Where do we start?

CEC2000

Hi,

Newbie here, advice needed as things are coming to a head.

Firstly, my partner has lost her job which has resulted in a substantial loss of income. We cannot agree on where to start.

We owe 170k on our mortgage. around 60k in equity
We owe 51k in unsecured debts.
No CCJ's or default payments (yet).

We cannot decide on best course of action.

• Sell house, pay off all debts and rent.
• Downsize to 160k ish house leaving paying about half of debt off after deposits etc.
• Contacting debt management/companies we owe to try and manage short term to try and start again.

Other half wants to retrain which would mean up to two years of less money than before.

Before we have had little spare cash but managed to pay what we owe, even if was just minimum payments.

Sorry for rambling, running out of ideas.

C.

EssexHebridean

First step I would say is that while you make decisions on th best way forwards your OH needs to get a job - basically any job, just to make sure you can continue paying the bills and start making inroads into that debt figure.

You also need to cut your household expenditure down to bare basics for the time being - so put yourselves together a Statement of Affairs (SOA) with everything you spend each month on it - remember to include for the stuff that goes out less often like insurances and stuff - and then work out what can be trimmed. If it helps post it in here and we'll take a look and see what savings we can identify.

Don't do anything without taking the time to think and talk it through - generally speaking paying off debt by selling a property with equity in it should only be done as an absolute last resort as effectively you're turning unsecured debt into secured by doing so.

Getting a full budget in place is your first port of call though as you need to know your "basic survival level" for your outgoings.

CEC2000

We have started with the budget, not a five minute job. The few we have spoken to about it say bad idea to sell to clear all debt then rent. Seems appealing to me atm. Even though the idea of not owning a house is not great, the idea of living without the worry is! OH is trying to get jobs but nothing as yet, she is trying hard though.

Ilona

I echo what EH says. A Statement of affairs is your first job. All money coming in and all money going out. It will give you a clearer picture of where you are.

Not a good idea to sell your house. While it may feel attractive to get rid of the millstone around your neck, don't forget, rent is dead money.

Cut your expenditure to the minimum. keep looking for more work to increase your income.

While not in debt myself, I had a lightbulb moment when I was in my mid fifties. I was not enjoying my work and wanted out. Suddenly it hit me, IF I DIDN'T SPEND ANY MONEY I DIDN'T HAVE TO EARN IT. So I cut right back, only paying mortgage, council tax, and utilities. I bought the cheapest food I could find, searched for bargains.

My bank balance plummeted, I only had one mortgage payment left in it, then I did a couple of days work to pay the next month's mortgage. I voluntarily skint myself, but hey, it worked. Now my house is mine, all paid off, it's a good feeling. So hang on to your house, you will be pleased you did later on.

You will get it sorted, a budget is what you need. Sort out the 'needs' from the 'wants', pull in the purse strings, and watch every penny. It won't be forever, you will get on top of it, but you have to make a start somewhere.



Ilona

EssexHebridean

CEC2000 wrote: »

We have started with the budget, not a five minute job. The few we have spoken to about it say bad idea to sell to clear all debt then rent. Seems appealing to me atm. Even though the idea of not owning a house is not great, the idea of living without the worry is! OH is trying to get jobs but nothing as yet, she is trying hard though.

It's a great time of year to find work - people are advertising already for staff in the run up to christmas and the new year sales - if she's happy to turn her hand to whatever is needed to pay the bills then she'll definitely find something.

Listen to what Ilona says too - she's been there and done it in terms of simple living.

A few years ago our household income dropped by over 50% overnight due to employment issues. We stripped back to basics, I used time I'd gained through not being at work to make savings where I could, walking between supermarkets to save a few £'s here and there on groceries, only using the car if it was 100% necessary, doing whatever surveys etc I could find online to make a bit extra. I took an Avon round to make sure I was earning something, and set up a self-employed admin business to set myself in motion with something for the future. We emerged from that period of time without missing a single payment on anything, and continuing to make out overpayments to our mortgage. As a result we're now mortgage free and are now in the process of doing up our flat using cash, not credit. It can be done and you will come out of the other side.

National_Debtline

Hi CEC2000

Welcome to MSE. First of all I’m sorry to hear your partner has lost her job but fingers crossed she finds something new soon. It’s already been said your starting point is a SOA. That will show you whether the house is affordable in your current situation. If it’s a struggle your mortgage lender may consider temporarily changing your mortgage to interest only as a way to relieve some pressure, but bear in mind this is a short term solution.

I think you then need to consider whether you want to sell your home. Only not paying your mortgage will put your home at risk, there will be options to deal with your other debts if they are not affordable. These will affect your credit file but this is about what is most important to you.

If you do consider a debt management plan contact one of the free debt advice agencies as they can arrange ones that don’t require you to pay a fee. Good luck with it all.

Susie
@natdebtline

datlex

OP your first step is to talk to your creditors and explain your situation. They are more likely to be amenable whilst you are not in default. They also might have payment holidays schemes which could give you a bit of breathing space whilst your partner finds a second job/ you sort your finances.