Spend Nowt, Buy Nowt, Owe Nowt

XSpender

You are right TOPM, we shouldn't have bought the dining suite. We needed the bedroom furniture as we currently don't have any (only DS room has a wardrobe) but this was only £1000 of the £2500 we spent and we paid more than that off our debt in Jan which would have meant a decrease in our total debt figure. The dining table was massively reduced as ex display but buying the chairs to go with it cost another £1000 even with 20% off.

I have around £250/month that I use to overpay the debt and I have been pondering if I should use this to save or complete work on the house and just pay the regular payments on our debt. It will still be going down every month just not as fast but we will also not be adding to it either by leaving ourselves short.

When DH gets a monthly bonus we will have over £1000/month spare and we can use some of this to pay off the smaller CC debts. I don't budget using DH bonus because it is not guaranteed. I also get a bonus twice a year which is guaranteed of around £850/month after tax and this will go to the CC debt.

We are seriously considering consolidating some of the debt when we re-mortgage in the summer, leaving one loan, a small CC balance and the furniture and carpet debt. This will reduce our repayments by half and will improve affordability for the mortgage in their calculations. This is based on the house being valued at the same as we bought it. It will also mean we can be debt free by 50 (2.5 years).

XSpender

Lloyds Loan #1……………….£10,203.82….£275.11…..3.9% APR…….40 payments left
Lloyds Loan #2……………….£14,261.45….£265.98…..3.9% APR…….59 payments left
Lloyds CC (Me) Part 1..........£664.14........£48.........17%
Lloyds CC (Me) Part 2………….£3072.30….….£0......…….0.0% APR…….until March 2019
Virgin (Me) Part 1…………..£677.42……..£22.15………0.0% APR…….until March 2018
Virgin (Me) Part 2…………..£1038.00……..£0.00….…….0.0% APR…….until Sept 2018
[STRIKE]Virgin (DH) Part 1……………£0……….£108.76…..0.0% APR…….until March 2018[/STRIKE]
Virgin (DH) Part 2……………£5959.20……..£103………0.0% APR…….until July 2018
Virgin (DH) Part 3……………£4372.97……..£0.00………0.0% APR…….until Sept 2018
MBNA…………………………….£8286.75……..£83.71…….0.0% APR….…until Sept 2019
Person 1…………………………£1275.79……..£0.00……….0.0% APR……………………………
Person 2…………………………£1362.18..…..£0.00……….0.0% APR……………………………
Hitachi…………………………...£1439.31……..£47.97……...0.0% APR…….BNPL payments start May 2018
Creation........................£1691.90.......£70.50.......0.0% 24 payments left

TOTAL £53,315.15 @ 16.12 TOTAL NOW £54,017.55

£702.40 - increase in debt

UPDATE: DH and I agreed to cancel one of the pieces of furniture this morning as he thinks we can do without it. I wish he's said this in the shop! This has saved £320 and has reduced the amount of the loan and our overall debt.

I might have to pay an extra £20 off to get us in to the fifty threes.

Treadingonplaymobil

That sounds very sensible re the unnecessary piece of furniture.

We have recently consolidated into our mortgage and for us it was the right thing to do as (like you) it has reduced our outgoings. BUT the reason/s we got into debt have largely gone - it's just the spending habits that need breaking rather than the circumstances (us not earning enough to meet essential bills, which was the problem at one stage). It seems like your circumstances aren't wildly different - there's still a fair bit of work left to do on the house I think? - so will consolidating mean that you end up doing that work sooner (thing like the sun room/kitchen etc you mentioned the other day) and ending up with an even more enormous debt? If you have the willpower to resist doing that work until the debt is at a sensible level then please do ignore me - I know how tiresome it can be to have people point things out that you have already considered on your DF journey!

If you think you have the willpower to ONLY use that £250 (plus bonuses?) for doing work on the house and not add to the debt then that sounds eminently sensible - no point paying it off if you then spend it again plus an extra 10%. If £250 per month if your budget, then that's got a hard ceiling, unlike adding to a CC which still has plenty of space on it.

apple_muncher

Definitely go and find that extra £20 XSpender!!!!!

XSpender

Treadingonplaymobil wrote: »

If you think you have the willpower to ONLY use that £250 (plus bonuses?) for doing work on the house and not add to the debt then that sounds eminently sensible - no point paying it off if you then spend it again plus an extra 10%. If £250 per month if your budget, then that's got a hard ceiling, unlike adding to a CC which still has plenty of space on it.

A remortgage would save us about £450/month on top of the £250 we currently have available and would be more than enough to do the work we need to drag the house out of the 1990s. We estimate the extension including a new kitchen, boiler, utility and cloak room will cost £40k and is not on the cards for a few years yet.

apple_muncher wrote: »

Definitely go and find that extra £20 XSpender!!!!!

Found it and paid it off the LLoyds card

Suffolk_lass

I know it feels really comfortable to consolidate loans into one but your circumstances are quite different to TOPM. And look at your loans. Do the maths before you consolidate, and look at the cost of the debts.

Please consider looking at this in a different way in 2018.

For you, your priority should be to pay off completely the 17% Lloyds Bank CC. Then look at the expiry dates of all of your other (mercifully 0%) CCs and put these in date order of overpaying with the bits and pieces you save. Don't forget to factor in the cost of porting from one 0% balance transfer card to another (normally a lump sum % fee)

The unspoken lumps of two unsecured loans at 3.9% should be your priority after the 17% Lloyds card. Consider putting the money for these away in another account (maybe a regular saver that penalises you if you touch it within a year) and save diligently and without distraction to pay these off. I also use the accumulating "Tilly Tidy" lumps in our cash emergency pot to make regular lump payments against our mortgage (our most expensive debt). My interest rate is less than 1% but it still cost almost £1000 in interest - the cost of our debt in 2017. If you start looking at the cost of the debt rather than your manageability of outgoings, it will give you sharper focus and you will stop wasting money. What is the point of saving £20 on groceries if you are paying hundreds in interest that you could clear?

I would check with Lloyds what their early part-repayment conditions are (TOPM just got stung for some unexpected interest beyond redemption (maybe 3 months)) and either save the lot or part-pay in lumps to reduce that interest charge.

If you consolidate for over £15k it is usually secured against your home. Based on your recent approach to the house you are in, are you really committed to overpaying that mortgage or are you really considering doubling the cost of those loans by expanding them out over several years.

You are fortunate that you both earn well and receive regular boosters in bonuses. Really consider using these as your primary tool to clear that unsecured debt and suddenly the affordability of your mortgage will be back in perspective

enthusiasticsaver

I think if you take on further borrowing - consolidation is moving debt then you will struggle to get a good remortgage deal in the summer. Your unsecured debt is now looking scarily high and seems to have gone up since last May. I appreciate your house needs a lot of work doing but you should not be borrowing further for that. Suffolk lass and TOPM are right to ask you to exercise caution here. If one of you lost your job you would be in real difficulties here.

XSpender

Thanks for all your comments, it has given me food for thought. I haven't made a definite decision about what to do and keep changing my mind about what to do for the best.

I would only consider consolidating as part of our mortgage, not as a loan and definitely not a secured loan, I've had one of those before:o. I know this is not the best way to do things but I worry that this is the only way we will be able to access a new mortgage deal in June. Our current mortgage is 3.14% and I would like to reduce the interest rate, we can't extend the term as we are 47 & 48 and I would not want to. Our mortgage broker calculates CC repayments at 5% which may effect our affordability for the mortgage and I wonder if we will have to consolidate debt into the mortgage to get one. I can't see how we can make enough progress by June to improve our affordability.

If we end up on the SVR it will wipe out the £250/month we have spare each month.

DH changed his job in October which increased his basic salary significantly and he received bonuses each month (guaranteed for 3 months) but there is a new bonus structure in place and he did not receive any bonus this month as expected. I can't take his bonuses into account when planning the debt payoff and I get frustrated that it isn't going down quick enough. This lack of progress is motivating me to do the re-mortgage too as it feels like I am making progress when I'm really just moving balances about.

The interest charge for early settlement is 56 days interest. I have a list of all the dates the offers end on the CCs. The Lloyds card interest bearing bit is the priority as this has the dining table on it which we will pay interest on from next month. Then it is my Virgin CC which expires May and September. The only card that will require a BT is DH virgin as the 0% deals expire in July and September.

We have done much better with managing our money this month and general spending, I've knocked £200+ off the food spends, have money in some of the pots and my age of money is 23 days on YNAB. It's usually back to zero when we get paid. One of the things I have done is increase DH personal spending by £50 and he is opening his own account today so that he can manage his own money and not spend a tenner out of the account on Greggs :eek:

DH is more spendy than me but I have been saying no, we haven't got any money for that this month, a lot more than I have in the past which is probably why we still have money in the account.

I want to finish the work on the 2 bedrooms we have already started and the garden needs a major tidy in the spring as it has a lot of mature trees and plants that are overgrown and is a mess and is beyond our capabilities. That is it for the next 6 months at least.

enthusiasticsaver

Can you do the remainder of the redecorating and the garden tidy up out of your spare £250 a month and bonuses?. I think the issue here is you are still spending on the credit cards and that is very dangerous when your debt is £53k anyway. Your remortgage will take into consideration the debt and the monthly repayments as your mortgage broker says. The better deals are if you have a low percentage mortgage against the value. If you add borrowing to the mortgage then that increases the percentage borrowed ruling out the cheapest deals.

It is out of concern I am labouring this point having seen people get into serious difficulties from rising debt and consolidating onto a mortgage. As you said you want to keep the house and will do anything I would halt the spending by borrowing and just live within your income even if it means waiting and saving up for the work on the house.

enthusiasticsaver

On the positive side having your DH have his own personal account when he is more spendy is a good idea. We do the same but mine ends up getting saved for a big splurge every now and then. My husband is a fritterer but at least he is frittering his money rather than out of our joint current account