Sell up and rent - thoughts?

Bossypants

bouicca21 wrote: »

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

Sadly there are far too many 'person who is bad with money gets a large amount of money and handles it badly, but still does not understand what they are doing wrong' stories for me to automatically think troll.

Good financial habits are a bit like good eating habits. To those of us who were lucky enough to be brought up with them, or self-aware early enough to realise what they were missing and consciously develop them early in life, it's so obvious what people who weren't and didn't are doing wrong, and hard to believe that they can't see it themselves. However, no one enjoys worrying about money all the time or having poor physical health, and almost everyone suffering like that would make it stop if they could. The fact that they don't suggests that they legitimately don't understand what they need to do, or find the prospect of such a significant change of perspective so overwhelming that their current misery seems preferable.

Unfortunately, in these circumstances people can only help themselves. Guidance and encouragement exist, but the work needs to come from them. I really hope OP heads over to Debt-free to learn and get support for their journey, it'll be long and hard but worth it in the end!

tlc678910

Hi,
You have asked people commenting to be kind - and I expect you will be feeling sore and defensive but you need to try to view the comments made as tough love.

People commenting want to help you/shock you/ shake you into living within your means so that you can keep your home, manage your finances and retire where you like. It would be easy for us to say - yes - sell your home and enjoy life! But in ten years you will have nothing at all and could be posting about how you can't afford the extortionate rents where you want to live, won't be able to afford to stay in your home in retirement etc.

You have burned through money quickly (and we understand why, having had lots of it and for the first time) but it is time to learn from your mistakes, steady the ship and halt the overspend and then slowly turn it around and get back into the black.

You have spent far more than your income but now (unrealistically I'm afraid) think that if you are renting you can pay £1300 of rent, £1000 of unsecured debt and live well and within your means - when you have not been able to do this without paying rent. I think there is a tiny little bit of your sub conscious that knows you want to sell up to keep the party going by spending the equity? I bet before you start 'living within your means' there are a couple of things you need to get or places you want to go?

You mention wanting to live in comfort in Hampshire but your budget should determine your level of 'comfort' not your desires determine your budget. If you want more you need to earn more. As you earn £3,500 this is how much you are able to spend each month (including debt repayments) - I would think that might offer a reasonable degree of comfort as you are mortgage free - even with the £1300 of unsecured debt each month.p - post a statement of affairs to see.

Post a statement of affairs and we might find that you have got used to thinking you 'need' things that can actually be cut if you need to save money.

If you have been overspending by tens of thousands each year there is no getting away from the fact that you are going to have to change your lifestyle. But you can do this - if you want to. If you don't change your lifestyle, even if you sell up, you will burn through the money and one day change will be forced upon you - when everything is gone.

You have made mistakes but you are still in a strong position and can sort this. Don't let it go too far so that you remember the time you had a mortgage free house (and a spending party) as just a distant dream.

If you are determined you can hang onto the mortgage free house dream (although perhaps not the spending party!)

Good luck!

gycraig_2

You are paying 1300 a month off debt but don't have a mortgage where is the rest of the money going ? You are attempting to kick the ball down the street. You earn average wages stop spending money as if you was a milllionaire

zagubov

Spain won't be a good retirement option.
Last I heard it's a great place for hospital treatment (don't know how that would be funded for you) but they dump you back on your front lawn afterwards for your family to supply aftercare because that's how it works in their cultural system.
And your family's over here.

BoGoF

At your current spending levels there is no way you would ' be alright for 25-30 years'.

Say you sell for £470,000 and clear your £50,000 unsecured debt - leaves you £420,000. If you don't change your spending habits your monthly outgoings would still be £4500 as you are replacing the debt repayments with a similar rent. Your £420,000 would last just over 93 months, less than 8 years!

Reality check time.

Pixie5740

CarpeDave wrote: »

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!

You're spending more than you earn. How do you expect to maintain that once you've burned through the proceeds of selling the house? How will you find your retirement in Spain if you have no money? What do you think you are teaching your children about money management, to fritter their money away, except unlike you a large inheritance won't be coming their way to give them a second chance later in life.

If you started living within your means now, without selling the house, you could probably pay of your debts and still live well.

ruperts

You can either choose to change your spending habits now while you still have some wealth left, or have it forced upon you in a few years when you've burned through the proceeds of the house sale. Up to you but surely the first option is preferable.

quantumlobster

OP - you managed your inheritance badly and took on too much debt. This was foolish.

Here endeth the sermon.

Your current plan of action will do little but kick the can down the road. You're basically planning on doing more of the same poor financial planning and excessive spending, and it would be unwise to think that the ultimate outcome would be different.

To ensure a happy and unworried retirement (which is not the course you are currently sailing), you should plan to service your unsecured debt, right now.

So you have £4500/mo of outgoings including debt repayments of £1300. This means you have £3200/mo expenditure.

Are you really spending £800/week on essentials? No, you are not. Pare everything back to the bare necessities, and build up from there.

You do not have a mortgage, so there will be ample scope to make efficiencies and economies.

getmore4less

You spent the best part of £100k on Holidays and cars(£80k + £15k)

Sell what's left of the cars and buy cheaper ones
Cut out any more holidays.

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

46 so can get 20y loan
£50k @ 2% 20y £250pm
Smaller if you sort out your cars to something cheap.

That means you will have £3,250pm to spend current spending £3,200

if you can't live on that it won't matter where you live you will be broke again in no time if you sell the house and rent.

Why not do a SOA and see what the £3,200 spends look like.

Bet most could find £1k of savings, some will come from running cheaper cars.


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

getmore4less

The real place to be is

https://forums.moneysavingexpert.com/forumdisplay.php?f=76

Selling is almost certainly last resort as that will throw away the best part of another £10k on costs