To sell, or not to sell

sg1000

Hi Everyone.

I'm looking for some advice on debts. I currently have about £20,000 on credit cards, which are all on 0% deals. I can manage to service these debts and can also "bounce" balances to new 0% offers when the need arises. However, I am aware that some institutions (RBS / Mint, for example) have now stopped 0% offers and are offering low % balance for life deals. Whilst I could still service this, I don't want to be paying more interest than I have to if the opportunity for 0% ends with my other providers.

Although I have these debts, I also have savings of around £16,000 in a mixture of S and S ISAs and cash (90 / 10 ratio). It has taken me over five years to build up my savings balance.

I also have a number of musical instruments that would amount to at least £10,000, which I have built up over the last ten years or so. The plan was that as these got older and rarer, their value would increase enabling me to sell them on at a profit, which has been the case for a couple of items.

I'm trying to decide whether to cut my debts (albeit they are payable for now), or clear some of them by selling the instruments.

Despite having savings and assets, I worry about having a negative balance overall.

Anyone got a view?....please be kind

Thanks

andyfromotley

Hi SG

its a really difficult question to answer. What do you think is the best thing to do?

£20k on cards is a lot, i understand that you can service them easily but the risk is that circumstances can change, if you lost your job or fell ill for instance. What if lenders change their criteria and won't stump up new 0% deals. (perhaps because they just work out that you're a card tart and therefore unprofitable?)
I had almost exactly that amount, it made me feel increasingly uncomfortable so i have just sold my camper van and paid off half of the total. I am now working flat out to pay off the other half which should take me about a year or so. I LOVED that van but i don't regret it. I feel like i am taking charge.

The instrument thing is interesting, really how much are they likely to go up? Could they fall in value? My experience is that most things stay about the same unless you are are lucky or an absolute expert.

If i were in your shoes i would sell the instruments. Pay down half of your CC debt. Aggressively attack the other half with the backstop of savings to pay them off if there is a bad change in circumstance,

The question you have to ask yourself of course is how did you end up with 20K of debt? If you are just overspending then it matters not what you do because until that problem is addressed then you will end up with no savings, no instruments and still have large CC borrowing.

Posting an SOA may shed light on the matter and help you recognise what the best course of action is.

sg1000

Andy,

Thanks for the reply. The £20,000 is fairly historic ( a couple of cars, uni fees and home repairs have kept it at that level). About fifteen years ago, if I was applying for a loan, I got as far as as my postcode before getting a "no".

With changes in job and income, my credit rating has increased and I have the option of several thousands more to take (not that I'm going to). That's why I started saving. I figured that I would always be inclined to take the "I can afford it" route and using the credit card...so savings would offset that. I know that is a crazy mentality.

Debt hasn't gone up for years and has, in fact, reduced...it was £33,000 at my worst. However, I still worry about being in debt and being able to service it in the future. The instruments I have are fairly unique, although a couple have dropped significantly in value...One I bought for a £1000...someone sold the same on e bay for £150 recently. Having said that, a few are definitely increasing, especially if not used.

I have done SOAs until they are coming out of my ears and have cut down on general spending. Just don't know what to do with the "investments" I made (instruments) as opposed to the regular savings vehicles.

It makes me wonder about the people who view themselves as not being in debt if they have property, or items of value. You can only get out of debt if the property, or items you sell, are worth more than the debt at the point of selling.

As such, do you cut your losses and sell or wait for the "possible" increase?

Thanks again for your reply,

SG

andyfromotley

Well another way of looking at it (which i always found depressing) is, you are probably paying the minimum, 1% of balance. if you manage to always keep it on interest free (not guaranteed) never spend another penny on them then it will take you 9 years to pay them them off. In that time other things may happen or come along that demand your money and your chance to pay off these debts will be lost.

like i said, i'd sell the instruments, but as with my van i know that it can be a real wrench to do so. Its entirely personal but i feel better not having that large amount of debt.

sg1000

Thanks, Andy,,

The instruments are going....most of them :-)!

SG