Frustrating times

Yorkie1

robatwork wrote: »

Yes it's all got a bit serious for steve....

He didn't say how come they are overdrawn by £3k when income is way above average but this can only point to profligate spending.

Time for some belt pulling-in, socks pulling-up and other clothes related clich!s. Get the debts paid off, pay off a lump sum of the mortgage depending on the interest rate (or save in an ISA)..and look to move in a few years.

Spending might be the reason, but it is not the only possible reason - there might be family reasons we are not party to. In the absence of any facts, you cannot categorically judge that the only possible reason is profligacy.

Dan-Dan

moving into rented , obviously dependent on location etc , would cost you over 2k where we are for a standard 2 bed house , thats before the inevitable associated costs , removals etc

robatwork

Yorkie1 wrote: »

Spending might be the reason, but it is not the only possible reason - there might be family reasons we are not party to. In the absence of any facts, you cannot categorically judge that the only possible reason is profligacy.

I stand by my point of profligacy - I didn't say whose....

yellowcrocus

Hi Steve,

I wanted to post because your situation is very similar to what mine has been in the past couple of years and I thought I would share our story.

3 years ago I was pretty much exactly where you are now, decent salary but minimal equity, very significant debts, small 2 bedroom house, 1 child with a desire to have another. There was no possibility of us moving house in the dire financial position we were in but after thinking long and hard we decided that despite all this we really were desperate to have another baby. Our children, 1 boy and 1 girl, have been happily sharing a room for nearly 2 years now despite a seven year age gap. It certainly isn't ideal but it has been far from horrific and I wouldn't let the lack of space put you off.

OH and I have spent the last 4 years paying down 30k plus of personal debt, we have been very fortunate that within this time our combined salaries have increased from under 40k to 70k plus this year even though I now only work part time. Through many fluctuations of income and having a baby we have persevered with the repayments and we are due to become debt free at the beginning of July. Fortunately due to a slight pick up in the market in my area we now have something of a deposit, and we will shortly be able to move to a bigger 3 bedroom house (with a 90% LTV mortgage).

I think my message is: don't despair! Unfortunately there is no quick fix but like us you are blessed with a decent income which makes a huge difference to your ability to pay down the debt. I really would concentrate on that rather than moving house, believe me though I know how hard this is when you are desperate to move on to better things. 2 small children are perfectly able to share a room so you don't need to put your family on hold in the meantime. Take yourself over to the DFW board, I have really found it an invaluable source of inspiration and support. Good luck!

To the other posters, don't be so quick to judge. Roughly 1/3 of our debt came from a time when we lived on an utterly miserable wage and genuinely couldn't pay the bills. The other 2/3 came from buying and renovating our house at the worst possible time...despite the renovations it lost 20% of its value within the year. A combination of bad luck and circumstance....certainly there has been no profligacy here!

artbaron

£80K a year and you're in this mess? Jesus wept. Whatever you do, don't move house! Instead, concentrate on reining in your spending.

serious_steve

Thanks for the advice everyone. I have only been in my better paid job for a few weeks and it is a years contract which I hope will lead on to a perm contract. We have had debts run up over the last few years. I have been made redundant twice since 2008 and have had to do contract work (sometimes very low pay) so it hasn't been a case of chucking money down the drain. We realise we have to pay off debts and we should be able to do that more now but we really want another child and our house is just so small that we are considering renting a bigger house for a couple of years whilst we save for a deposit for another house. Money isn't it a pain!!!!!

lessonlearned

serious_steve wrote: »

We realise we have to pay off debts and we should be able to do that more now but we really want another child and our house is just so small that we are considering renting a bigger house for a couple of years whilst we save for a deposit for another house. Money isn't it a pain!!!!!

One extra child is not going to make a substantial difference - you already have all the equipment etc. The second child will just slot into your lifestyle - it's the first child that is the culture shock.

Your "solution" ie renting addresses a non existent problem ie lack of space. Let your babies double up and share a bedroom for a few years whilst you straighten out your finances.

You do not have enough equity to sell up. In the circumstances selling to rent is just plain bonkers. You will just be digging yourself deeper into the mire.

You will be jumping from the frying pan into the fire.

lessonlearned

serious_steve wrote: »

We realise we have to pay off debts and we should be able to do that more now but we really want another child and our house is just so small that we are considering renting a bigger house for a couple of years whilst we save for a deposit for another house. Money isn't it a pain!!!!!

One extra child is not going to make a substantial difference - you already have all the equipment etc. The second child will just slot into your lifestyle - it's the first child that is the culture shock.

Your "solution" ie renting addresses a non existent problem ie lack of space. Let your babies double up for a couple of years and share a bedroom whilst you straighten out your finances. With your combined income you should be able to clear your debts in next to no time.

You do not have enough equity to sell up. In the circumstances selling to rent is just plain bonkers. You will just be digging yourself deeper into the mire.

You will be jumping from the frying pan into the fire.

kingstreet

What are the two £400 per month loans for?

[Deleted User]

As someone in a similar earnings position to you and your wife, you should seriously look at your spending. I have managed to reduce my spending by thousands every month just by looking at what I'm doing with money. You've got ~£40,000 of debt to pay off, on £80,000 a year you could very easily live and get that debt sorted within 2 years, then with the financial management skills you've learned give yourself the ability to save tens of thousands per year and build up some serious savings for future expansion, retirement etc.

The secret is exceptionally simple in theory, it's only difficult when you bring first world behaviour into the picture: live like you're poor, instead of thinking "We take home £60,000, we should spend £60,000 on things!" think "We take home £60,000, we should spend the minimum on things and spend the rest on our future". Your salary can go straight into savings and towards debt, live off of the money your wife brings home.

The easiest way for you to understand how terrible your spending is, is to look at how much you've spent in the last 3 years. Request (or download) copies of the last 3 years of bank statements and go through every thing you've spent, it'll take you all night or maybe even an entire weekend but it will be worthwhile. You'll be shocked at just how much you've spent, consider what value each expenditure provides to your life now and whether or not it was worth it, remember to factor in the debt you've had accruing all this time! That £300 coffee machine that is sitting in your cupboards unused has now cost you hundreds more, because that £300 could have had a positive effect towards your debt repayments!

Stop spending, if it's not something that is either keeping you alive or essential then you don't need it, you don't buy it. The next 12 months will provide you with £30,000 that you didn't have before, that's £30,000 that can go towards your future, it can be used to repay the majority of your debts and provide your bank account with a positive balance. The £30,000 your wife already earns can pay for your mortgage, your childcare and your living costs, anyone can live off £30,000, you don't need to spend a penny more on day to day.

There is nothing about your situation that is untenable and if you treat paying off this debt like a job you'll be debt free within 2 years, guaranteed. Yeah, you won't be eating the best bacon for the next 2 years and you won't be able to get a new BMW and your wife will be reading books from a charity shop and not on a brand new iPad but in 2 years when you go to buy bacon that bacon will be paid for on the spot, you'll never be paying for that bacon again, because right now if you buy bacon you're paying for it through debt for years...

I know that's all easy for someone not in your situation to say, I know that I don't understand the intricacies of your situation and I know you don't need to listen to me but if you just try and do it you'll be shocked at how easy it is to rescue yourself. Imagine right now how you'd feel in 2 years if you had no debt, if you were able to save thousands a month, if your house being mortgage free was in your sights and if you were able to prepare for paying your childrens way through university and be able to provide a deposit on their first homes. You don't need to imagine, if you handle this situation properly that is all possible.

So many people see the amount of debt they have an assume it can never be solved and just ignore it, if you face it head on you can achieve incredible things. Spend a few minutes in the "Debt Free Diaries" section of this forum and you'll see people earning £20,000 per year that have paid off £40,000 debt in 5 years... you'll see people that have paid off £100,000+ in under a decade on much less than you earn. You've just got to accept the situation and try. The worst thing you can do is ignore it. If you're only paying the minimums on your debts each month you're not trying hard enough.