Sell up and rent - thoughts?

CarpeDave

Hi, I’ve just signed up this evening so please be gentle.

I’m 46, married and with two children aged 10 and 7. I was an only child, and when my father passed away five years ago I inherited his £200,000 house and around £400,000 in cars and cash. Previous to this I had no savings and no assets, and had just about covered my living costs from one month to the next.

Following the inheritance I spent £230,000 on a family home, around £80,000 on nice cars and holidays, and £20,000 on refurbishing his house in order to let it out. That house was successfully tenanted for a couple of years, and around 18 months ago I sold both it and the house I’d been living in. With the sale proceeds we bought ourselves a 4-bedroom house outright for £450,000 near my wife’s family in Hertfordshire.

The savings have now run out and we have £50,000 of unsecured debt. This comprises a £15,000 home improvement loan at 5%, a £15,000 car finance agreement at 5% and £20,000 on credit cards at 0% until mid-2020 when they will revert to around 17%. Getting more 0% credit cards for balance transfers seems to be impossible because we are using most of the available credit on the existing ones.

Our monthly income is around £3,500, while we’re spending around £4,500 (including £1,300 a month of debt repayments). To sell the house, clear our debts completely and buy another house would mean either significantly downsizing, or moving a significant distance away from this area where all our family and friends are.

We don’t want to take out a secured loan on this house to release some equity because that doesn’t solve the fundamental affordability problem of living in comfort here in Hertfordshire, and it could mean we risk losing the house anyway if either of us were to become unable to work. We each have £500,000 of life insurance up to the age of 60.

We are giving serious consideration to selling up, investing the proceeds and renting a house of a similar size for the next 10 or 15 years. The house is worth around £470,000 and current rental prices in our area are between £1300 - £1600pcm. By my calculations we would be alright for 25-30 years. Our ultimate plan once the children have grown up is for my wife and I to emigrate to Spain.

I never expected to own my own house, so I don’t have that fierce attachment to the concept of property ownership at all costs that many people do. We believe that life is for enjoying now, rather than for struggling every day so there might be something for the children to inherit one day.

The opinions of others on our plans would be gratefully received, whether positive or negative. Thank you for reading!

Bluebonnie

Your ultimate plan: don’t expect to be able to emigrate to Spain after we leave the EU.


No comment on your other tales of woe.

AdrianC

Five years ago, you inherited £600k.
Now you have a £450k house and £50k of debts - which means you've burned through £200k, or a third of that inheritance, in just five years - £40k/year on average on top of your income...
Your income is considerably more than national average and you are not paying any rent or a mortgage - yet it's barely standing still. You are effectively paying off just £300/month of your £50k debts.

You say "life is for enjoying, not struggling", but that doesn't mean that you can continue to outspend your income.

Cut back on the expenditure and sort the debts NOW. Anything else is delaying the inevitable. Selling the house and spending £1,500/month in rent is just going to increase your outgoings.

DFW is where you want to be posting. They can help to put your situation into perspective, and help you to rescue something before it's too late.

Grenage

You are living beyond your means; adjust your lifestyle. As Adrian mentioned, selling your home will only delay the inevitable. You are pulling in more than enough to live well and pay off your debts.



Much like weight loss and other things, there are no quick fixes - you have to change your habits.

trailingspouse

You say that 'life is for enjoying now, not for struggling for every day' - but you are indeed going to be struggling, and you know this, that's why you've posted on here.
My mother had another saying, and it's stood me in good stead throughout my life - 'Any fool can spend money'.
I think you've fallen into the trap of thinking that £600,000 is a lot of money. It sounds like it is, but if you spend £60,000 a year it will only last 10 years... You've spent most of it on a house - but lived as if it was still in the bank.
So - something has to change. You could downsize, or you could reduce your outgoings drastically (and post on the Debt-Free Wannabe board as others have suggested). Only you and your partner can decide which of these is right for you.
Well done for grasping the nettle - I hope you are able to go into the New Year with a plan.

Red-Squirrel_2

It sounds like you’ve gone a bit mad when you’ve had a lot of money for the first time ever.

Get over to the debt free wannabe bit of the forum post haste. This sounds completely sortable without having to give up your home and your family’s stability.

You will have to be completely honest though, be prepared to take some feedback on the chin and be ready to change some habits.

SandraX

In a nutshell, pay off your debts and start again and please live within your means as you could easily do that and then you or the family will not have to suffer.

ATB and I hope 2019 is a good year for you and your loved ones.

missile

A fool and his money?

theartfullodger

Many who left such large sums to their offspring would be so disappointed with such profligacy. Such a shame.

bouicca21

Surely this is a troll? Someone who has burned through capital thinks the way forward is to get more capital to burn?

Bossypants

Our monthly income is around £3,500, while we’re spending around £4,500 (including £1,300 a month of debt repayments).

Living on £2200 net per month when you have no rent or mortgage to pay is completely doable. As others have said, post on the Debt-free board and adjust your lifestyle, don't give up your family's major asset just to buy yourselves a few more years before the inevitable.