Am I doing the right thing?

virgo84

Hi guys,

I've just joined after reading these threads for a little while and basically need a little bit of advice and reassurance.

I'm a 29 year old female and currently have a mortgage of £88,000. I'm single and don't have anyone to share the bills with. I have a loan of just under £1000 and 2 credit cards with £7500 on. I also have an overdraft of £1200 and a HP of £138 per month (balance £8500). I got all this whilst in my last job. Last year I was made redundant and struggled to find a job paying the same salary. I'm currently temping and earning significantly less than I was. I'm interviewing for jobs on higher salaries but I don't know when I will be successful.

After a year of complete hell where I have only survived by the good will of my family I have come tot he decision to sell my house to pay off my debt. I have budgeted as much as I can which includes cancelling gas and electricity and water direct debits and paying them on my credit card as they come in quarterly. I have no spending money for anything at all and buy my food on my credit card and have my parents help me out with food shops. I can't give up my car as if I terminate the agreement I will still have to pay them £2500 to get out of the agreement. I currently pay £138 a month for the car.

If I sell my house I could achieve a profit of between £15-20k and pay all my debts off except the car. I can't even begin to imagine the relief this will give me to be able to afford things again. I've sold everything I possible can and even slept on the floor for 6 months as I didn't have a bed until my mum bought me one. I have no wardrobes and very little furniture.

I feel I can either stay in the same position and continue not to make ends meet or sell my house and pay off my debt and start again. This would mean renting which is something I never wanted to do again as I think i'll never own a house again.

I've never missed a payment on any of my bills so my credit rating should still be intact. My income is only £1100 per month at the moment and my mortgage payment is £515. Total outgoings currently £1380 per month. What are your thoughts? Am I doing the right thing?

Sorry for rambling x

princess_pea

Hi Virgo84,


You've made a huge step in posting on here, your situation is heart-rendering but you aren't alone! I'm the same age as you and living on my own but in a rented flat. If selling your house means you can pay off most of your debt and start again it seems like the way to go (although I'm no expert). You can check your credit rating to see what your score is, but if it is good you should be able to get a mortgage in the future. Unfortunately the problem for people our age is saving for a deposit but it can be done, just sort your current worries out first, better than losing your home because you can't keep up the mortgage payments and damage your credit rating.


Have you thought about getting a lodger? Or could you move in with family and rent your home out?


Can you shift your credit card debt onto a 0% card? By keeping spending on your cards the problem is just getting worse but I know too well what it is like to have no other choice but to put food shopping and bills on there.


If you do sell up you could consider moving into a house-share if you have little furniture - presumably costing much less than your mortgage payments? I've had friends who have rented rooms in house-shares and the people aren't all nutters!


There is lots of good advice on here about which debts to try to pay first and budgeting techniques, but this is hard if you don't have full-time permanent employment. I've found even little changes like meal-planning can help.


I'm sure others on here will have more helpful advice but I'm sure you can start to sort things out, it's not hopeless and you aren't on your own x

virgo84

Hi Princess_pea,

Thank you for responding so quickly. It's so nice knowing i'm not alone in this. Unfortunately my parents live in a one bedroom bungalow so moving in with them isn't possible. I've thought about a lodger or house sharing but honestly don't think I could as I am difficult to live with and people would end up killing me or me them. I have 2 cats as well which makes it more difficult but they come first for me.

Due to me temping and earning less than my debt I can't move credit cards at the moment but luckily my credit cards are only on 6.8% rate which is better than the really high ones.

I'm sure you know how all consuming your thoughts are with debt 24 hours per day. I can't even imagine what it would be like to be able to afford to go to the cinema or buy some new make up. Little things make a huge difference to your life.

Thanks again for the advice I really appreciate it : ) xx

Muhren

Well done for coming on here and owning up to having a debt problem as it isn't always easy to do.

I would recommend post a Statement of Affairs (SOA) as people on here will be able to give advice on where to cut back. Hopfully someone will post a link in a bit.

My personal opinion would be either to get a lodger or rent your place out as keeping hold of your house would be good in the long run. I am renting my house out at the moment and the rent is covering my mortgage with a little extra on top which I am using to pay my debt.

virgo84

Hi Muhren,

Thanks for your reply. The rent I would get wouldn't cover my mortgage payments on a buy to let mortgage so I would be in the negative each month. I'm also a bit OCD and can't imagine how I would cope with someone even scuffing the paint on my walls. I know its bad but I can't help it : /

Muhren

What about having a look into going on to an interset only mortgage until you can increase your income?

princess_pea

I have a dog so can understand your cats come first!


For make-up I do online surveys, you'll be amazed how quickly the credit builds up with depending on the site you can cash in for a Mr B voucher or money paid into your bank account. It makes you appreciate things more not being able to go out and just buy them


I find it really hard seeing friends being able to go out for dinner or to the cinema and spend what they like, or even just buying clothes! I'm always the person who says sorry I can't go out or sorry I'm skint this month. It can be really isolating. See if you can organise something like a clothes-swopping party - free and you get something 'new' to wear. Or have a film night at yours and ask people to bring nibbles/ drink.


I agree with Muhren above, posting a SOA will help :-)

Muhren

http://www.stoozing.com/calculator/soa.php

StrawberryJam132

Hi Virgo84,

I just want to say how strong you must be to decide to pack up and sell your home. I'm not sure I could do that; I'd continue to bury my head!

You obviously have your head in the right place now. Whether you decide to sell or not, I hope you start a debt-free diary and link it here, because I will definitely subscribe and support you in your journey.

No advice from me sorry, I don't feel knowledgeable enough to give any. I'll just be Ms. Support

Good luck!

SJ X

virgo84

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household.........
Number of cars owned....................

Monthly Income Details
Monthly income after tax................ 1085
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1085

Monthly Expense Details
Mortgage................................ 515
Secured/HP loan repayments.............. 205.15999999999997
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 65
Electricity............................. 25
Gas..................................... 35
Oil..................................... 0
Water rates............................. 15
Telephone (land line)................... 0
Mobile phone............................ 15
TV Licence.............................. 12.12
Satellite/Cable TV...................... 0
Internet Services....................... 26
Groceries etc. ......................... 220
Clothing................................ 0
Petrol/diesel........................... 65
Road tax................................ 2.5
Car Insurance........................... 30
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 16
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1246.78


Assets
Cash.................................... 0
House value (Gross)..................... 105000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 105000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 88000....(515)......5
Secured Debt.................. 1000.....(67.16)....0
Hire Purchase (HP) debt ...... 8500.....(138)......0
Total secured & HP debts...... 97500.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Credit card....................2500......60........0
Credit card....................5000......110.......0
Overdraft......................1200......20........0
Total unsecured debts..........8700......190.......-


Monthly Budget Summary
Total monthly income.................... 1,085
Expenses (including HP & secured debts). 1,246.78
Available for debt repayments........... -161.78
Monthly UNsecured debt repayments....... 190
Amount short for making debt repayments. -351.78

Personal Balance Sheet Summary
Total assets (things you own)........... 105,000
Total HP & Secured debt................. -97,500
Total Unsecured debt.................... -8,700
Net Assets.............................. -1,200

virgo84

Thank you StrawberryJam132, I don't feel strong at all but i'm literally just existing and not living. I have to ask myself if I can live like this for the next few years and the answer is no I can't imagine not being able to enjoy life for years and years. From my SOA you can see that i'm not living but I guess it's true what they say what doesn't kill you makes you stronger.

Thank you for being so kind and supportive it means a lot : ) xxx