Sell home and downsize to be debt free? Help!!

Hopelessly_Hopeful

Hi

Well done on admitting the issue and accepting that something has to change.

You need to factor in buying costs too so you can see the true situation. I reckon uying and selling costs a min of 10k. Do you know they will lend you £160k on a £200k house for sure? Seems pretty tight on todays criteria with a salary of 40k. Then when you get there there will no doubt be work to do and decorating as well as well as the compromise on space.

Have you considered going interest only until you get ontop of your debt?

Are you sure your min repayment is £600. Not mistrusting you just advising you to check as 2% of £22k is £440. This would give you £160 for over payment and more still if you went interest only for a few years. If you dont use any more credit paying £600 a month on an assumed interest rate of 18% will have it cleared in fours years and four months.

First step is being really clear about whhere the money is going. The lightbulb moment can take a while before it is proper lit and not just flickering away in the background.

Good luck with it all, there will be a number of solution and the choice has to be right for you and your family.

If you want any advice about dmps and implications please shout up

eyeopener2

If you do go down the dmp route, you may be able to cut the stupid hours you work, and keep the house. So why not look into what you may pay and length of repayment.

Believe me, it's not the end of the world. So your credit rating gets destroyed, so what? You won't get the very best deals available but there are plenty dmpers who have stayed with the the same lender and got decent rates.

Stepchange do an online debt remedy that gives you a no obligation idea of what your options are.

It's worth an hour of your time to complete it surely?

Don't jump into anything till you've considered all the options and asked the questions.

E2

theoretica

I agree that you would be wise to consider a lodger. As you are considering a 3 bedroom cottage could you let out two room - perhaps one as a bedroom and one as a sitting room so you can keep your family life separate. Could the children and your wife grow food in the garden?

Are you eligible for any free insulation? Do you heat hot water on demand or have to heat the whole tank?

racing_blue

With respect, I don't understand why the posters above are advising against consolidating all your borrowing?

Existing mortgage + cards = £242k.

At 3%, the interest on £242k is £600.50 per month ... almost exactly what you are paying on your cards aione right now.

ellesbellesxxx

racing_blue wrote: »

With respect, I don't understand why the posters above are advising against consolidating all your borrowing?

Existing mortgage + cards = £242k.

At 3%, the interest on £242k is £600.50 per month ... almost exactly what you are paying on your cards aione right now.

The OP has pointed out that this is not an option due to LTV on mortgage.
Also, consolidating doesn't always work... if the debt is secured against your house, your house can be repossessed in the case of non payment. (worse case scenario job loss, illness etc) If it is unsecured then you can pay token amounts and enter into repayment plan.

missindecisive

Hello, it doesn't matter about what car you drive or really what house you live in, whats the point of a dream home if you can't have a life without all this worry? You sound like you are working too many long hours to keep all this going, think of your health as you can't keep on like this indefinately.
I bet your kids would like to see more of their Dad. If I were you I would definately consider downsizing the home if it would make you more financially comfortable.
Just a thought, look at all different types of houses if downsizing, perhaps something you may have previously not even considered. You may have more funds available if you do move, and you can make any home lovely and to your taste. The most important things are your health and happiness and that of your family, good luck.

greenwoodlad

Hi folks thanks again for your valued support - we pay £1042 a month mortgage - that is part repayment and part interest only - i have asked about going all interest only which would knock the mortgage down to £700 ish a month but the building society have refused as they say we need to have proof of an investment to pay it all at the end of the term - i told them we would just sell up - but they will not let us go interest only . I have a loan with 12k outstanding and 5.5 years to run - i have tried to get a new loan to consolidate all the debt but have been refused even by my existing lender and others. I have tried to get a balance 0% transfer credit card to transfer my existing credit card debt and have been refused - to add to all this we have a £1000 overdraft and we occasionally go over, not often - we have received a letter from the bank saying they may demand the overdraft paid back in full with 7 days notice. We have a next card with a £2k balance - we try to pay this off 1st as the interest rate is high but because we never have any money - when any of us are desperate for clothes shoes etc - we tend to use the card - we only shop at sale times though - but we need to get rid of this card and the credit card i know - the credit card has 5k on it - max limit - but whatever we pay off we are using the next month on food - crazy i know :eek:

Happytogetdebtfree

Hi what about reposting another statement of affairs maybe fresh eyes and fresh review can see some further saves. Is overtime likely to restart again ? can your wife up her hours ? Have you things you can sell on ebay?? Good luck on your journey:)

greenwoodlad

:rotfl:
SOA
Number of adults in household........... 3 (eldest son 16)
Number of children in household......... 2 (aged 10 and 14)
Number of cars owned.................... 1 (15 year old Skoda on its last legs but not given up get!)

Monthly Income Details
Monthly income after tax................ 1790
Partners monthly income after tax....... 720
Child Benefits................................ 188
Income from 2nd Job............................ 300
Income from Extra Job ...........................200????( seasonal gardening jobs ...summer only but have divided summer income by 12 months but this can fluctuate owing to weather etc)
Total monthly income.................... 3198 can vary taking into account summer job

Monthly Expense Details
Mortgage................................ 1042
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property)....0
Council tax............................. 200
Electricity............................. 60
LPG Gas..................................... 15
Heating Oil..................................... 100
Water rates............................. 68
Telephone (land line)................... 27.50 (Just switched to cheapest deal for home broadband and phone)
Mobile phones x 4..................... 93 ( 3 mobile phones on cheapest contracts – we are restricted to Orange network as we live in a remote place , Orange is only coverage)
TV Licence.............................. 12.12
Satellite/Cable TV...................... Cant afford it , never have had sky or anything – have freeview
Internet Services....................... Included in Telephone (Landline)
Groceries. Toileties, Pet Food etc. ......................... 500 (includes school pack ups, home baking ingredients , Laundry powder / medicines and one bottle of wine each week))
Clothing................................ 0 (we have put all these items on our next account as we never have spare cash to buy any other way)
Petrol/diesel........................... 160
Road tax................................ 19
Car Insurance........................... 26
Car maintenance (including MOT)......... 60 (Based on actual repairs, tyres MOT & small service) We cover 24000 miles a year
School Trips/Activities............................. 30 (Based on last year)
Vet Bill............................ 20(Based on the last year)
Swimming Lessons/Coaching .......................74
School Bus fares ( we live in a village)............ 160
Medical (prescriptions, dentist etc).... 50 (Based on last year – my wife & I needed dental treatment we are at an NHS dentist)
School Dinners for 1 child................. 60
Buildings insurance..................... 15
Contents insurance...................... 15
Life assurance ......................... 62
Presents (birthday, christmas etc)...... 30
Haircuts................................ 30
Entertainment.........................0
Logs/Coal………………..30
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2958.62


Assets
Cash.................................... 0
House value (Gross)..................... 299,000
Shares and bonds........................ 0
Car(s).................................. 500
Other assets............................ 0
Total Assets............................ £299,500


Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 220000....(1042)......3.95
Hire Purchase (HP) debt ...... 0
Total secured & HP debts £220,000.....-.........-

Unsecured Debts
Description....................Debt......Monthly.. .APR
Next Account.............2100.........210............29 .9
First Direct Loan ....12000.......228.92...........9.1 12 years left
Santander card…..5000…..150………17.9
ODraft …………1000…………………
Total unsecured debts. £20,100


Monthly Budget Summary
Total monthly income.................... 3198
Expenses (including HP & secured debts). 2958.62
Available for debt repayments........... 239.38
Monthly Unsecured debt repayments....... 588.92
Amount left ....... – £349.54

Personal Balance Sheet Summary
Total assets (things you own)........... 299500
Total HP & Secured debt................. – 220000
Total Unsecured debt.................... -20,100
Net Assets.............................. £59,400

*** Currently in order to pay debts we end up reducing our food budget down by the -£349.54
Also we have sold everything we don’t need on e bay mine and my wife’s bikes, kids toys and clothes that are no longer used , our car and we now have a cheap old car that does the job.

NOTES – from last SOA advice !! supermarkets – we live in a remote village 40 miles from cheap supermarkets like lidl and Aldi – we buy fresh meat from our village butchers, and we shop at Morrisons as my wife works there and we get 10% discount.

Happytogetdebtfree

Well done on posting the soa, I'm sure people will be along to post helpful comments. You say cheaper shops are 40miles away could you do a trip once a month to stock up on freezer food and tinned, do you meal plan? If so can you fine tune it better? Phone up mobile phone company and ask for a reduction? Consider orange pay as you go?


At the minute it looks scary it always does at the beginning but no problem is unfixable. With regards to school bus fares, is there any people doing car shares or is there cheaper transport?

What can be done short term to improve longterm, can your wife up her hours? Can the children 14 & 16 get a paper round and contribute to some costs?

Are the amounts in debt repayment the minimum payments or are you paying more? How frugal can you be? Don't have haircuts for a few months don't do a present fund for a few months overpay a card and don't spend on it, it's not going to be easy but eventually things will start to reduce. Try the old style board for meal ideas.

Things won't disappear overnight I've been tackling my negative wealth since 2008. This is the first month I've been able to feel the financial difference. You might not be able to trim massive amounts but sit down as a family and talk be realistic and be honest let the kids get on board. Make a realistic plan, sell old clothes to buy new clothes shop on eBay! Have the kids got things they want to sell to make money to pay for there Mobile costs.
It does get easier xx