Wow wee oh my - trying to hack away at my £54k debt (was even about to book a holiday)

enthusiasticsaver

alt80 said:

@enthusiasticsaver Not sure how much experience in property you have tbh but i/o on a BTL isn’t the gamble it is on a res home. If the investment stacks there’s much less of an issue and remoing to leverage the next property is a legitimate way to maximise growth of a portfolio (increases reward and risk though as with any form of leverage tbf). However, as I’ve said the OP doesn’t seem to have any real strategy (or exit) for the investment and it should not be on a res mortgage. Exit is something he can certainly consider and as you rightly point out no guarantees. 

@alt80 I don't have the experience you do on property (I invest in multi asset funds) but the OP knew that when he asked me the question. I am responding as a previous banker and when I was agreeing mortgages (residential not commercial) I would not have encouraged interest only except as a very temporary situation with reduced income etc. As you rightly point out BTL is different as the asset is much more available to liquidate than the roof over their head. I invest myself so I know the pitfalls and rewards but many of us, myself included invested in endowment policies in the 80s and 90s to repay our mortgages on the promise they would return more than enough to cover them but then we went through a recession in the 90s and returns dropped or the projected returns were inflated in the first place and many people were left with a shortfall at the end of their mortgage term. Thankfully we saw the writing on the wall and converted our mortgage to repayment about 15 years prior to the finish date and kept the policies as extra investments. The oldest one didn't do too bad and performed as expected but the later ones severely underperformed. My point is investment returns depend on the economy and a plethora of exterior events you have no control over and to get high returns you have to take high risks you may lose the capital. Our own investments are in a cautious (no surprise there) portfolio and they are giving around 9 % return at the moment so they can do well but no guarantees. I dare say the higher risk portfolios are doing even better much to my surprise in this climate. Probably because cash savings offer such pitiful returns many of us are ploughing into investments instead. 

You also point out that the mortgage should not be on a residential mortgage as it is a BTL which is correct. I chose to overlook that as his thread is about his debt. 

Rainbowtrousers

caeler said:

@Rainbowtrousers I log all my receipts to make sure I stay within my monthly allowed spending money which covers food, fuel and any incidentals or things I want. I’m very strict with myself.  I meal plan so I avoid overbuying and wastage. I always take a packed lunch to work.  I only do one weekly shop and recently I’ve realised I don’t need to do a full weekly shop, now every other week is just for a few fresh bits like milk and veg.  I hate wasting money. I do this as I’m very focused on paying off the mortgage so every spare penny is accounted for. 

i am about to do a weekly shop now with my meal plan next to me. Going with tesco. This will massively help with my weekly shopping spend in terms of keeping the costs down and saving me having to go to the local expensive butcher and sainsburys local which has much less deals. So a big thanks for the tips. 

Rainbowtrousers

Rainbowtrousers said:

caeler said:

@Rainbowtrousers I log all my receipts to make sure I stay within my monthly allowed spending money which covers food, fuel and any incidentals or things I want. I’m very strict with myself.  I meal plan so I avoid overbuying and wastage. I always take a packed lunch to work.  I only do one weekly shop and recently I’ve realised I don’t need to do a full weekly shop, now every other week is just for a few fresh bits like milk and veg.  I hate wasting money. I do this as I’m very focused on paying off the mortgage so every spare penny is accounted for. 

i am about to do a weekly shop now with my meal plan next to me. Going with tesco. This will massively help with my weekly shopping spend in terms of keeping the costs down and saving me having to go to the local expensive butcher and sainsburys local which has much less deals. So a big thanks for the tips. 

Mortgage free would be the dream. Prior to this bump in the road my goal was interest only on both mortgages and blow what was left over

caeler

Rainbowtrousers said:

caeler said:

@Rainbowtrousers I log all my receipts to make sure I stay within my monthly allowed spending money which covers food, fuel and any incidentals or things I want. I’m very strict with myself.  I meal plan so I avoid overbuying and wastage. I always take a packed lunch to work.  I only do one weekly shop and recently I’ve realised I don’t need to do a full weekly shop, now every other week is just for a few fresh bits like milk and veg.  I hate wasting money. I do this as I’m very focused on paying off the mortgage so every spare penny is accounted for. 

i am about to do a weekly shop now with my meal plan next to me. Going with tesco. This will massively help with my weekly shopping spend in terms of keeping the costs down and saving me having to go to the local expensive butcher and sainsburys local which has much less deals. So a big thanks for the tips. 

I often scan the current offers before I shop, just so I can make sure I pick up items I regularly use on offer.  https://www.tesco.com/groceries/en-GB/promotions 

Rainbowtrousers

MidsHollie said:

Well done on deciding against the remortgage. 

Im with astrocytic_kitten on recommending the zero based budget. I’ve found that zero based budgeting, a spending diary (logging every single freaking spend, as close to the time as spending it, but about once per week) and sinking funds have worked really well for me. 

It’s funny isn’t it, how people are different. I would 100% not have the headspace for another job after my full time job, but I would happily have a housemate. I think if I was going to get the extra job I’d get the housemate too.... you’ll never be at home to see them anyway!! I’m an introvert too, I just always find an introverted housemate. The thing that puts me off about a second job is the tax on it. Wouldn’t you g rest taxed at 40%? I find it annoying that the govt would take almost half of my very very hard earned extra cash.

Well my second job would be consultancy work so i would invoice them through my limited company. I would still have to pay tax. I am still deciding on what to do with getting a housemate but as you said i could be extra fussy to get a good fit. My spare room is huge with a sofa so they basically have a mini apartment in there.

astrocytic_kitten

Rainbowtrousers said:

Yes well i am not using it as an excuse but i also grew up in a poor family living month to month with the odd takeaway as a treat. Was the first one to go to university and the only one from my friend group. Ironically my friends that left school at 15 and became plumbers are now rolling in it ha ha. Sorry to hear about your health and i am really chuffed that you decided to share that here with me/us. Noted with the cleaner and yoga, sounds like they do for you as my gym/pool does for me. i also struggle with anxiety at times and those activities are my reset. 
I bet the feeling must be awesome. I took my first loan at 18 and have been in debt since. So debt free and savings would be totally totally alien to me. You must actually save so much more money now. The feeling i get is that it is an upward spiral (being able to pay for annual policies which are cheaper etc). If i can do 2021 within budget that would be a huge huge step.
Thanks for the helpful tips. I too have had to share my debts with friends. One friend who i was on the recent holiday with (he is excellent with money) could not believe it when i said it was part funded by mortgage holidays! Crazy ... He said i seemed so happy and content and could not believe that i had taken more debt to finance it. Oh my .... 
Thanks again for the helpful tips.

Upward spiral is a good way to put it. Having emergency savings and sinking funds for everything still feels alien to me tbh - it feels like a very wonderful but fragile thing that I’m scared I’ll mess up! Definitely a better way to feel than the awful sick feeling in the pit of my stomach I felt whenever I thought about finances when I was just starting on the debt free journey (and for the few years before that when I knew it was an issue but was sticking my head in the sand). 

You can definitely get there too. Good luck with the weekly shop!

Rainbowtrousers

alt80 said:

@Rainbowtrousers Please don’t take this as judgement but I am seriously concerned you’ve got a BTL on a res mortgage. If this is what I think it is you are (perhaps unwittingly) committing mortgage fraud. Re. what to do with the BTL - you don’t seem to have any real strategy. I/O is quite likely the way to go but equally depending on where the BTL is and your own strategy for investment repayment may not necessarily be the worst idea. As I’m fairly sure someone is going to judge the fact I’m even giving advice in the first place relating to money ... I may be a d**k with my personal finances but I am experienced as a LL and my other business is property so feel free to ask any questions if you’re serious about property investing - what you’re doing now is no way to build a portfolio and there are a lot of pitfalls.

As for me did I realise it? Yes 100%- I did it to avoid telling my wife I had a smidge under £100k in credit card debt. Not my finest moment.

I earn similar to you did in Switzerland but was spending £10.5-11k/m living on the income I’d like not the one I have. Earning half your previous income must be very difficult and probably explains a lot of the debt.

Res mortgage remo - I just have too many financial commitments right now (£1650/m car finance, £1k/m cards, £1k/m school etc.). Currently under 50% LTV on my res home and will only increase to leverage further property investments. Not even saying that’s something most people should do tbh.

Think we have quite a few similarities tbf. There are a few of us on here who earn well and have issues with mindset / lifestyle / too image conscious.

Please judge away this is exactly what is needed as i have been overspending and burying my head in the sand for a couple of decades. Even pre Zurich and my university days i have always overspent. Have just seen myself as a wheeler dealer type and it has been lots of fun but probably not healthy long term. My strategy really was to get all repayments as low as possible so i can blow loads. But my dad is now a decorator so BTL investing should be easy for me. I will give property investing/strategy some thought once the spending is under control. 
You have hit the nail on the head with mindset. 
Thanks again. 
I still want the 911 4S and that will not change but i need to find a way to earn and save for it!

Rainbowtrousers

enthusiasticsaver said:

alt80 said:

@enthusiasticsaver Not sure how much experience in property you have tbh but i/o on a BTL isn’t the gamble it is on a res home. If the investment stacks there’s much less of an issue and remoing to leverage the next property is a legitimate way to maximise growth of a portfolio (increases reward and risk though as with any form of leverage tbf). However, as I’ve said the OP doesn’t seem to have any real strategy (or exit) for the investment and it should not be on a res mortgage. Exit is something he can certainly consider and as you rightly point out no guarantees. 

@alt80 I don't have the experience you do on property (I invest in multi asset funds) but the OP knew that when he asked me the question. I am responding as a previous banker and when I was agreeing mortgages (residential not commercial) I would not have encouraged interest only except as a very temporary situation with reduced income etc. As you rightly point out BTL is different as the asset is much more available to liquidate than the roof over their head. I invest myself so I know the pitfalls and rewards but many of us, myself included invested in endowment policies in the 80s and 90s to repay our mortgages on the promise they would return more than enough to cover them but then we went through a recession in the 90s and returns dropped or the projected returns were inflated in the first place and many people were left with a shortfall at the end of their mortgage term. Thankfully we saw the writing on the wall and converted our mortgage to repayment about 15 years prior to the finish date and kept the policies as extra investments. The oldest one didn't do too bad and performed as expected but the later ones severely underperformed. My point is investment returns depend on the economy and a plethora of exterior events you have no control over and to get high returns you have to take high risks you may lose the capital. Our own investments are in a cautious (no surprise there) portfolio and they are giving around 9 % return at the moment so they can do well but no guarantees. I dare say the higher risk portfolios are doing even better much to my surprise in this climate. Probably because cash savings offer such pitiful returns many of us are ploughing into investments instead. 

You also point out that the mortgage should not be on a residential mortgage as it is a BTL which is correct. I chose to overlook that as his thread is about his debt. 

Would genuinely love to get to the stage where i am investing. This really has all been inspirational. Both from you, alt80 and everyone else. I think first focus is to tackle the spending, pay off the debt not by remortgaging and build up some sort of emergency fund. 

One-step-at-a-time

I do like that description, upward spiral! That is exactly how it feels. 

Rainbowtrousers

One-step-at-a-time said:

I do like that description, upward spiral! That is exactly how it feels. 

Great cannot wait for that feeling. I have to say though, overspending is much easier than budgeting!