Do I need a loan?

Rossim1985

Hi,

First of all thank you to all of you on this board in advance for your help. This forum is an absolute goldmine of useful help, advice and support so thank you! Anyway, on to my query....

I recently became debt free, for the first time in many years in August of this year - Please have a read through my older posts for the backstory on that, but basically I was depressed, stupid etc etc and ended up using payday loans, credit cards, loans the works.

I feel I have very much turned over a new leaf. I now have no debt whatsoever, and even a small amount of savings for the first time in over a decade, however I have a lot of expenses coming up in the next 4-5 months, which I'll list below, but the reason I posted this was that my knackered old car has finally died and I don't really know what to do, Anyway please see below first!

I am in the process of buying my first place at the moment (please note I currently live at home with my parents) and I have the money I need to cover all the solicitors fees, stamp duty etc, but not exactly much left over for buying some furniture. I have a TV stand, nice hallway sideboard and crucially a freebie sofa already, but will still need to buy a bed, wardrobe, drawers etc. I don't have a date yet for exchange but it shouldn't be too long as I am a FTB, the mortgage is all done and the flat is vacant. Mortgage will be £797 per month.

I am getting married to an Egyptian girl on 31st January 2016 and am going out there for the final visit / marriage preparations on 14th November. I will use the £500 of savings I have for the flight and a bit of spending money, but I will have to top up the latter a little bit with cash from my current account (flights are never less than £350 to Cairo, so only £150 left for spending money).

My stag do for the wedding is on 7th November which is a trip to Cardiff. Lots of drinks will be bought for me I am sure, but I wouldn't expect much change out of £200 by the time you add in travel and accommodation.

In late November / early December I will need to get the visa process started for a settlement visa for my future wife. I am doing this through a professional immigration solicitor as my partner had a second tourist visa application rejected, despite already having been here and returning home fine before! The solicitors fees will be £2,000 plus VAT, and the governments fixed visa fees a further £1,800 on top of this. I am going half each on this with my partner, but that's still just over £2k to find. This is a non negotiable cost - I trust this solicitor, they are a client of ours at work and another I went to see that was only £500 cheaper seemed an absolute amateur in comparison!

Just after Christmas I will then need to find the money for my travel / accommodation and the honeymoon for the wedding itself. This is very finger in the air figures but that's not going to be much less than £1,000 to £1,500. The actual reception / party etc is being paid for entirely by my partners family (which is not the norm in Egypt at all, but I am grateful for their help)! At the moment I am thinking we might have to scrap the honeymoon for the time being but that's really something I want to avoid.

Finally the tired old £500 Fiat Punto I bought off my sister last year when I was still paying debts off has decided to give up. The mechanic is going to check over it tomorrow but it's almost certainly a case of the head gasket going, so given the costs involved it will be making one last journey to the scrap heap. I can live without a car for the last few weeks while I'm at my parents place but once I move I will definitely need one again. Do I just buy another £500 banger with a years MOT or is that a false economy? My Uncle works for Fiat Group so I can access cheap lease / hire purchase deals for Fiat's, Chryslers, Jeeps and Alfa's but I really do not want to be paying £200+ a month on a car.

So as you can see a lot of expense and I just don't think I can do it all without some sort of loan, however having only recently been debt free I am so so so reluctant to take one out.

So you can help calculate things (thank you!) my take home salary is £2,520 per month. Mortgage as said above will be £797 per month once the move is done plus all the other bills inc food, service charge and insurances maybe £1,300 per month? Travel to work (train ticket) is £350 per month so there would be approximately £800 left over per month. Is a loan a stupid idea, am I being a fool? Any advice would be really appreciated, and sorry for the long rambling post. I need some sleep!

Thanks in advance.

HappyMJ

Rossim1985 wrote: »

In late November / early December I will need to get the visa process started for a settlement visa for my future wife. I am doing this through a professional immigration solicitor as my partner had a second tourist visa application rejected, despite already having been here and returning home fine before! The solicitors fees will be £2,000 plus VAT, and the governments fixed visa fees a further £1,800 on top of this. I am going half each on this with my partner, but that's still just over £2k to find. This is a non negotiable cost - I trust this solicitor, they are a client of ours at work and another I went to see that was only £500 cheaper seemed an absolute amateur in comparison!

It's much cheaper to move to another EU country for a minimum of 6 months then return to the UK to get a free visa under the EU immigration regulations. It'll save you as a couple £3,800 and you can effectively have a 6 month long honeymoon which you also said you will spend up to £1,500 on. You can rent a small flat for very little money in many EU countries.

I would really avoid getting a loan if you can avoid it.

Is your new wife going to work?

Rossim1985

Good suggestion and not one I had thought of, but I don't think that could work? She is Egyptian so not from the EU. She needs a visa to visit just about any country that isn't some other African / middle Eastern / South American hell hole! Egyptian passports allow access visa free into something like 40 odd countries. Ours give us visa free access to over 170!

Also what would I do about a job for 6 months? I am very happy where I am now and do not want to leave, plus I would be in breach of my mortgage terms if I rented out my flat.

Thanks for the suggestion though!

Oh and edit - yes she will work once here, most likely in some form of translation work as her English is excellent.

HappyMJ

Rossim1985 wrote: »

Good suggestion and not one I had thought of, but I don't think that could work? She is Egyptian so not from the EU. She needs a visa to visit just about any country that isn't some other African / middle Eastern / South American hell hole! Egyptian passports allow access visa free into something like 40 odd countries. Ours give us visa free access to over 170!

Also what would I do about a job for 6 months? I am very happy where I am now and do not want to leave, plus I would be in breach of my mortgage terms if I rented out my flat.

Thanks for the suggestion though!

Oh and edit - yes she will work once here, most likely in some form of translation work as her English is excellent.

You are from the EU country, you can apply for an EEA family permit for her from the other country to join you in that other EU country.

I'd just treat it as a long holiday. Don't leave your employer just ask for 6 months unpaid time off work. You don't need a well paid job wherever you go just enough to pay the rent. A temporary job on minimum wages will be fine. We have very high rents here in the UK so anything will do. You're going to save at least £5,000 so you could spend £200 a week without working and you'll be in the same financial situation had you stayed here worked very hard and paid all the solicitor bills but you would not have had a long holiday. I prefer the holiday.

I'd just leave the flat empty for 6 months. I would not rent it out. Get a friend to house sit to look after it and pay the bills no rent though just the council tax, gas, electricity and water.

When_the_going_gets_tough

Mmmm I understand that the route happymj is suggesting ie.op exercising his European rights Is more difficult in practise I would advise the op to take some careful advice before going down this route. On the other hand if it works it is much cheaper than going via the immigration route. I think this is called the surringer Singh route if the op wants to research it.

CKhalvashi

When_the_going_gets_tough wrote: »

Mmmm I understand that the route happymj is suggesting ie.op exercising his European rights Is more difficult in practise I would advise the op to take some careful advice before going down this route. On the other hand if it works it is much cheaper than going via the immigration route. I think this is called the surringer Singh route if the op wants to research it.

My understanding is that the OP would have to prove that he has genuinely lived abroad, and is returning from this, not using it as a way around the UK immigration system.

I'm an employer with an office (possibly soon to be 2) on the mainland, so if you'd worked for a company like mine, transferred out, then transferred back at the company request, this would be a lot more believable than simply leaving the country for 6 months.

I don't know the ins and outs of how this particular route works/exactly what the rules are, and I'd recommend the OP to get advice before even thinking of committing to it.

Rossim1985

Thank you again for the further posts / advice but to be honest this is still something I am reluctant to do. I would have to leave a job that I love (I highly doubt they would keep my job open for six months) plus one of the posts below said;

"You're going to save at least £5,000 so you could spend £200 a week without working and you'll be in the same financial situation."

If I was going to be in the same financial position I would rather spend that same money here, so I could live happy in my new flat and keep my job, rather than living in some cheap apartment with no spending money somewhere in Europe. Don't forget that if I leave my flat empty I am still going to be paying the mortgage every month, plus minimal bills so I really don't think this Europe idea is a realistic option.

I think it might be best to forget the visa thing and focus on the other costs and what to do with those?

I forgot to add in my original post that I am expecting a bonus from work, which they will pay half in December and the other half in March. No figures have been confirmed yet, but I have heard a few rumours and expect at the lowest end it would be £1,000 and absolute best case £2,500. Obviously this would be subject to tax but I assume splitting it out might help there?

Thanks again.

Pixie5740

You became debt free in August so how much have you managed to save between now and then?

You are currently living with your parents? Have you ever lived away from home before? Have you worked out a budget for running your household and putting money away for repairs and maintenance? If so is there anything left over to fund loan repayments?

I'd say postpone the honeymoon because it doesn't sound as though you can afford it and have a stag do closer to home so you don't have to pay for travel and accommodation as it doesn't sounds as though you can afford either.

Just get another £500 car if that's all you can afford. For someone who just became debt free you seem determined to start borrowing money again.

Rossim1985

Pixie5740 wrote: »

You became debt free in August so how much have you managed to save between now and then?

You are currently living with your parents? Have you ever lived away from home before? Have you worked out a budget for running your household and putting money away for repairs and maintenance? If so is there anything left over to fund loan repayments?

I'd say postpone the honeymoon because it doesn't sound as though you can afford it and have a stag do closer to home so you don't have to pay for travel and accommodation as it doesn't sounds as though you can afford either.

Just get another £500 car if that's all you can afford. For someone who just became debt free you seem determined to start borrowing money again.

No absolutely no! I do not want to borrow money again, I must make that very clear. If I did have to it would be an absolute last resort.

Since August I have saved around £2500, but £2,000 of this is going on stamp duty, solicitors, search costs etc and the last £500 on my final trip to Egypt.

I am currently live with my parents, yes, but I went to Uni 10 years ago and I also rented in London in 2010-2011. It was during the latter that I first started to get into debt, but with the benefit of hindsight I was renting a flat and living a lifestyle that was too expensive for the money I was earning at the time. I then got depressed, did the whole head in the sand thing, hid letters etc. I am nothing like that now, I check my bank account most days using the mobile app and have a proper filing system for all letters. No more stuffing them at the back of a drawer!

I have an approximate monthly budget in mind of £500 to £550 per month for all bills and food including service charge payments. The flat is a third (top) floor flat with two bedrooms and two bathrooms and in this figure I am including;

- Electric
- Gas (heating is gas, not storage or electric heaters)
- Council Tax (single person discount until next year)
- Service Charge (they invoice you twice a year but I would put the money aside on a monthly basis at £93 per month)
- Car Insurance
- Broadband / Phone
- Netflix (so so much cheaper than Sky)
- Mobile Phone

Contents Insurance and TV License are two other costs but I would pay both of these on an annual basis given the relatively low costs and the fact it costs more to pay them monthly. I believe water costs may already be included within the service charge payment but I need to clarify this.

Taking away all the above, plus travel at £350 a month leaves just over £800 per month once I have moved into the flat. I would like to put away another £75 to £100 per month for a rainy day / boiler explodes / car bills etc type fund but as the property is a flat, building maintenance costs are covered by the service charge. The building is only 9 years old and in excellent condition. This would leave just over £700 per month as disposable income.

I agree re the honeymoon and think this is something that will have to go for now, or alternatively we do something cheap like a week all inclusive in Sharm El Sheik for £500.

With the car is another banger a false economy? The Fiat Punto cost £500 to buy in November 2014, had a full service and MOT in June at a cost of £150 and required a new exhaust just two months ago at a cost of £90. Assuming it is the head gasket, the car will now be worthless and have to go to the scrappy. :mad:

The car I had before that which I shared with my dad was a 2003 Ford Focus that managed to incur bills of no less than £1,300 in the final six months before we sold the unreliable thing in November last year. This cost was split 50/50 between my dad and myself. Maybe I have just had a bit of bad luck with cheap / old cars?

I'm going to have a crack at a budget for the next 6 months on Excel to see just how bad the shortfall will be. Certainly Christmas is going to be a non event this year!

Thanks again.

Pixie5740

Start by putting together a statement of affairs for your new home. Budgeting isn't just looking at your monthly outgoings but also your less regular outgoing such as birthdays, Christmas, MOT, car insurance (which you should pay annually rather than monthly because it's cheaper), Road Tax, to name but a few. Budgeting is also more than looking at your bank balance every day, take if from someone who has been there and done that. I found that my budgeting improved vastly when I started using YNAB, but the important things is to find something that works for you and sticking to it.

As for the Fiat Punto. You've owned it for a year. In that year it has cost you £500+£150+£90=£740 and it is still (touch wood) going. That works out at £61.67 a month. How much would it cost you every month to lease a new(er) car? More than £61.67?

Whilst you might not want to forgo the honeymoon you simply can't afford it, not even a cheap all-inclusive deal. If you borrow money to pay for it then you are just stealing from your future self but it's up to you.

Rossim1985

Thanks Pixie good idea on the SOA, here is mine below. I have added in a few comments too, and please do let me know if you think I have missed something!

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1 This will change to 2 from approx March 2016
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2520
Partners monthly income after tax....... 0 - Hard to put a date on this but again my partner will be earning from spring next year
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2520

Monthly Expense Details
Mortgage................................ 797.3
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 93
Council tax............................. 81.11 - (This is with single person discount)
Electricity............................. 35
Gas..................................... 35
Oil..................................... 0
Water rates............................. 30 - Might not be required
Telephone (land line)................... 0
Mobile phone............................ 45 - Yes I know this needs to come down!
TV Licence.............................. 12 - I would pay this in full up front
Satellite/Cable TV...................... 8 - Just netflix no sky etc
Internet Services....................... 20
Groceries etc. ......................... 180 - I am including a couple of bought sandwiches in this for work

Clothing................................ 20
Petrol/diesel........................... 20
Road tax................................ 10 - This is based on current (broken ) car
Car Insurance........................... 40 - This is a guesstimate - currently paying £59 per month but this should decrease with a years no claims and a bit of shopping around, policy is due in November. Won't be able to afford this up front given timing this year

Car maintenance (including MOT)......... 15
Car parking............................. 0
Other travel (Train Ticket).................... 350
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 0 - N/A Flat (done through service charge)
Contents insurance...................... 10 - I would pay this in full up front
Life assurance ......................... 15
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 15
Entertainment........................... 300
Holiday................................. 50
Emergency fund.......................... 75
Total monthly expenses.................. 2286.41

Assets
Cash.................................... 0
House value (Gross)..................... 162500
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 162500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 154375...(797.3)....3.79
Total secured & HP debts...... 154375....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-

Monthly Budget Summary
Total monthly income.................... 2,520
Expenses (including HP & secured debts). 2,286.41
Available for debt repayments........... 233.59
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 233.59

Personal Balance Sheet Summary
Total assets (things you own)........... 162,500
Total HP & Secured debt................. -154,375
Total Unsecured debt.................... -0
Net Assets.............................. 8,125

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

I did give YNAB a go a few months back when I was paying off my debts still but I found it hard work and struggled to reconcile it to my bank account, though at the time my account was always overdrawn so perhaps that was why! I use Excel a lot for my job and I'm pretty good with it so I think one of of the many Excel based budget planners might be my best bet.

I take your point on the Fiat. When you put it like that in terms of a monthly spend across the last year, it actually seems pretty reasonable so another banger it is! There is something kind of fun about owning a banger too, car park dents and scrapes are not a worry and you can buy something a bit more unusual too if you fancy (I only use a car at weekends so MPG is not really an issue for me).

I think for now I'm just going to have to hope and pray with that potential bonus and also that the flat takes a bit longer. If the flat didn't complete until say the end of November, that would be a real bonus, as it would mean I could keep a lot more of my salary at the end of this month as savings.