No regrets. We only have debt. 4 June 2019 at 8:41AM edited 4 June 2019 at 12:16PM in Debt free diaries 89 replies 19.9K views

MrGorsky

Having been in 59k debt, and cleared it with help on this forum, and now I'm back in debt due to renovating a house, I would make the same decision again. We now have a lovely place of our own for our family to live in, so I have no regrets about taking the decision to borrow to achieve that.


Short summary:

2015 - 2017 -> 59k debt cleared with help from this forum under different user name.
2017 debt free, bought a house that needed renovating - our only way onto the prpoerty ladder
2019 - house almost complete, but back in debt.

Having been in 59k debt, and cleared it, and now I'm back in debt due to renovating a house, I would make the same decision again. We now have a lovely place of our own for our family to live in, so I have no regrets about taking the decsion to borrow to achieve that.


So here is my SOA:

Family of 4 (husband & wife in late 30s, two children under 10)

---

I'd love some feedback on my SOA.


From my past, I have exhausted all of my ebaying (2k income), and matched betting (5k income), and bank switching (1k income) opportunities.

---

---

S.O.A.

---

Income

£GBP£
Monthly Salary.........................3,541 after tax (After I pay in 6% to my pension and my employer contributes my contribution +2% ... so total pension contribution is 14% = £659)
Wife's Salary...........................1,513 after tax
Child Benefit Income...............27 after tax

Total Income............................5,081

Expenditure

Home
Groceries...................................400 Incl food, cleaning products etc ... everything I can get at Asda.
Fibre Internet............................ ..33 <- going to look at new deal on this today incl cashback etc, but need to consider wifes phone is within this
Home insurance..........................10 paid annually
Council Tax..................................170 over 10 mnths
Gas & Electric..............................80 Pure energy
Water.............................................52
Mortgage........................................881
Mortgage Overpayment ..............0 Would love to over pay this
Mobile telephones.........................0 (Wife's is in BB package, mine is paid by work)
Life Insurance................................32
Hair cuts........................................30
TV Licence....................................12 Paid annually
Clothing .........................................50
Dentist.............................................7 for 6 monthly checkups

Entertainment:
Going out......................................100
Hobbies.........................................180 All four of us have various hobbies
Caravan expenses.........................20 Paid annually
Holiday...........................................70 £840 covers annual - 2 weeks in the summer in caravan, 1 week at easter away, and 1 week in October half term in caravan.
National Trust Membership ..........10 paid monthly DD


Transport:
Fuel...............................................140
Public transport.............................40 Wife's commute
Car Insurance...............................48 Paid annually
Car Tax.........................................24 Paid annually
MOT & maintenance.....................20


Debt repayment:
AA Loan 3.2% .............................325
Hitachi Loan 7.6% .......................360
Sainsburys Credit Card 0% til 09/21......280
Post Office Credit Card 0% til 06/20......100
Nationwide Loan 3.1% ................. 1489 ..... last month of repayment for this.


Other:
Work Lottery Syndicates.................15 The fear of the syndicate win keeps me in
Union............................................... 2
Takeaways......................................20 One per month
Other one offs / Treats.....................50
Presents...........................................20



Monthly Expenses..........................3,581


Monthly Income...............................5,081
Monthly Expenses...........................5,070
Net Income ................................11




Assets & Liabilities:

Debt: £GBP£ Balance
Mortgage Balance......................221k 26 years left
Value of house is £350k, mortgage rate 2.8% ... will look for remortgage deal in 10/19

AA Loan £13100 3.2% currently repaying £325 mnth
Hitachi Loan £11614 7.6% repaying £360 / mnth
Nationwide Loan £1489 3.1% repaying £1489 /month (yay!, £25k loan almost paid back)
Sainsburys Credit Card £11989 0% til 09/21.............280 /mnth
Post Office Credit Card £3874 0% til 06/20.................100 /mnth
Family loan £30k <- plan is to start paying this back next after nation wide loan is paid back.


Total Debt......................£293k

Total debt excl Mortgage ....£72k

Current Account balances:
Account for annual spends & Saving.....£649
Daily current Account.........................£864 just enough to pay all of the bills this month
Savings account ...............................£0


Value of house: £380k (was bought in 2018 for £252k)
Value of owned car 1: £8k, Car 2: £100
Value of Caravan owned £12k

Our house renovation has been extensive. Old house, taken back to bare brick shell with all utilities taken out, and all floors out upstairs and down etc.
Full insulation envelope installed, UFH.
85% complete now, but kids are sharing a bedroom, and only bathroom is our ensuite.
I've done most of the work myself.
Bought a house in this state as only way to get on property ladder.

still needs around £12k spent on it:

Bathroom £5k (everything, its just a bare brick room with no floor, no plumbing etc.)
Fireplace £2k (Need fireplace and fire)
Front door and surround £2k
Garden £1k - it's like a building site, need a drive and other materials.
Daughters bedroom £1k - everything, brick and no floor at the minute.

The end of the Nationwide loan repayment is a big relief, that's £25k paid back over 18 months. My plan is to start paying back family loan from next month at £1k per month, and use additional £500 per month to put towards debt over repayment and finishing house.

I feel quite exposed with my finances now, but any comments are very much appreciated.

D_M_E

You have done well - would say, though, that once the final payment is made, consider splitting the £1500 to half family repayment and £100 to building up an emergency fund with what's left going towards clearing loans/cards.

MrGorsky

Thanks for your reply D_M_E. You are right. I don't have an emergency fund at the moment, so need to put something away for that. Thanks. Thats exactly what I'm looking for, feedback on what I may have missed from my SOA, or anything I should do.

MrGorsky

Thanks for the feedback Andy, not all constructive I must say, which is generally what I was after. The ebaying etc. was done in an effort to clear my previous £59k debt, I was on a lower income then, and using every opportunity to clear it. I must say the matched betting was a suprise income stream on that front.

I don't have regrets about lending to get the home for our family where it is, whether I have repeated that or not is no indication of self denial, just a point I wanted to excercise.

I learned an awful lot about managing my finances, what I could afford to repay, what tools to use (My own version of YNAB) etc. I have confidence that I can again manage the finances that I borrowed which enabled us to have the home we want. Most people need to borrow to get the home they want, with the idea being you get to enjoy the home for a longer period of time (the nature of a mortgage). Save for 5 yrs, and live in a caravan or shell of a house while my kids are growing up in it, or payback over 5.5 yrs and have all of that time in a lovely home.

I hope I can reply to you in 5 years time advising you that you are the dingbat, and I am debt free with £2.5k per month spare cash.... or £1k towards my mortgage free wanabe status, £1k pension topup, and £500 free cash anyway

System

MrGorsky wrote: »

Thanks for the feedback Andy, not all constructive I must say, which is generally what I was after. Save for 5 yrs, and live in a caravan or shell of a house while my kids are growing up in it, or payback over 5.5 yrs and have all of that time in a lovely home.

Yeah, I'm known for tough love. Some people go for the nicey-nicey approach, however I feel that everyone wants a father figure, not everyone wants the discipline...


That aside, I do see many people (not just you) not willing to save and loading up on debt because they want the nice house NOW! I could, like many, splurge 25k and have an amazing kitchen, bathroom and living room, but I'm happy to do one after the other when I can afford. I guess it's the NOW generation these days...someone I know just took out 5K on a credit card because they couldn't live with the living room furniture anymore and wanted new all at once. Oh the despair :-)

MrGorsky

I understand, and it's a difficult decision, and both can be considered the correct thing to do. My children only get one childhood, and I've made my decision and stuck to it.

Thanks for the follow up reply, I was initially upset by it, but can see the lessons and principles you're advising.

Apart from reprimand for past decisions, any future advice will be most welcome considering your experience on these boards. :beer:

EssexHebridean

There are plenty of ways of being tough without being rude, and judgemental, would be my take on things.

OK - looking at the SOA - it's a bit tricky due to the way it's laid out/formatted, but let's have a go. Comments in red as usual.

Income

£GBP£
Monthly Salary.........................3,541 after tax (After I pay in 6% to my pension and my employer contributes my contribution +2% ... so total pension contribution is 14% = £659)
Wife's Salary...........................1,513 after tax
Child Benefit Income...............27 after tax

Total Income............................5,081 This is a decent start!

Expenditure

Home
Groceries...................................400 Incl food, cleaning products etc ... everything I can get at Asda. Start shopping for some stuff at Aldi & Lidl as this can definitely be reduced a lot! Cook everything from scratch, eat veggie meals more days of the week than meat based, and make use of the super 6 & pick of the week deals to base meals around.
Fibre Internet............................ ..33 <- going to look at new deal on this today incl cashback etc, but need to consider wifes phone is within this Take the opportunity to switch your wife's mobile to SIM only.
Home insurance..........................10 paid annually Is this buildings and contents? Seems surrisingly cheap, hence the question.
Council Tax..................................170 over 10 mnths Switch to 12 months to help with budgeting. Failing that make absolutely sure that you allocate next year's "free" months to paying something off and shift the money there as soon as it's paid into your bank in those months.
Gas & Electric..............................80 Pure energy Best possible tariff?
Water............................................. 52 Metered? if so can you cut use? If not might metered be cheaper for you?
Mortgage........................................88 1
Mortgage Overpayment ..............0 Would love to over pay this Your time will come.
Mobile telephones.........................0 (Wife's is in BB package, mine is paid by work)
Life Insurance................................32
Hair cuts........................................30 can this be reduced at all? An extra week / few weeks between cuts?
TV Licence....................................12 Paid annually Never forget the pennies - forget enough of them and it skews the whole picture. If you must round always round up, not down.
Clothing .........................................50 Cut this back to essentials only.
Dentist........................................... ..7 for 6 monthly checkups

Entertainment:
Going out......................................100
Hobbies.........................................18 0 All four of us have various hobbies
Caravan expenses.........................20 Paid annually
Holiday........................................... 70 £840 covers annual - 2 weeks in the summer in caravan, 1 week at easter away, and 1 week in October half term in caravan. drop this to just 2 holidays rather than 3 - considering making those 2 just the caravan ones.
National Trust Membership ..........10 paid monthly DD
Your entertainment budget including holidays is currently £4320 a year which is quite a lot for someone over 70k in debt. I'd suggest it's time to take a step back and revisit those figures, and decide where you are going to make cuts.

Transport:
Fuel.............................................. .140
Public transport.............................40 Wife's commute You have 2 cars - why is she paying to commute on public transport?
Car Insurance...............................48 Paid annually Just to check - the stuff you pay annually, you ARE putting this money away each month, aren't you?
Car Tax.........................................24 Paid annually
MOT & maintenance.....................20 is this enough to cover two cars neither of which look that new? We budget £160 a month for car costs - that includes everything aside from diesel, is also for two cars but one of those is just 3 years old and costs nothing to tax. I'd suggest that by the time everything (MoT Tests, tyres etc) is taken into account, this is going to be a way short of the mark.


Debt repayment:
AA Loan 3.2% .............................325
Hitachi Loan 7.6% .......................360
Sainsburys Credit Card 0% til 09/21......280 Don't lose track of the end date on this and the one below. Also if this is set for minimum payment only currently, change that to a set amount of £280 as this will have a better impact on the balance as time goes on than a falling min payment would. (also means that you don't end up with extra money being left in the bank that you're not accounting for)
Post Office Credit Card 0% til 06/20......100
Nationwide Loan 3.1% ................. 1489 ..... last month of repayment for this. My suggestion would be to use this money for 1 month to make a proper basic emergency fund, then to shovel it all on to the next most expensive debt - either by saving to pay off in a lump sum or by overpaying if it is advantageous to do so.


Other:
Work Lottery Syndicates.................15 The fear of the syndicate win keeps me in
Union............................................. .. 2
Takeaways......................................20 One per month
Other one offs / Treats.....................50 This is effectively another £600 to your already high entertainment budget.
Presents.......................................... .20 This seems low - even if you only buy presents for the kids, not any other family members, this still means only £60 each for each of them for their birthday and again for christmas - if you're sure that's all you spend, then great, but I suspect it's not. Does it account for things like parties?



Monthly Expenses..........................3,581


Monthly Income...............................5,081
Monthly Expenses...........................5,070
Net Income ................................11 Yes - you HAVE to make savings as this is truly dangerous territory.




Assets & Liabilities:

Debt: £GBP£ Balance
Mortgage Balance......................221k 26 years left
Value of house is £350k, mortgage rate 2.8% ... will look for remortgage deal in 10/19 Start keeping your eyes open now for what your current mortgage company has to offer as they may let you lock down a deal early. personally I'd be looking at fixed rates too, for safety.

AA Loan £13100 3.2% currently repaying £325 mnth
Hitachi Loan £11614 7.6% repaying £360 / mnth This is the next one to tackle - if you use even the £1000 from the Nationwide payment then you'll really start to see that balance drop.
Nationwide Loan £1489 3.1% repaying £1489 /month (yay!, £25k loan almost paid back)
Sainsburys Credit Card £11989 0% til 09/21.............280 /mnth
Post Office Credit Card £3874 0% til 06/20.................100 /mnth
Family loan £30k <- plan is to start paying this back next after nation wide loan is paid back.


Total Debt......................£293k

Total debt excl Mortgage ....£72k

Current Account balances:
Account for annual spends & Saving.....£649
Daily current Account.........................£864 just enough to pay all of the bills this month
Savings account ...............................£0 Make this your emergency fund account - feed with £1000 from the Nationwide payment once that has finished then make sure you keep it topped up if it is needed - it is ONLY for emergencies though, remember!


Value of house: £380k (was bought in 2018 for £252k)
Value of owned car 1: £8k, Car 2: £100 You need to start budgeting for a replacement for car 2, or work out how you will manage on 1 car if that is financially better for you
Value of Caravan owned £12k

I can well see why your current situation makes you nervous - it would be scaring the life out of me! I take it that you're not even thinking about doing anything more to the house until you have at least double the cost of the next bits cleared off the cards? If you are I can only urge you to rethink - at the moment if your wife's income fell for any reason it would be enough to cause you massive issues - never mind what if anything happened with your own job.

You say you have done matched betting before - could you return to that for a while?

Takmon

MrGorsky wrote: »

I understand, and it's a difficult decision, and both can be considered the correct thing to do. My children only get one childhood, and I've made my decision and stuck to it.

It's worth pointing out that when your children are older they won't be looking back and thinking how great their childhood was because they had a brand new bathroom and a newly redecorated house to live in.

They will probably have the most fond memories of the £840 you spend each year on 4 weeks holiday where they have quality time with their parents having fun.

They certainly won't be looking back fondly at their parents barely making ends meet and pushing their finances to the limit due to excessive spending and stressing over how everything will be paid off. I'm not saying you are stressed over this situation (I certainly wouldn't be happy in your financial situation) but it's definetly worth thinking about.

Socajam

I read everything including the comments and my head is spinning.
That's like living on the edge and hoping that a strong wind does not stir up and push you over.
I agree with all the comments and do not see any negativity.
One's man toughness can be seen as being rude, but if one really need and want honest answers, they would have to take the hard knocks with those softly approach given.

System

Takmon wrote: »

It's worth pointing out that when your children are older they won't be looking back and thinking how great their childhood was because they had a brand new bathroom and a newly redecorated house to live in.

They will probably have the most fond memories of the £840 you spend each year on 4 weeks holiday where they have quality time with their parents having fun.

They certainly won't be looking back fondly at their parents barely making ends meet and pushing their finances to the limit due to excessive spending and stressing over how everything will be paid off. I'm not saying you are stressed over this situation (I certainly wouldn't be happy in your financial situation) but it's definetly worth thinking about.

This is very true. Reminds me of another MoneySaver on here complaining about having to 'fork out' for a holiday on their partner's request when he could put the money to "good use" buying a new state-of-the-art TV...


No-one looks back 20 years and says "love, can you remember that state-of-the-art TV we bought, what fantastic memories".

MrGorsky wrote: »

Thanks for the follow up reply, I was initially upset by it, but can see the lessons and principles you're advising.

Apart from reprimand for past decisions, any future advice will be most welcome considering your experience on these boards. :beer:

Not a problem. I thought it may of upset you as I've had it removed by the mods. I'm willing to not appeal my post removal as I did call you a dingbat, afterall.


I will add from a psychology perspective (my area) you do mention 'not regretting' three times (inc. title) in quite an assertive way, as if you know you probably do regret it, and don't want to admit it. Is it validation from us for the decisions you made you want or honest observations?

determined_new_ms

all kudos to you for taking on such a major renovation. We have renovated a house and it's hard work. But please can I caution you to reconsider the cost of your outstanding work? I believe you can get a high standard at a much lower cost. We spent £10k on renovating our house and did every room, knocked walls down. I lot of the stuff I sourced - kitchen I happened to be in a supermarket and saw a woman was selling off an ikea kitchen for £150. I then went to ikea and bought new doors/drawers. Solid oak worktops I got off of ebay I think for around £220/50 - we needed 5 meters. I got a beautiful marble fireplace and surround from ebay £80 ad paid the guy £20 to deliver it - I was super lucky with this as it was miles away! I paid a builder to knock out the wall and install and he charged me £180 for the work. We were quoted £1500 by the local fireplace business. We had woodworm in the joists and it cost a couple of hundred to have it cut out, treated and joists replaced.

The biggest cost was actually the garden and it cost £1800 to have turfed and then the other half I paid about £1k for crazy paving and a builder to lay. Got the slabs from a reclamation yard.

Bathroom was completely ripped out and tiled all walls. Prob cost in the region of £600

I am currently redecorating and expect the whole house to cost £1k. I am going to paint the floorboards in our room with a paint called Frenchic. it's fairly expensive but looks great probably costing £40 instead of a few hundred for a carpet.

There's a great page on facebook that is called DIY on a budget. I've found it inspiring enough to crack on with what needs doing!

Just a thought!

Other than that I think there are some costs that can be cut from your regular costs to bring your surplus somewhere a little more comfortable.