Trying to avert disaster

macman

Why not go the fast track route to clear your debts by using the equity in the house? Sell it, downsize and start afresh. You will still be able to afford a decent property with the remaining 75K of equity in the house. And your joint income will offer you a sizeable mortgage: you can buy a similar priced property with a mortgage of around £125K,
Yes, you are doubling your debt, but at low mortgage rate costs, not credit card rates.

enthusiasticsaver

macman wrote: »

Why not go the fast track route to clear your debts by using the equity in the house? Sell it, downsize and start afresh. You will still be able to afford a decent property with the remaining 75K of equity in the house. And your joint income will offer you a sizeable mortgage: you can buy a similar priced property with a mortgage of around £125K,
Yes, you are doubling your debt, but at low mortgage rate costs, not credit card rates.

No, no and again no please don't do this.

The costs of selling unnecessarily is not needed here. Read the previous posts as to why selling up, going bankrupt or converting from unsecured to secured is a very bad idea. There is no fast track to clearing debts as often the debtor will continue overspending and be back again in a year or two with a much higher mortgage plus more credit card debts. As you don't know whereabouts in the country this OP lives you have no way of knowing whether a similar sized property can be bought for half the value or even if their current credit history will allow them to get another mortgage at a decent rate.

Kitten868

Another vote here for paying off the aqua card this pay day coming. Getting a creditor off your list is great and ringing up to cancel the card is very satisfying. This challenge is just as much about you staying mentally strong and keeping going and the wins help.

Can you sell anything? That feels like a win too. I realise in your position you don't really need to but I found it helped me feel like I was achieving my goal.

You can do this. Please don't consider remortgaging.

JayRitchie

macman wrote: »

Why not go the fast track route to clear your debts by using the equity in the house? Sell it, downsize and start afresh. You will still be able to afford a decent property with the remaining 75K of equity in the house. And your joint income will offer you a sizeable mortgage: you can buy a similar priced property with a mortgage of around £125K,
Yes, you are doubling your debt, but at low mortgage rate costs, not credit card rates.

I dont see how selling a £200k property to buy another for £200k is downsizing? Certainly not when you take the costs of moving into consideration.

macman

My suggestion to maybe downsize and increase the mortgage is obviously dependent on the OP reigning in their current unaccounted-for expenditure. Any way out of their current debt is clearly contingent on them doing that, so much so that I didn't think it necessary to reiterate that point.

EssexHebridean

In the position they are in, both from the point of view of needing to learn from the process, AND with a currently low mortgage and having small children, this route is not appropriate for them though. Even if it was appropriate for them, if they downsize now to a two bed house on the assumption that the children can share a bedroom, it won't be many years before they need to get themselves in a position to "upsize" again, costing yet more fees/stamp duty/moving costs!

fudgecat

Obviously the snowball method would dictate that the highest interest are paid off first. Psychologically, it may give you a boost to get rid of the easiest to clear (it is what we did in the past), so I think I would target the Aqua card as it can be very satisfying on the spread sheet to see one whole debt crossed out.
Other advice (other than spending) would be to make a spreadsheet. In a few years, debt free you can start to see the wealth balances increasing, rather than the debt balances reducing!

EssexHebridean

That can be a good motivator actually - the thought of savings to come. mentally fast forward to the point where you have paid the debt off and then work out how much money you will potentially be able to stash away into savings - for your kids futures, for YOUR futures, for a dream holiday for the family, or for whatever else, come to that - inside a year.

System

EssexHebridean wrote: »

No no and absolutely no. That kind of knee jerk reaction has no place here - we've not even seen the OP's SOA yet! PLEASE do not encourage people to turn unsecured debt into secured - effectively or literally - without all the facts in place. It's also extremely cruel to "threaten" them with bankruptcy when they are already clearly terrified by their situation already - that sort of reply can be the difference between someone following through on a lightbulb moment and burying their head back in the sand again in sheer fear.

What are you talking about??? I'm not talking about turning unsecured debt into secured debt.
I'm talking about paying off the debt!

So often we see on here people in mountains of debt, yet with huge equity in their substantial houses.

Sell the house, pay off the debt, buy a more reasonable house. Start living within your means.

zippygeorgeandben

When reading this whole thread, I'd be interesting in the wife's perspective on this.
Taking 3 years out from work after giving birth is a long time, and then to only go back part time. Also, in regards to a previous poster, surely you have some stuff that you can sell.
It does sound like you're really going to sort this out OH and it's important that you are both on track for this.
Pay that Aqua card off. Get a signature up with your massive debt figure and then watch this gracefully fall down!