Living month to month because of huge debt: sell house to get back to 0?

adebt

dizzyrascal wrote: »

The problem is (as I see it), you say your parents have never been debt free (or not for a long time anyway). This tells me that they have not really dealt with their issues.
In reality, once they are in a cash rich situation and have disposable income they will spend it and not save it!! That's what people do. It sounds like they have never saved so this will require a total new mindset.
They will need to be disciplined to stick to a budget which I honestly doubt they will do.
Living in debt is awful but it should teach us a few lessons and make us make personal changes. This does not seem to have happened (however much you might want to convince yourself that it has).

I'm relatively young so I may be misunderstanding my parents situation and giving them too much credit, you're welcome to correct me if that is the case:

I believe that when faced with the situation my parents are in (seriously high debt with no end in sight) the average person would convince themselves that an extra £1000 of debt is okay because "that £1000 could be used to go on holiday, or buy something nice, and it's only £1000! That's less than 1% of the total debt, it won't make a difference! it'll make me feel better, I deserve it."

My parents have chosen for the last 6 years to spend only what they earn, which means they can't go on holiday, can't get haircuts, can't pay for my brother to get the lessons he wants, can't repair the heating in their house... they don't have any active credit cards and every penny they spend is on living costs. They haven't accrued a penny more debt since they made the decision to fix their finances. This to me is the actions of people that have genuinely turned a corner, they haven't just made a commitment to do something, they've actually done it.

They most definitely made a lot of mistakes over the last few decades however they have come to terms with that and have been working hard to rectify the situation for over half a decade. The problem is that the situation is becoming more and more stressful, yes they could continue to live as they are now for the next 10 or more years and have a home they own outright, but the stress and precarious situation means is it worth it?

The cost of living is going up, the costs associated with the family are going up (my brothers desire to attend university) and the strain on my parents relationship is going up. This isn't the choice between having nothing and having everything, it's the choice between a decade of stress so they can keep a house they don't like and remain in a precarious situation, or take a short term safety hit (having no home or savings right after the sale, assuming it sells at the lowest possible price) and then be able to rebuild their finances from the ground up, with their new found ability to save money in every avenue.

This topic was about finding out if there were any potential concerns that I had missed when discussing this with my parents, none have come up and so far the only problem people have with the idea is the issue of no home ownership, however due to my mothers stable employment and impending pension this isn't a pressing issue.

I will be passing on all the information and opinions presented here to my parents including advising them to talk to the debt charities mentioned above but from what I can see there is nothing that makes this idea unworkable, which is what I was trying to find out.

Just saw your new reply, everything above was written before.

dizzyrascal wrote: »

BTW, why do you rent a house with 5 bedrooms and 5 bathrooms?
You sound young so you can't need all that space?
It makes me wonder if this is all about appearances. You seem to be ashamed of where your parents live?
Have they downsized before to pay off debts?
Your sibling can go to university btw but they may have to work part time to make up any shortfall. They should be able to get by on the loans, grants and bursaries that are available with some pt or holiday work.

I wanted to return to their town (I left 2 years ago to move 300 miles north) and they aren't happy in the house they own (it's small and falling apart -- I mentioned the broken heating and burst pipes previously) so I rented a modern house big enough for my family to live in with me without the stress of living in an old house.

They move in to my house next week and this is part of the house sale plan, I will support them while they sell their house (and cover costs of required improvements to make the sale).

dizzyrascal

They move in to my house next week and this is part of the house sale plan, I will support them while they sell their house (and cover costs of required improvements to make the sale).

So you have already decided on a plan of action but you posted on here for advice about it? That does not make sense to me!

You are bailing them out again.
If it only takes 5k to make the house available to sell that does not sound like a house that is unsaleable in it's current state.
Empty houses don't sell as well as lived in ones, especially if the buyers suspect that there may be financial problems

Most people look forward to getting their lump sum payment to use it to pay for big holidays or put it in an ISA or just have a good time after years of struggling. All your parents are doing is the same as most of us. Paying their bills and having nought left at the end of the month.
I think you should seek help from a debt charity before you go any further with this.

pennies_from_Heaven

I may get shot down in flames for this, but if I was them I would sell the house. As long as they are disciplined with the money they will have 'spare'.
Life is too short to be miserable. We sold our property, now live in rented and used some of the equity to pay debts. We are currently adding savings to the rest of the equity to buy again.
That said though, we hated where we lived and are a little younger than your parents.
If I am having a bad day I wonder if it was the right decision, but just day to day living it was, as completely no stress now!
Just my opinion, but it was the right thing for us.
Good luck to you and your family

Pennies

musicabc

I don't know if I'm missing something but there seems to be an assumption that a house worth £140000 now will be worth £140000 in 10 years time. Although the market hasn't been great the last few years it is probable that a house worth £140000 now in 10 years time will be worth considerably more.

Will £180000 in 10 years time purchase an equivalent house to their current £140000 house?

dizzyrascal

Yes I think that is a problem too.
The OP is working on house prices not increasing at all but it would be a very unusual trend if this were to be the case.
The period they are considering saving for will happen in 10-15 years time where they will have to be cash buyers. As the above poster says, that 140k house may well cost 180k/220k or much more, who knows?
It is very unlikely for there to have been no growth in the market at all (considering that it's been a year or two since there was any movement already)
However, the OP seems to have already made their decision, albeit one with a very short term focus.

adebt

dizzyrascal wrote: »

So you have already decided on a plan of action but you posted on here for advice about it? That does not make sense to me!

The plan (as outlined in the opening post) makes perfect sense to me, I have considered all the eventualities and every one is preferable to the current situation.

I posted this to find out if there was anything I have missed, or if there are any considerations that I'm unaware of. This is ultimately my parents choice and they want to do this, I'm trying to make sure that they will not be making a mistake.

dizzyrascal wrote: »

Most people look forward to getting their lump sum payment to use it to pay for big holidays or put it in an ISA or just have a good time after years of struggling. All your parents are doing is the same as most of us. Paying their bills and having nought left at the end of the month.

The removal of the stress associated with these financial problems from their lives will be of greater value to them than any holiday could be.

dizzyrascal wrote: »

All your parents are doing is the same as most of us. Paying their bills and having nought left at the end of the month.

Most people are struggling so my parents should struggle too, even if they have the option to no longer struggle and the struggle is causing them genuine problems? That seems backwards to me, I certainly wouldn't want to live that way.

dizzyrascal wrote: »

I think you should seek help from a debt charity before you go any further with this.

They will.

pennies_from_Heaven wrote: »

I may get shot down in flames for this, but if I was them I would sell the house. As long as they are disciplined with the money they will have 'spare'.
Life is too short to be miserable. We sold our property, now live in rented and used some of the equity to pay debts. We are currently adding savings to the rest of the equity to buy again.
That said though, we hated where we lived and are a little younger than your parents.

If I am having a bad day I wonder if it was the right decision, but just day to day living it was, as completely no stress now!
Just my opinion, but it was the right thing for us.
Good luck to you and your family

Thank you for sharing your experience, I will pass this on to them

musicabc wrote: »

I don't know if I'm missing something but there seems to be an assumption that a house worth £140000 now will be worth £140000 in 10 years time. Although the market hasn't been great the last few years it is probable that a house worth £140000 now in 10 years time will be worth considerably more.

Will £180000 in 10 years time purchase an equivalent house to their current £140000 house?

This is not a plan to make more money or to get rich, it's a plan to resolve the financial problems my parents have and reduce the stress they're under. The goal is not to have the most money as possible in 10 years, it's to be financially secure and be happy.

If they can have £100,000 in 10 years which has been saved over the last 10 years with no stress they would choose that in a heartbeat over £160,000 in 10 years with 10 years of stress. As pennies said, life is too short... they are currently miserable and I don't think they could last another 10 years like this...

RAS

Fisrtly, Why are you making plans for your parents debt situation?

Secondly, the only things you should be doing are

1. Putting them in touch with one of the debt charities http://www.moneysavingexpert.com/loans/debt-help-plan#help

2. Checking whether they had PPI on any of these accounts and helping them claim it back.

Hillbilly1

Adebt - please can you be vigilant with your quotes? You have put several quotes under my name but they weren't from my posts. You have also made this mistake with other posters.

adebt

Hillbilly1 wrote: »

Adebt - please can you be vigilant with your quotes? You have put several quotes under my name but they weren't from my posts. You have also made this mistake with other posters.

Sorry about that, I have fixed each quote to have the correct attribution.

de_g.

Just reading back on the thread...

You're not really actually asking for advice, you're looking for vindication that the decision you have made is the right one, I assume so you can direct them towards it to back up your own position. Your way may have its merits, but the caution from most on here seems to be that it's probably not the best option.

I'm a newbie myself so not going to give specific advice, other than to take their comments on board and genuinely take advice from qualified people like the CAB as they suggest.