Should I sell to clear debts?

rosannadoc_87

Hi
I'm trying to get rid of my debts but I can't see how. Bare with me as I'm a newbie to this site and not great financially (as you'll see!)

Between my husband and I we have around £20k of debts. Some credit cards, one catalogue account & and a loan that still has 27months on it. The majority of this was to pay for our wedding, vital house improvements and the catalogue was Christmas/birthdays whilst I was on maternity leave.

We are just getting buy paying minimum payments and I don't know how I can squeeze any more money to pay more off. I really want to move house and thought if we sell we could clear our debts and basically start from scratch again? Would this be sensible?

We're lucky that we have my parents close by who we could live with rent free and between 50-60k equity in the house. Do you think selling makes sense? I can't see how we can pay it off anytime soon otherwise (or ever!)

Any help/guidance would be appreciated!

Thanks

vlad

So if you sell you might realise 50k equity and pay off 20k in debts, then you would have to save as much as possible to create a good deposit for a new home, how much do houses sell for where you live I suppose is one question as you will need around 20% deposit.

theoretica

Can you afford the debt repayments? What portion of your debt is on the loan and will be gone in 27 months?

sourcrates

I think a statement of affairs would be be helpful here, there may be other options:

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

rosannadoc_87

50k equity would be the lowest we would get if we sold at a low price quickly - it could be more if we held out.

We earn 2400 monthly but as I was on maternity last year it's set us back and I'm always in my overdraft by the end of the month. My loan that will finish in 27months is 6500 of the debt. The rest is on cc and and a catalogue at 2 half k.

We married and bought our house within a year - first time buyers naivety and didn't realise the cost of doing up/keeping up with repairs on an old house that hadn't been touched for years! Hindsight is a wonderful thing.

If we were to sell my view is the debts would be clear and we'd have 30k or more for a deposit, and could save easily more whilst living with parents for a few months. Am I way off the mark? Is this a sensible suggestion to make it went to an IFA??

January2015

Selling would be, for me, a last resort.

Could you consider moving in with your parents to live rent free and renting out your house to cover at least the house costs - which would free up your personal income towards clearing the debts. That way you would have a house to go back to once the debts are cleared, or at least are more affordable.

rosannadoc_87

I don't see the point in that - I wouldn't want to go back to it after it's been rented out - it wouldn't be our home. To be honest I'd be quite happy to get rid of it I've never been happy in it & I can't stand not living or doing things as a family because we have no money or I have to work odd hours because we have no money. I'm sick of the worries keeping me up all night!

January2015

rosannadoc_87 wrote: »

I don't see the point in that - I wouldn't want to go back to it after it's been rented out - it wouldn't be our home. To be honest I'd be quite happy to get rid of it I've never been happy in it & I can't stand not living or doing things as a family because we have no money or I have to work odd hours because we have no money. I'm sick of the worries keeping me up all night!

Fair enough - another option is to rent it out and once you are debt free sell it to buy somewhere you are happy with. At least you are staying on the property ladder. I don't know what house prices are like where you live but where we are they are rapidly climbing again and if you get off the ladder it's going to be that much harder to get back on when you are debt free.

Just a thought.

pelirocco

I know a couple who did that , over 2 years later they haven't saved a penny despite living rent free and have in fact spent a huge amount of money.he was made redundant just as their house sale went through (£11k of redundancy ...spent/wasted ) he found a self employed job , they were just about to apply for a mortgage when that job came to an end
Meanwhile living with parents has got difficult and house prices have rocketed

You have built up debt by borrowing for a wedding and Christmas , how much over the debt is this

Jackieboy

rosannadoc_87 wrote: »

I don't see the point in that - I wouldn't want to go back to it after it's been rented out - it wouldn't be our home. To be honest I'd be quite happy to get rid of it I've never been happy in it & I can't stand not living or doing things as a family because we have no money or I have to work odd hours because we have no money. I'm sick of the worries keeping me up all night!

Living with your parents will be even less your home, particularly for your husband. Also, living with a young baby will be very stressful for your parents.

Some of your comments above sound as if you'll be doing more spending than saving, which is a bit worrying.

ViolaLass

sourcrates wrote: »

I think a statement of affairs would be be helpful here, there may be other options:

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

I second this. If you're overspending, that would be the easiest bit to solve.