Working to pay the bills

ggleno

I would grateful for some advice on what to do about mycurrent financial situation. I work full time and have a good salary, butrelationships ending, property etc mean I’m now in a vicious circle of payingbills and debts. On top of this I do not like my job and would like to do apart time course but I can’t afford it. I have a good salary and take home£2195 a month and I am in a debt management plan with Stepchange which has beenvery helpful but leaves me with a tight budget. My mortgage is £643 a monthinterest only with Santander. I also have 3 interest only rental propertiesthat are not included in my Stepchange plan because they don’t make me anymoney. They have become an albatross around my neck. I am single and have no othersource of income.

3 flats are as follows:

1. has been vacant since last November, it has a mortgage ofaround £92,000 on it. I am putting it on the market but the home report onlycame in at £90,000. Including fees of £2500 if the property actually sells, I amagain into more debt. The mortgage on this per month is £282.

2. This one is vacant on and off, it has a mortgage ofaround £86,000 and I get a rent of £552 minus agent fees. The monthly mortgageon this is £261.

3. This one is let, the mortgage is a whopping £155,000 themortgage is £517 a month, building management fees are £100 a month and therent I receive is £598.

If I sell the other two properties I will be in the samesituation with a mortgage shortfall that will just add to my debts. I was onthe wrong tax code at work so was hit with a big tax bill that I’m paying offat £100 until Oct and my gas bill was underestimated so I’m paying that off at£60 a month.

I just feel like I’m working at a job I dislike to just pay offdebt and bills. Is there light at the end of the tunnel? Many thanks, G.

ellesbellesxxx

There is definitely light at the end of the tunnel but just a bit flickery at the moment. That is so frustrating re: properties - we are trying to rent out our other house and it's a mare!!!
Is your third property sellable, with a decent sum left over? When you say on and off, is the second one let at the moment? The first one sounds like a nightmare

nicp60

Hi there,
As ellesbelles said, there is light at the end of the tunnel, it's just that you're spread a bit thin at the moment.

I think all of us at some point feel like hamsters on a wheel, working our a$$es off just to stay still.

I would get rid of property number 1 and take the hit for now - you'll still save £282 a month and the worry of having it empty. I'd ask stepchange about possibly including the shortfall in your DMP, although I'm unsure about how this would appear on your credit report and you'll want to check this out beforehand.

Why don't you complete a SoA for us to have a look at? It may end up that the best thing is to ditch all the properties, pay down your consumer debt and start again, but without tangible figures it's hard to advise.

Thrugelmir

Look at disposing all of the properties. Interest rates in the longer term are only heading one way, upwards. The impact on your circumstances would be a disaster. The obvious consequence also then being downward pressure on capital values. Which would compound your problems even further.

ggleno

Thanks for your replies, they make me feel better already. This is the budget I drew up with Stepchange. It doesn't include the flats. I think I will have a mortgage shortfall on all my properties so I'm wondering whether to take the hit or not considering I'm already trying to pay off debt. When I say is rented on or off, it usually rents for about 6mths at at time and has a month or two gap in-between.

Budget
Mortgage £643
Council tax £87
Gas 60
Electricity £36
Building/contents insurance £9
Mobile £40
Telephone/internet £25
TV licence £13
Repairs/maintenance £20
Spares/servicing £30
Road tax £8
Insurance £31
Breakdown cover £4
Fuel/parking £55
Public transport £50
Food/toiletries/cleaning £130
Dentist/opticians £10
Hairdressing £25 to
Education fees £200
Clothing/footwear £25
Sports/hobbies/entertainment £15Amount Comments
Sundries & emergencies £10
Loan from family/friends £1 loan from family/friend (£600)
HMRC £100 clears Oct
Stepchange £353
Total: £1980

chrisfreelander54

ggleno wrote: »

Thanks for your replies, they make me feel better already. This is the budget I drew up with Stepchange. It doesn't include the flats. I think I will have a mortgage shortfall on all my properties so I'm wondering whether to take the hit or not considering I'm already trying to pay off debt. When I say is rented on or off, it usually rents for about 6mths at at time and has a month or two gap in-between.

Budget
Mortgage £643
Council tax £87
Gas 60
Electricity £36
Building/contents insurance £9
Mobile £40 can you not cancel this and get either a pay as you go or a sim only deal, virgin do a good sim only deal, unlimited Internet, unlimited calls and unlimited texts @£15 p/m on a 30 day rolling contract.
Telephone/internet £25 can you use you mobile for this instead?
TV licence £13
Repairs/maintenance £20
Spares/servicing £30
Road tax £8
Insurance £31
Breakdown cover £4
Fuel/parking £55
Public transport £50 what's this for if you run a car, is it for the train?
Food/toiletries/cleaning £130
Dentist/opticians £10
Hairdressing £25 is this per month, can you not get your hair done every 2 months instead, if not longer?
Education fees £200
Clothing/footwear £25
Sports/hobbies/entertainment £15Amount Comments
Sundries & emergencies £10
Loan from family/friends £1 loan from family/friend (£600)
HMRC £100 clears Oct
Stepchange £353
Total: £1980

Just a few ideas above saving you between £50 & £90 per month.

Repairs/maintenance £20
Spares/servicing £30
Road tax £8
Insurance £31
Breakdown cover £4
Fuel/parking £55

If the public transport is for the bus do you really need to run a car as you can save another £148 a month by getting rid of the car?

ggleno

I would grateful for more advice on what to do with the flats. Should I take the mortgage shortfall and let them go? Is it worth me organising estate agents and paying fees or should I just let them get repossessed?

theoretica

ggleno wrote: »

When I say is rented on or off, it usually rents for about 6mths at at time and has a month or two gap in-between.

Do you have any idea why this is? Are the rents being asked high for the area? In an unpopular area? Nasty properties? Bad neighbours? My thought on seeing this is that the agents are not really doing what you are paying them for and wondering if you could sack the rental agents and organise it yourself.

ggleno

Thanks Theoretica, yes my agent is pretty bad and very unreliable. I thought by selling my flats it removes her as a problem. I have discussed how un-professional she can be several times with her and she promises to improve, but its short lived. The flats aernt in the best area and attract housing benefit tenants which can be a nuisance. I have contacted another agent about letting my vacant flat in the meantime in-case it does not sell within the next few months. Thanks

FatVonD

Can you rent the flats directly to the local authority? I looked into this a few years back and they pay you directly (ie you don't have to rely on the tenant getting the money and then paying it to you.)

dktreesea

I would advise you to get rid of your agent, even if it means paying a couple of percent more in letting fees to get a decent agent, and getting your vacant property rented out. Is there something wrong with it structurally, i.e. a reason other than location as to why it isn't renting? Even a rent of £400 a month would take a lot of pressure off you financially.

I can understand you feeling fed up by the "treadmill" like existence, but if it's any consolation, that is a feature of many people's lives these days.

I remember my Dad getting annoyed at a bunch of his baby boomer mates who were congratulating themselves about how well they had managed their incomes and grown their wealth compared to today's generations. He made a good point. It wasn't "good financial management" at all. He and his mates were fortunate to have been born and working at a time when jobs were plentiful, inflation gave them tremendous gains in incomes, far more than "performance" would have given them, and being educated beyond high school was relatively rare compared with nowadays so they didn't have much competition when it came to getting high paying jobs.

Contrast that to nowadays, when incomes have dropped, in terms of their buying power, where competition for jobs across the board is intense, to the point where unpaid internships for people wanting to start out have become the norm. And having an education doesn't even guarantee you a job, let alone one that matches your qualifications and gives you a good income. It's not the same labour market at all.

OP, at least you have your rental properties. Don't ditch them just yet. Could you consider renting out the property you currently living in, and moving into the property that has been vacant until November, at least until you are in a bit safer waters financially?