No regrets. We only have debt. 4 June 2019 at 9:41AM edited 4 June 2019 at 1:16PM in Debt free diaries 89 replies 19.9K views

MrGorsky

Rental property is 50% shared ownership, with no mortgage.
Value around £80k, we get half of the rental @ £221 net of tax.

fresh_cotton

Sometimes in life - you just accept that 'you are where you are'

Lots of positives here I think

1) - good income
2) - you are on the housing ladder
3) - you want to tackle your debts
4) - Healthy pension contributions.

Good luck in getting these debts paid off, hopefully you can avoid debt altogether after the house is completed and then you can properly enjoy all your income.

warby68

Whilst you might not regret it as such, I'm sure you are aware its a high risk strategy and with a young family you are extremely vulnerable to any bumps in the road.

A little worrying that the house still has some significant projects to complete - the outside seems to have only a token budget. We've found outside work relatively expensive and you don't get much for £1k. How are you valuing the property at £380k noting it doesn't have a bathroom and some rooms are still brick and boards? In a distressed situation, a house with any major work needed won't bring top dollar.

This is one case where I would be tempted to have a slightly higher mortgage to reflect the fact you have spent on refurbs designed to last most of the length of the mortgage and add to the house value. This is not ideal in the debt free wannabe world, swapping unsecured for secured debt but if you had bought a house ready done you'd probably have a higher LTV from Day1. Your Day 1 is yet to come - finished house, finished value. I see your high level of unsecured short term debt as risky - if your circumstances change this would be much harder to deal with than a long term mortgage.

Alternatively is the family loan something you could treat more like a mortgage - offer security in return for not reducing it rapidly?

Please note I'm not cutting wholly across the conventional wisdom of not consolidating or mortgaging for unsecured consumer debt. In my head, where it is an acceptable strategy is where the spending has been on the long term structure/fabric of the property which permanently lifts it value. In such a case, if the house had been done already, this cost would have rolled into the initial mortgage.

My suggestion is not about making it an easier life but reducing or rebalancing risk while you have dependants and clearly rely on two incomes. I would still want to be clearing any residual, non mortgage debt ASAP.

Karonher

With regards to the matched betting, I have lost some of the bigger accounts but still manage to make about £1500 over the year. There are always new bookmakers so sign up with them, even if there are no reload offers. If you have some of the bigger ones, they have lots of reloads.

comeandgo

Do you have any plan B if illness or accident meant you or your wife could not work? Do both of the employers offer full pay if off long term? Your expenses are so tight even one month of no pay would cause problems.

JayRitchie

MrGorsky wrote: »

Rental property is 50% shared ownership, with no mortgage.
Value around £80k, we get half of the rental @ £221 net of tax.

That rather changes the equation doesn't it? Is this a property which you would be able to sell if things get tough?

EssexHebridean

warby68 wrote: »

Alternatively is the family loan something you could treat more like a mortgage - offer security in return for not reducing it rapidly?

The mortgage company would be unlikely to allow this - second charges aren't usually easy to agree, and this would very likely not be seen as a scenario where most mortgage co's would agree to one.

warby68

EssexHebridean wrote: »

The mortgage company would be unlikely to allow this - second charges aren't usually easy to agree, and this would very likely not be seen as a scenario where most mortgage co's would agree to one.

I know it was a long shot

katsu

Cancel the lottery. Or make yourself do enough surveys to earn £15 a month in vouchers to make it cost neutral. Better to dump the lottery and do surveys to give you extra funds towards doing up the house

Does your work offer life insurance too? Might you be able to reduce the premium you pay a bit if you don't need as much cover?

Swap Asda for Aldi or Lidl. Better value and again frees up cash towards the next house jobs.

Does the rental property meet all its costs? Is there a net contribution to your budget?

I would start seeing the house as more of your treats and cutting down on the other extra spends. We had some major work instead of a holiday last year/ this year.

Do you really need a second car or could you cope without? Saves the tax and insurance on it at least.

You want to get another £12k spent and reduce your exposure so you'll need to find changes you can make.

Well done on the contents insurance and paying off the big loan so fast, plus doing so much yourself. It's not easy.

Hope some of these ideas help.

shteca

Hi OP
Had a read through your situation and seen all the replies.
I personally started my debt free journey 12 months ago and I was in a situation with regards to having many loans, credit cards and even a £7.5k overdraft.
When I started I came to the point where I said never again. I had too just refurbished my flat putting £14k on cards and loans so I do feel very similar to you.
With regards to your situation, how is your wife with everything? Does the debt worry her?
Do you sleep okay at night with debt?
For me being in debt controls my life. I have two kids too and I will never let them make the same mistakes with money as I have.
I still have £20k to go on my over £50k debt and I really empathise with you