earn an awful lot of money, for instance shortly he will have over £10k come in profit alone... And that's if he does nothing else. But then the money gets him down some days and so he doesn't always push himself and we can go months with nothing coming in... It's worrying, especially when you want to live within a budget or keep an eye on your spending.

So far we've figured out the following, but there's a LOT missing... For instance my car repayments, the debts... This is just our very basic monthly outgoing vs incomings...

Outgoings

Mortgage 1 - £1,136.00
Mortgage 2 - £469.00
Water - £35.00
Gas - £35.00
Electricity - £100.00
Life Insurance - £26.00
Car Insurance - £60.00
Car Tax - £25.00
BT - £35.00
Internet - £34.00
TV License - £10.00
Mobiles - £35.00
House Insurance - £24.00
Petrol - £180.00
Food - £220.00
School Meals - £65.00

Total - £2,489.00

Incomings

Child Benefit - £210.00
Rent - £500.00
Salary 1 - £415.00
Salary 2 - £415.00
Tax Credit - £922.00

Total - £2,462.00

Now I know that it looks like more is going out then is coming but we have chunks of extra money coming in through my other half's business on an almost monthly basis and these can be anywhere from an extra £500 to several thousand depending on what's going on. Hence the reason we never worried about it before.

We are pretty sure we will have some lumps of cash coming in shortly and we're going to try and make arrangements with the loan companies etc to write the debts off if we pay cash lump sums... So hopefully that will bring the sums down somewhat...

Other then that I don't really know what to say. Our credit histories are terrible at the moment, I believe there is even a CCJ that shouldn't be there listed... We complained to the company involved but they refused to remove it! So that's an ongoing battle. And there's another ligit CCJ but we're haggling to cut a deal and get it removed too. Most of our bad credit comes from late mortgage payments etc etc...

So there you go, and here I am! Start of a rather scary journey really. We live a fairly good lifestyle right now. Most of the chunks we get in go on meals out, holidays, spending spree's in general and it's hard to think of cutting that out to get rid of debt, but then I suppose that free's up some money at the end of the road really.

Living in denial has got us into this mess. Facing reality will get us out of it.

CLAPTON

you haven't been forgotten but you need to post a complete picture with all the spending and all the debts
also can you say what both the houses are worth and what the mortgages are

misspoppy

Do you make provisions for your husbands tax and NI?

WannabeMortgageFree_2

Hiya Clapton, I'm just working out all our spending and debts as I type. Our main house has a mortgage of £176k, we had a recent valuation as we were thinking of moving which valued it around £240k and our second house is £77k and is worth around £140k. So quite a bit of equity in both houses, but we're hoping to pay them off completely once we've got rid of our debts...

Misspoppy, yes we do make provisions for tax and NI. But to be honest it's very low as his income is so varied, and then there's business costs and expenses etc etc. My DH is a stickler for everything being ligit and so he gets it all double checked by an accountant and his mother (who is very savvy with money) as well as going over it himself (he studied accountancy at one point). I'm not sure how it works, but basically we pay ourselves a small amount each month so we know we've definately got something coming in as we can often go for months with nothing coming in and then have one big order which is enough to tide over the year if that makes sense? I'm not sure, I'd have to ask him again, as it all goes in one ear and out the other with that kind of thing and me!

Bestthingsinlifearefree

I think you both need to be honest about what your other half's business is making.

On the one hand you say it goes months with out making anything and other times it brings in big amounts.

Ask your accountant to tell you exactly what it has made over the last 12 months (after tax / costs etc) ?

Was it 10K or 25K or 50K or 100K ? etc etc or maybe it did not make any thing ?

If your OH can't tell you exactly what he earned in a 12 months period after ALL costs. Then he needs to get a new accountant.

Once you have established this figure you can divide it by 12 to work out your OH average monthly income from the business and use this in your SOA.

Keep up the good work !

raq

hi there and welcome.

Some great people on here who will give excellent support.

One question from myself really ???

going by your figures seems you have more than a couple of children .. How come you get a good weekly figure from wftc ???

Bestthingsinlifearefree

Why not sell the 2nd property and use the equity to clear all your debts?

It would give you 60K in equity which you can use half to clear your debts and the other half to reduce your main mortgage.

Then just live within your means / budget i.e don't run up new debts.

Problem solved :beer: or am I missing something ?

WannabeMortgageFree_2

We have four children aged 5 and under and a 5th child on the way. We get such high WFTC and child tax credits because we both work about half a working week as our children are home and we pay ourselves just below the lower limit for tax and NI as it's basically what we can afford to pay ourselves unless a big order comes in. Last years income was dire - hence a lot of our debt as my OHs father died suddenly and he went off the working rails somewhat. He's now all fired up and working hard again so our WFTC will go down again once we've got money coming in again. But that probably won't be for another couple of months, so really this is the planning stage.

If all goes well then half way through the year he should have an order which will leave us £10k in profit and the later part of the year a followig order will leave us around £40k... And hopefully he should have other smaller bits and bobs coming in around those as well... So we'll probably, at that point loose the WFTC altogether I would assume? Don't know though.

I'm sorry I hadn't made it clear before... My OH has great capacity to earn, he knows his sector very well and when working properly can make a lot of money. But last year he went into something of a slump and didn't really do anything so we didn't make very much at all... We got a few orders in which basically left us enough to pay ourselves the wage I listed above.

I suppose it's embarrassing really to admit the main money earner in your family, didn't earn any money for close to a year! And what he did earn we frittered away on meals out and clothes to try and cheer ourselves up, but still it was nowhere near enough to affect WFTC.

I'm not good with money and have never really paid any attention to it before because my OH did all that stuff. But now it's clearly obvious we're getting into trouble and I want to take an active role in helping. My OH agree's completely, hence the reason he's pulled himself up, dusted off and is making an effort this year.

Sorry if I don't make much sense... As I said, I don't really understand the situation we're in very well and am trying to figure out exactly what is going on. I suppose it came to a head when at the end of last year my DH suddenly announced we were horrifically behind with our main mortgage and he needed to wipe out his savings to sort it out straight away - I'd had no idea about any of it and was somewhat shocked. I came here yesterday on a recommendation and realised there is a way I can do something to help by working it out, keeping on top of it and motivating him to basically get off his !!!! and do his damned job!

WannabeMortgageFree_2

Bestthingsinlifearefree wrote:

Why not sell the 2nd property and use the equity to clear all your debts?

It would give you 60K in equity which you can use half to clear your debts and the other half to reduce your main mortgage.

Then just live within your means / budget i.e don't run up new debts.

Problem solved :beer: or am I missing something ?

I suggested this to my OH last year as frankly I'm fed up with the damned place. I never wanted to buy that particular property in the first place. Unfortunately my brother is now living there and paying rent - well he was until he lost his job and now we're footing that bill too. We've agreed to him staying there for upto 3 months and if he still can't pay rent then I'm afraid he's going to have to go. :rolleyes:

I know it sounds terrible but I'd chuck him out and sell it tomorrow, but OH seems strangely attached to that house and is hoping to use it as some sort of pension plan? I don't know what he means by that - I suppose he means living off the rent or something when he retires. My suggestion was to sell it and buy two smaller properties or a cheaper property when we were back in a good financial position but he doesn't like that idea.

I'm so confused my brain hurts now!!! It seems everything I suggest to my OH he poo-poos or tells me is a bad idea. I suggested that if he wouldn't sell that house then he could at least pull the equity out and pay off the debts but he says it's such a hassle he'd rather just pay them off a little at a time and that, that house is our fall back position for if things ever got really bad.

Bestthingsinlifearefree

I think you need to have a serious financial heart to heart with your OH.

Is he being totally honest with you about the state of the finances.

As I say in my post 7 you have a solution it seems strange your OH does not want to take it

I maybe totally, totally wrong but it seems to me your OH is in big denial about his income / the business and his finances.

The business does not seem to be making any money and nor does the 2nd house.

Maybe both should go ? Maybe he should get a job and use his skills in that and get a guaranteed wage.

You are doing the right thing WMF in getting involved 100% in the families finances.

I think you need to have some serious financial chats with your OH and he shouldn't just ignore your suggestions.

Keep up the good work.

WannabeMortgageFree_2

I agree... His phrase when I just mentioned this to him (he's just across the room from me working!) was that we're cash skint but capital rich... And whilst that house last year cost us around £1.5k it made us £10k in capital.

we have nothing to spend, but our personal fortune (!) is going up by around £3k+ a month

Is his view.

I think I'm going to have a serious talk with him tonight when the kids are in bed to be honest because I'm so confused. I don't understand the situation at all, and if I don't understand it how can I help?! I'm pretty sure there are no hidden debts he's not told me about but I have been so bamboozled the last 24 hours with figures and stuff I'm not sure I understand anything right now!

Thank you for your help and advice! I think I'm just a bit too confused right now to do or say anything useful. So tonight I am going to sit down with him and work out exactly where we are and what's going on and how we're going to get out of it. For some strange reason I thought this would be really simple!!! Talk about ignorance is bliss!!! :rotfl:

Anyway I will report back tomorrow with a SOA and let you know how it goes tonight as I don't think I can say much more today because I am so confused now I think I need to see it all written out in front of me....

What can I say?! I used to be blonde!!!!