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Not sure what to do...

I know some of you will think I'm mad... my problem isn't so much getting out of debt, but making a decision that will create a debt albeit pretty small.

So heres my dilemma (part of mind saying just do it/other part saying no not yet).

Only have a mortgage for a debt less than 40% LTV, wife's nice car paid for and my old one paid for. No loans and no monies on the cc's .

So.... my earning have been up and down (self-employed) but I've saved enough for my next passion (a new motorbike). With px'ing mine worth 2.5K against the new one at 8K leaves means 5.5k to finance.

Being self-employed i'm a bit worried of not being able to pay the bills in the longer term. But i worked out that even if I was not earning anything with my wifes earnings all i would need is 900 quid a month for use to have a good lifestyle.

I used to have loans of over 16K, plus cc cards with a couple of K's on them and very happy at the time due to the regular income (then it was a case of ...as long as the debt balances with the assets then all is OK). Also, have an excellent credit rating - but all that could change......

I just think it would be a good motivator and I've worked very hard recently (wife is ok with it 'ish). And even if I had to sell it at a loss, I'd still cover the loan cost.

Options:

1. Don't buy it, get a job, be satisfied with the bike (paid for) I have, and maybe look again if the self-employment work become more regular (currently working for the one company only! on a one to five day a week basis - this may not continue was only going to be for two weeks - that was 10 months ago).

2. Take a loan or use monies I've saved separately for the for my tax bill in 2006 thus leaving me with at least 6 months (monies saved to use on the bike) to find new income if the existing opportunity dry's up.

3. Send the wife out to earn more money whist I enjoy the freedom on my new purchase during the summer.

What would you do?

Comments

  • Xbigman
    Xbigman Posts: 3,906 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    I may be biased on account of the debt problems I've had in the past, but I'd save up for the new bike and only buy it when you can pay for it.
    I needed a new car last year and used my savings and a lot of haggling to get what I wanted for less than I could have spent. I now get a thrill out of 'owning' things like this. Even better, its a cheap thrill. :D
    Regards



    X
    Xbigman's guide to a happy life.

    Eat properly
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  • Coming from a family of crazy bikers - even I would say wait.. suffer the bike you have for another year and put away £458 a month! Then pay cash for your new bike and watch the price go down! If you have alook at the money saving old style you would be surpised how much you can save amonth and with the incentive of a new set of wheels its very possible you could get this bike really quickly!:D
  • deemy2004
    deemy2004 Posts: 6,201 Forumite
    Yeh save up for it..

    The purchase will have more value / satisfaction value than if you actually worked towards getting it rather than getting it and then paying for it....
  • I know what you're saying.

    You could say that I have already saved for it b'cause the cash is in the bank and its been building up whilst I've been doing work. The only problem is that I may need to live off it if I can't get any more work.

    Hence the idea of a 5.5K loan - therefore, leaving 5.5K cash in bank to live off.

    All my mates don't have a problem with debt and I never used too. Their view is you only live once and you don't know whats going to happen tomorrow.

    Problem is I think too much - where's my coin? heads or tails? Knowing me the coin would land on it's edge!
  • ceegee
    ceegee Posts: 856 Forumite
    But what if you have the loan and you don't get any work? Would there be adequate income to cover the loan repayments?

    Also, you said that you were a bit concerned for the future if you didn't get any work. Wouldn't having a loan just add to any worries/concerns as time went by?

    BTW, I think too much too!
    :snow_grin"Let it snow, let it snow, let it snow........":snow_grin
  • Debt_Free_Chick
    Debt_Free_Chick Posts: 13,276 Forumite
    10,000 Posts Combo Breaker
    Definitely NOT option 2 - Crown Debts are not negotiable and you will find the Taxman very difficult to deal with. Especially as you actually have the money.

    Do you also have enough to see you through 3 lean months? Or 3 months with no income at all? You should have that, in addition to your tax bill, before you even contemplate spending any money.

    As for taking on debt ...... do you want to re-read your post ;)
    Warning ..... I'm a peri-menopausal axe-wielding maniac ;)
  • I don't get why you would want to pay loan fees for setting the loan up and interest on the money when you have it anyway? I see what you're saying about having a safety net but you're paying for it!
  • deemy2004
    deemy2004 Posts: 6,201 Forumite
    Don't get the loan
    Don't buy the bike until you have saved enough cash for the bike and a few months to cover no income.
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