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

Happytogetdebtfree

Can you convince all kids to go on packed lunches ? Also if kids are at a local school how local is it? 160 for a month bus fare is extortionate ? What other options have you got instead of selling house, have you considered a dmp?

Slowdown

Hi I'm really feeling for you here. I have not had to face this choice myself but I am oozing with sympathy. So many things to consider, and alongside the all the financial chaos, we are also talking about major emotional trauma.

You sound to me like you have reached critical velocity and think a dramatic shift is all the only option left. Is that because you feel you have no other way out? The debt has become so cumbersome and your lives so pared down to the bare bones that you can make no more cuts?

Well I would like to offer a small thought that may or may not help. Three years ago my DH was diagnosed with cancer. He is still here today and one day we hope it will never come back. However. this crisis taught me a valuable life lesson. It is the people and your relationships with them that matter above anything and everything else in life, and it is these that we should strive to maintain and grow. Everything else is so much less significant.

You must first think of what is best for your own mental health and stability. Without you on an even keel the family unit will quite likely begin to crumble. The house comes a poor second. I would live in a shack if it meant my DH could be told he is free of his nemesis and I would be quite content with my lot.

If this means you move on, then do it. Of course there are an awful lot of considerations, such as balancing up the cost of moving/taking an offer on the financial side, and in particular your wife's attachment to your current house, but this is a pile of bricks we are talking about. Should you choose to move to the cottage you will still have each other, your children, your job, more time to spend with the people you love - just in a smaller place. You may even find that cleaning and maintaining a smaller property quite liberating.
There are some very good people on here with excellent advice but, in the end, its what you value most that should be a the top of your list. I suspect this may end up being the people and not the shell in which they live.
Kind regards
Slowdown:)

chevalier

My comments are in purple.

greenwoodlad wrote: »

SOA
Number of adults in household........... 3 (eldest son 16) Does he get any child benefit still? Can he get a Saturday job? I am assuming he is still at school?
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 Can the hours be upped? What about doing mystery shopping around the part time job. Can eldest baby sit the youngest so she can work more? How about doing surveys online (vouchers can be put towards christmas)
Child Benefits................................ 188 Not entitled to any other benefits?
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

Have a look at the up your income thread for ideas to earn extra money. All 3 of your children are old enough to do surveys aimed at children. Toluna do both an adult section and I think a child's one. There is also the entering competitions thing as well. Obviously income isn't guaranteed from these, but you do get wins that can either be sold or used as presents. There is a competition forum here where the comps are legit. But there is also loquax too which is mostly legit (sometimes an odd unlegit one gets through, but not often).

Monthly Expense Details
Mortgage................................ 1042
Council tax............................. 200 Is this over 12 months or 10. You can ask to put this over 12 months.
Electricity............................. 60 Not bad but make sure that you recharge your phones at work, turn stuff off at the wall etc.
LPG Gas..................................... 15
Heating Oil..................................... 100 Can you get any grants to have insulation so the house leaks less heat? What about sausage dogs at the door to keep out drafts?
Water rates............................. 68 Is this a meter or water rates? Can you monitor your usage to see if you can cut it? 5 min showers, use washing up water to water the garden, get a water butt to collect rain water for outside use?
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) This is STILL alot. Do you ALL keep inside your plans? When are they up for renewal? Can you go PAYG once you are out of contract?
TV Licence.............................. 12.12
Groceries. Toileties, Pet Food etc. ......................... 500 (includes school pack ups, home baking ingredients , Laundry powder / medicines and one bottle of wine each week)) This is still alot! Even allowing for your eldest eating like an adult, you can cut this. The scary thing is this is WITH a 10% discount. So task for the weekend, inventory every cupboard and freezer and set yourself a challenge to meal plan to eat out of these this month. Then you can hopefully pay most of the grocery spend to the Next card. Then meal plan the next month and I bet you can spend less than this. Is you wife on at a time when they are yellow stickering stuff. If so she is ideally place to get bargains!

Even allowing for the pack ups etc, I think you could still shave at least 100 of this by downshifting brands. And also making a monthly run to the lidl, aldi etc town. You can get milk and freeze it too, so that would save some little shops aswell.

There is a whole other forum on here called the Oldstyle Forum that has LOADS of ideas onto how to save money, not just on meals, but on cleaning products etc as well. So check that out as well.

Does anyone deliver to your area? Would this be cheaper if you don't impulse buy like maybe you do in the shop?

Clothing................................ 0 (we have put all these items on our next account as we never have spare cash to buy any other way). If it hasn't been worn in the last 12 months then it goes! You can get bundles of next clothes on ebay for a few pounds if you are hung up on the brand. Or else on that monthly expedition for food shopping, hit the charity shops as well. This is the most expensive debt. Every THREE POUND ITEM COSTS YOU FOUR POUNDS IN REALITY. When you add on the interest.
Petrol/diesel........................... 160 Can any of this be shaved off by walking, using a bike etc?
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 Ouch that is a lot. Can anyone pay this as birthday presents instead of you?
School Bus fares ( we live in a village)............ 160 How about putting up a note in the village shop/pub/post office for sharing of cars to take kids to school. Or in the school mag? Would this save you money? Do you not get a free bus pass if you live so far away from the school. I take it that you or OH don't work in the same town as the school is so that you can drop them off on your way to work?
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 I think you need to explain to this child, that you can't afford this for the next couple of terms. Sorry especially if you want to keep the swimming.
Buildings insurance..................... 15
Contents insurance...................... 15
Life assurance ......................... 62 Ouch. Have you checked to see if this is the cheapes.
Presents (birthday, christmas etc)...... 30 How about a challenge where presents are money neutral this year. Ie you have to earn extra say via survey etc, or selling, to buy the presents. Or is anyone crafty so presents could be made?
Haircuts................................ 30 Can you go a week or two longer between each cut? Would save a bit over the year.
Entertainment.........................0
Logs/Coal………………..30 Keep an eye out on freecycle for people offering wood to burn. Also feed merchants often have pallets to give away cos they can't return them anymore.
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 This needs to be gone asap. 70 pounds of you payment roughly is going back on the card in interest.
First Direct Loan ....12000.......228.92...........9.1 12 years left
Santander card…..5000…..150………17.9
ODraft …………1000………………… Is there any chance you can increase your overdraft to pay off the Next debt? What are your credit scores like? Ie can you get a 0% card to shuffle any of this onto? Or even a low life of balance card.
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

So not great here you are in a negative. However with a bit of belt tightening I genuinely think you could get to a place where you at least balance. But it will be tough going too. I don't suppose there is anyone who can lend you the money to clear the Next card. That would free up alot of money each month that you could throw at the other debts.
Personal Balance Sheet Summary
Total assets (things you own)........... 299500
Total HP & Secured debt................. – 220000
Total Unsecured debt.................... -20,100
Net Assets.............................. £59,400


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. Just because you wife works at Mr M's and you get a discount, doesn't mean that for ALL things they will be cheaper. Do check on mysupermarket.com, to see what they are cheap for you maybe surprised.

Yes things are very tight for you, but it will get easier. Try and NOT buy on the Next account again. Shop from your wardrobe if you can. I was always so glad to have friends with kids who were older than mine, got some great hand me downs.

Good luck
chev

racing_blue

ellesbellesxxx wrote: »

The OP has pointed out that this is not an option due to LTV on mortgage.

How has the OP has arrived at this conclusion though? Eg. met with a mortgage advisor/ made any applications other than to existing lender?

Selling up and buying a smaller place will cost >10k & I'm not sure that is what the OP really wants to do anyway ("dream house")

Firewalker

Of course I can't give you advice but I won't downsize in your situation.This is for two reasons:

1) You used 'our home' when you asked the question whicgh tells me that this is not simply a house and that moving will cause emotional upset to more than one member of your family.
2) This one is much more serious than the previous: it is likely that couple of years down the line you will find yourselves in the same situation. Why? Because you have not gone through the crisis and developed the mentality, knowledge and skills you need to make sure that your income exceeds your spending (the only way to pay off debt and stay out of trouble).

Having said this, and looking at your SOA, your only option is to increase your income; and this cannot fall on only one of you. Any chance that your wife can increase her hours? Or get another job? How about part time jobs for the older kids? Could you start a 'side hustle' (this is what I call a business on the side that brings regular income and has the potential to grow)?

These are some of my thoughts.

Firewalker

Hopelessly_Hopeful

Hi

As you only have 4 creditors an IVA may be a good option for you as well as a DMP.

Not withstanding the stress you are under but have seen much worse situations that are recoverable, there will be an answer out there for you.

Good luck

HHx

missindecisive

just a thought. would you move more out of the area to get a cheaper house? perhaps would you consider say, a semi detatched for around £180k or so...you could make it just how you want it,new kitchen etc. Then budget like mad and stick to it.

eyeopener2

I do not see what is wrong with a DMP. At current levels you would be looking at 8 years or so (20k at 200 a month). If you cut back a lot more and increased your income that could be brought down drastically. Overtime may return, you never know,and at least you would not be drowning.

Honestly, stuff the credit rating. Unless you can seriously up your income, cut down spending to nothing and live a basic life for a couple of years I really can't see any other option.

HH has mentioned IVA, this could also be an option but is obviously a little more drastic.

You can do this, but tough choices have to be made. Selling your house is only one option.

harrys_dad

Hi, just got to this thread, and well done for looking at your problems. Some good idea earlier, especially renting out a room (you can get over £4000 a year income tax free, two rooms would produce a tax liability but may still be worth it).

A couple of comment on your SOA: £900 a year on swimming coaching/lessons (and presumably additional transport costs as well) is something you cannot afford (much as I know that as a parent you think it is really important). Your child may give up their swimming to see more of their dad!

£2000 a year on school bus fares. Are your children at the nearest school? If so, and it is more than 3 miles, can you not claim fares back?

On the general point about downsizing, have you also considered that living in the country adds significantly to your livjng costs?

One final point, when are we all going to learn that it is actually a "property snake" not a "property ladder".

greenwoodlad

Had house valued yesterday by 2 estate agents - i had thought it would be about £299,000 ish and we would be getting offers of lower - both agents said if they were to market the house - should go on at £345,000 and we should achieve £330,000 minimum food for thought and good news i suppose! This would increase out net assets to £90,000 +
Cheers for all your replies - it makes such a difference to have the support & advice and know that we are all in similar positions in one way or another