What a Right Pickle!

Bravehearted_2

The posters complaining about wasting time out of their lives to post must be short of brain cells.

This is a public forum where no-one puts a gun to your head or makes you post. It was your decision to read and post. How about just jog on rather than post again about the OP wasting your time.

Since when was there a rule to post every detail about your life before seeking opinions?

I think it's particularly silly that someone got envious of the OPs gift and wife's decision to leave work - not your business, grow the hell up.

racing_blue

Sometimes seeing a problem from the perspective of others helps you to test and refine your own ideas, and maybe apply the things you have learned to your own situation. So I'm still grateful to the OP for posting. Real or not, he has given us a very interesting problem to chew over, with a curve ball on page 7.

For a long time I have been convinced that the mathematically correct way to solve these sort of problems boils down two focusing on two numbers: net wealth and cashflow.

In the womb we have net wealth of zero, and after our estate has been divided among of heirs we'll have a net wealth of zero. We all share in that! Some are born with a hand full of aces, some with the four of spades and the six of clubs. But by controlling cashflow, we can all influence how our wealth (and with wealth, choices) ebbs and flows over the course of our lives.

From the SOA on page 1, this is a snapshot of a family with a net wealth of £47835 and an average monthly positive cashflow (before debt interest) of £1041.50. That's not such a bad situation to be in, and there are plenty worse.

Cashflow is the problem at the moment: add in debt interest and their cashflow is negative £1300 per month. The expensive unsecured debt is clearly the biggest drag on their cashflow and hence wealth. They simply need to reduce this by whatever means, or they are getting poorer each month. All else being equal, they will have a net wealth of zero within about 3 years. A net wealth of zero gives very limited choices in life.

(NB: The Office for National Statistics would also include pension wealth as an asset, and at a guess this household could well have pension wealth in excess of £200k, so maybe we are looking at a net household wealth of £250K? Which is somewhere around the national median.
Data from ONS report 3/12/12:
bottom 10% household wealth threshold: £13,000
50%: £232,000
top 10%: £967,000)

Curveball: a large cash gift to renovate a house. Large enough that they can consider paying off £50k of debt by scaling down the renovation. The game is the same, but suddenly there are a few new strategies to consider.

One is paying off all expensive debt (what I would do, without a doubt), building a cash fund of at least 1-2 years school fees, and then starting on the house if finances still allowed.

One is renovating the house quickly with a view to selling at a profit. I personally wouldn't do this unless I had a construction / architecture skill set & wanted out anyway.

Either way I'd be thinking one move ahead. What will my net wealth and income be in 5 years, how will that expand my choices in life?

An interesting scenario to ponder- don't let irritation distract from that!

meer53

Bravehearted wrote: »

I think it's particularly silly that someone got envious of the OPs gift and wife's decision to leave work - not your business, grow the hell up.

What a stupid comment !

Do you really think that anyone would be jealous of the OP ? Gifted cash or not ?

I feel sorry for both of them, trying to keep up a facade whilst slipping further and further into the financial abyss which is facing them.

80k worth of debt, refusal to even consider cutting back on their most expensive outgoing, school fees, now considering losing one salary ? Regardless of this "gift" the OP has to be the biggest ostrich in the world.

Until he gets his head out from up his backside, there's only one way this situation will go. And it's not up.

mustnotspend

Hello OP

Well you've created quite a stir!

I think there are some real concerns here. We've not seen any evidence of you 'getting' the fact that your lifestyle is unsustainable, with or without a cash gift. It seems implausible that not only are you NOT downscaling the house and / or stopping the private schools but rather you're embarking on home refurbs AND giving up the second income...

You say you've down some calculations so I think it would be good to see your updated 'to be' SOA. So there's challenge for you: show us that you've REALLY thought this through and that the sums do add up!

Because I, like many others, really do not see how this is at all feasible... (Unless the real gameplan is that you're banking on a few more cash gifts in the next few years!)

Best wishes either way...

MNS

pennies_from_Heaven

Bedsit_Bob wrote: »

That won't work.

You can't expect NMD's children, to live in the same house as people who rent. :eek:

ha ha!!! As a renter myself paying 1k:eek: a month for our property this really made me laugh and says it all really!

Tabatha_Kitten

Wouldnt surprise me if he went ahead with the whole house refurb thing and his wife giving up work then put his head back in the sand regarding the debt.

Given the comments he probably wont be back here when it finally goes pear shaped but hey ho, at least he will have shown his friend and neighbours how sucessful he is with his big house and his wife having time to "do lunch" and natter with the other mums at the school gates.

Newyorkdreams

I wasn't going to post again! But here goes...!

I'm not bothered whether the OP comes back and responds or not. It's his loss if he doesn't and I am not going to lose sleep over it. I would like to think that if it was me, I would have the decency to say thanks to folks and defend my argument but that's me. However, it really does not make one iota difference to my life. The point of this forum, as I see it, is to offer mutual support and advice to support one another to get out of the hole(s) we find ourselves in when it comes to debt. I'm in a great big hole and I found the advice extremely useful and thought provoking which I needed. Now, let me ask the question, what is the POINT of spending your time responding to someone's situation (for the benefit of the whole DFW community) when all the facts haven't been shared? I don't mean what you bought for lunch, what type of washing powder you use or whether you buy your knickers in Primark or Prada, I'm talking about withholding particularly key and pivotal facts that would shape the whole course of the responses. My time is extremely precious and I don't want to think that it's been wasted, which, I feel it has which is why I'm peeved. Of course, I had a choice to post and I chose to do so, on the unwritten rule that is obvious that you share all the facts that are deemed relevant, rather than drawing people in to, what one poster described as an 'imaginary situation' which is what it is. It's testament to the strength of this forum that the vast majority of posts are not time wasting but are of incredible value.

As for the comment Bravehearted about being envious, I really don't think it was envy that was being portrayed but utter disbelief and a tounge in cheek way of saying 'get a grip'! Although you are entitled to your opinion, I think you are outnumbered and therefore perhaps you should take your own advice to the majority of the posters on this thread and as you so gracefully articulated it - 'jog on'!

As I said in my original post, I wish the OP and his family all the luck for the future.

NYD

nomoredebtplease

Oh blimey, I do seem to have caused a bit of a stir!

Firstly, my apologies to anyone who felt offended / let down / aggrieved by me withholding the details of the money gift. This was definitely not my intention and on reflection I should probably have been a little more open about the complete picture. Lesson learnt.

Secondly, I absolutely value every single comment that people have made on this thread whether positive or negative, constructive or judgmental (and surprisingly there have been a few of those over the last couple of days!) - it's all useful and helps to demonstrate the vast tapestry that is human nature.

OK, so where do we go from here. I'll lay out some facts.

1 - We absolutely did not want to use any of this money to pay off debt. It was meant as a gift to develop and extend our house - which we can still do if we scale this down. We're happy with that. But, given our personal desire to continue with the private education, not sell our house, not go on a debt management plan, we thought this was our only course of action left. Additionally, we've justified it in our heads as effectively my wife will be project managing the build of which some of this money will form her 'income'.

2 - My wife will still be left with an income of about £1,400 a month once she leaves her job. That may not have been clear from my previous post. That will cover school fees. Other non-overdraft debt will be about £20K.

3 - I will be posting a revised SOA to reflect all of this. It's been a busy week at work and I've just not had the time.

4 - We will also be cutting back in a number of other ways too. Mobile phones, holidays, food shopping. Some of this is already in transit and again, will be reflected in our revised SOA.

5 - We've also set ourself some goals for this year. Goals around work life, personal life, family life etc. We HAVE had our lightbulb moment - just looking to juggle everything as best we can and do everything we want to do. We're ambitious people.

6 - If we don't go onto a DMP, then we have options when we remortgage in September. With a DMP, we don' t have those options (hence the post earlier about looking to secure a fixed rate in my prev. post). Those options will be greater with reduced debt, lower interest rates and (if the re-development work is complete), higher LTV. That will also reduce our outgoings.

Finally, there have been some pretty nasty comments posted about my situation recently. I thought this board was meant to be non-judgmental and whilst I'm thick skinned enough to soak them all up, others may not be. I would hate to think that others reading this thread without the courage yet to post about their situation would be detracted from doing so. I've seen myself the good work that this board does.

beecher2

Just wanted to say that if the work isn't completed in September you might be better sitting on the SVR rather than remortgaging, and wait until it is complete.

nomoredebtplease

beecher2 wrote: »

Just wanted to say that if the work isn't completed in September you might be better sitting on the SVR rather than remortgaging, and wait until it is complete.

Thank you - yes that had cross my mind.