Trying to avert disaster

enthusiasticsaver

beany_bot wrote: »

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.

You are not talking about paying off the debt. Moving it from unsecured debts to the mortgage is NOT paying it off. It is turning unsecured debt to secured and as EH says is not to be recommended. Regardless of how much equity is in the property anyone increasing their mortgage needs to be aware they are risking their home. That extra couple of hundred on the mortgage may well be a massive problem if one of them loses their job or gets sick and cannot afford the newly increased mortgage.

The most that can happen to you usually if you have unsecured debt is a CCJ and rarely does it get to that if some sort of debt solution is put into place. Increasing the mortgage is expensive, means the debt takes a lot longer to repay and does not address the overspending issues. If you are recommending selling and downsizing that is not as bad as adding to the mortgage but not always possible depending on area and moving house is expensive.

System

enthusiasticsaver wrote: »

You are not talking about paying off the debt. Moving it from unsecured debts to the mortgage is NOT paying it off. It is turning unsecured debt to secured and as EH says is not to be recommended. Regardless of how much equity is in the property anyone increasing their mortgage needs to be aware they are risking their home. That extra couple of hundred on the mortgage may well be a massive problem if one of them loses their job or gets sick and cannot afford the newly increased mortgage.

The most that can happen to you usually if you have unsecured debt is a CCJ and rarely does it get to that if some sort of debt solution is put into place. Increasing the mortgage is expensive, means the debt takes a lot longer to repay and does not address the overspending issues. If you are recommending selling and downsizing that is not as bad as adding to the mortgage but not always possible depending on area and moving house is expensive.

READ what I have been saying. Stop making wrong assumptions. I can not be clearer about this.

SELL HOME.
USE RELEASED EQUITY TO PAY OFF DEBT. (yes, that's right... PAY OFF DEBT).
USE REMAINING EQUITY TO BUY NEW, MORE MODEST HOME.
LIVE WITHIN MEANS.

theoretica

beany_bot wrote: »

READ what I have been saying. Stop making wrong assumptions. I can not be clearer about this.

SELL HOME.
USE RELEASED EQUITY TO PAY OFF DEBT. (yes, that's right... PAY OFF DEBT).
USE REMAINING EQUITY TO BUY NEW, MORE MODEST HOME.
LIVE WITHIN MEANS.

But by the value of the OP's home they are already in what for most of the country would be a modest home for a family of three.

User_101122

beany_bot wrote: »

You have equity of 140K in your home and 65K of debt.

I think you know what you have to do ...

It's either that or bankruptcy and it's taken anyway.

Ignore Beany_bot.

You are not insolvent, you have £2,000 disposable income on which to repay your debts.

becks818

Hi Everyone, Apologies for my absence. We have been away for a few days house sitting for my in laws who live in North Devon. It was a good chance to get away for a few days without any major costs ( Petrol and food!).

We have had a nice few days relaxing, walking and playing on the beach with the kids and generally getting away from it all. We tend to do this every year, however this year it will be our only holiday. We have cancelled our August holiday to Majorca as we still owed £2200. We have lost our deposit £170 but we have to just swallow that. We can't afford to go on this type of holiday for a few years. Before our LBM we would have scrambled around as the final payment day drew near looking for a credit card with a spare 3K. This behavior probably explains why we are in this mess!

We have a 'no screen' rule when we go to Devon as the kids would happily spend all day glued to our phones or Ipads. We do take our phones but I find it hard to type anything more than 5 words using my phone, hence my absence. Back at home now with laptop!

I have read all of your posts and I appreciate everyone who has taken the time to post.

We definitely aren't going to remortgage or sell the house, although I do understand why some of you may have suggested that. I worry that we would not get back on the property ladder due to our history of debts. We also love our house and whilst it's not our forever home, we have no desire to move just yet. It's also in a great catchment for a good secondary school for out kids, so that is a major factor in us wanting to stay put for now.

We don't really have anything of any great value that we can sell. although we are going to put some clothes on ebay.

I must admit that since posting on here I have felt better about our finances than I have in quite a while. Don't get me wrong, I wasn't losing sleep before as that just isn't me - I always knew that we had the potential to sort it out, however it was creeping in to my mind more and more.We both feel calm and measured about it all now. We know that we can do it and we are grateful that we are still in a position to turn things around.

enthusiasticsaver

beany_bot wrote: »

READ what I have been saying. Stop making wrong assumptions. I can not be clearer about this.

SELL HOME.
USE RELEASED EQUITY TO PAY OFF DEBT. (yes, that's right... PAY OFF DEBT).
USE REMAINING EQUITY TO BUY NEW, MORE MODEST HOME.
LIVE WITHIN MEANS.

As Theoretica says the value of the home is just an average price for a family home and without knowing whereabouts in the country the OP lives there is no knowing whether it is possible to buy a more modest home with just the equity after clearing debts. There is also no need for this as the OP has plenty of disposable income once he gets to grips with budgeting and living within his means. Also as the OP says they may not be able to get another mortgage due to their debts and any mortgage application would be done while the debts are still outstanding.

Selling up to release equity is a knee jerk reaction and entirely the wrong one in my view especially as moving house is costly and £7k - £10k of moving expenses etc is not going to help his situation. Thankfully the OP has decided to ignore this advice.

becks818

Last night was interesting. We spent the evening with some close friends. Normally we go to a restaurant and it can cost quite a lot. We have decided to be open with our friends and family about our debt free journey. I don't think that we will tell them how much we owe, but we felt that it would be easier to be direct about what we are doing, rather than skirt around the issue and feel awkward for the next 3-4 years. If they know that we are trying to get debt free then they won't think it's odd when we turn down invites or look for cheaper options.

Our friends came to our house and we had supermarket pizzas and salad. We had a great evening, the kids played and it cost about a tenner!

It feels like we are really getting into the swing of this!