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

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  • enthusiasticsaver
    enthusiasticsaver Posts: 15,765 Ambassador
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    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. 
    You can get to the stage of investing but as you say once the debt is gone and you have some savings behind you. Do you have a pension? 

    You have a good income in comparison to most but yes I think your problems have come from still spending as if you were earning your Zurich salary and from thinking short term with the mortgage payment holidays to pay for actual holidays and just never budgeting. As I have said before high earners are particularly guilty of this because they assume their high income will continue as infinitum, there is usually also a sense of entitlement which comes with a high salary as they think they earn well so don't need to limit spending. You have come to your senses though and can turn this around quickly by cutting back, taking in a housemate and or a second job or just resign yourself to a bit of a slog clearing it. It took years to build up (although I think you said this is the second time you have built it up?) so it may take a few years to clear it. You  and @alt80 have a lot in common so you can spur each other on. 
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • enthusiasticsaver
    enthusiasticsaver Posts: 15,765 Ambassador
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    Also read Ryan's diary. He had £28k debt and moved in with family for a year to clear his debt. Not saying you should do that but an indication of how others sort the problem of clearing debt as quick  as possible. @alt80 has sold a bunch of stuff to get his card debt down from £40k to £30k. Have you got anything you could sell to give you a kickstart? If you have a large spare room though I think that would be my first choice. How much would you get per month do you think? I think you have to pay tax after £7-£8k per year on lodging income so bear that in mind. 
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • Rainbowtrousers
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    Also read Ryan's diary. He had £28k debt and moved in with family for a year to clear his debt. Not saying you should do that but an indication of how others sort the problem of clearing debt as quick  as possible. @alt80 has sold a bunch of stuff to get his card debt down from £40k to £30k. Have you got anything you could sell to give you a kickstart? If you have a large spare room though I think that would be my first choice. How much would you get per month do you think? I think you have to pay tax after £7-£8k per year on lodging income so bear that in mind. 
    So i actually have 2 spare rooms and imagine i could let each of them for £850 per month. I live in a decent area in London. I appreciate i would have to pay tax on anything over £7500. By a strange coincidence a good friend has asked to rent my place as a whole while he house hunts (he has children with one in the nursery on my road) but that may be too disruptive even though i could rent my flat for close to £3,000 per month as a whole. I will read Ryan's diary for sure. I will have a look around at some things to sell but that would hurt ... even though the debt shifting would feel great!
  • Rainbowtrousers
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    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. 
    You can get to the stage of investing but as you say once the debt is gone and you have some savings behind you. Do you have a pension? 

    You have a good income in comparison to most but yes I think your problems have come from still spending as if you were earning your Zurich salary and from thinking short term with the mortgage payment holidays to pay for actual holidays and just never budgeting. As I have said before high earners are particularly guilty of this because they assume their high income will continue as infinitum, there is usually also a sense of entitlement which comes with a high salary as they think they earn well so don't need to limit spending. You have come to your senses though and can turn this around quickly by cutting back, taking in a housemate and or a second job or just resign yourself to a bit of a slog clearing it. It took years to build up (although I think you said this is the second time you have built it up?) so it may take a few years to clear it. You  and @alt80 have a lot in common so you can spur each other on. 
    Well my idea for a pension was to sell my london place, move into the rental and live off the difference. Moving to brazil and living in a campervan also appeals! But i do need to get wise to this and grow up a bit. I like alt80s idea of starting a BTL portfolio (once debts are paid off) as i do have estate agent contacts and my dad has builder/plumber contacts through his decorating years. 
    To be totally honest this is probably the 4/5 time it has built up and has been paid off by liquidating assets (i made lots from a flat sale about 10 years ago), when i was younger my parents bailed me out and from striking lucky and getting well paid contracting jobs. The issue has always been there (overspending and not budgeting). 
    Yes i think @alt80 and i have a similar situation. At this stage i am tempted to suggest a trip to Rio to celebrate but that's the old me talking.
    I am very committed to the hard slog i assure you and know that i will be so much happier, less stressed and really value things so much more. 
    Thanks again. 
  • alt80
    alt80 Posts: 4,346 Forumite
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    edited 28 October 2020 at 11:08PM
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    @RainbowtrousersI’d say we probably do have similar mindsets on the personal stuff, @ryanm8655 has also admitted to having similar issues with mindset and I may have just hooked you up with a lodger tbf as he’s looking to move back to London. Never stop making deals ha.

    Totally understand re still wanting the toys but 911 C4S - come on be a man and at least be aiming for the C2S... none of that power should be heading to the fronts mate. I had to voluntarily terminate my V8 F-Type, one of the hardest things I’ve ever done and sent me on a massive downer tbh. Still got the Range and a 440i but not gonna lie I want a Vantage far too badly right now.

    As you’ve gave me permission to make judgement I’m sorry to break it to you mate but assuming property investment is going to be ‘easy’ because your Dad is a painter and decorator is really the wrong way to go about it. It’s a business and to make it work as a LL you need to treat it as such - it’s not the passive income the ‘gurus’ will have you believe. You either need to manage yourself or have a damn good agent you can 100% trust - not the one with the cheapest fees usually. I’m passionate about property - it’s my livelihood after all but I’ve dealt with so many LLs over the years who are either the ‘accidental’ type or the ‘easy money’ type - not great for them and no good for the tenants. Please don’t forget you are providing a home to someone whether that be a room in a HMO or a whole house, for the time that tenant is there it’s their home. I’d honestly say don’t do it if you just want some easy money/ second income - it’s not what it was tbh but can still work under the right circumstances and for the right person. I may well have read your posts re property entirely wrong and sorry if I have but having a BTL on a res mortgage was a massive flag to me and would be to any other professional LL.


  • ryanm8655
    ryanm8655 Posts: 1,152 Forumite
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    alt80 said:
    @RainbowtrousersI’d say we probably do have similar mindsets on the personal stuff, @ryanm8655 has also admitted to having similar issues with mindset and I may have just hooked you up with a lodger tbf as he’s looking to move back to London. Never stop making deals ha.

    Totally understand re still wanting the toys but 911 C4S - come on be a man and at least be aiming for the C2S... none of that power should be heading to the fronts mate. I had to voluntarily terminate my V8 F-Type, one of the hardest things I’ve ever done and sent me on a massive downer tbh. Still got the Range and a 440i but not gonna lie I want a Vantage far too badly right now.

    As you’ve gave me permission to make judgement I’m sorry to break it to you mate but assuming property investment is going to be ‘easy’ because your Dad is a painter and decorator is really the wrong way to go about it. It’s a business and to make it work as a LL you need to treat it as such - it’s not the passive income the ‘gurus’ will have you believe. You either need to manage yourself or have a damn good agent you can 100% trust - not the one with the cheapest fees usually. I’m passionate about property - it’s my livelihood after all but I’ve dealt with so many LLs over the years who are either the ‘accidental’ type or the ‘easy money’ type - not great for them and no good for the tenants. Please don’t forget you are providing a home to someone whether that be a room in a HMO or a whole house, for the time that tenant is there it’s their home. I’d honestly say don’t do it if you just want some easy money/ second income - it’s not what it was tbh but can still work under the right circumstances and for the right person. I may well have read your posts re property entirely wrong and sorry if I have but having a BTL on a res mortgage was a massive flag to me and would be to any other professional LL.



    Haha. Thanks for the tag. Likely looking to move around January.

    Will check out the diary, it looks an interesting one from the few posts above.

    August 2019: £28.8k

    November 2020: £0 (0% interest)

    My debt free diary: https://forums.moneysavingexpert.com/discussion/comment/77330320#Comment_77330320


  • alt80
    alt80 Posts: 4,346 Forumite
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    @Beeboo23 bet you’re the f**king life and soul of the party mate.

    We probably earn a similar income if you’re talking net and not gross and if you’re a saint with money and not interested in the lifestyle fair enough and good for you but I’d rather be burning petrol at the rate of 15mpg in my Supercharged Range Rover than taking my foot off the throttle to save a penny in a Kia and so would the OP by his own account. My choice / his choice. The point of my post was little to do with cars and more to let him know there are other people on here with a similar mindset also on a debt journey, give him a bit of moral support. Yeah I’ve been harsh about the BTL - for his own good not to be a self righteous little p***k.
  • Beeboo23
    Beeboo23 Posts: 201 Forumite
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    alt80 said:
    @Beeboo23 bet you’re the f**king life and soul of the party mate.

    We probably earn a similar income if you’re talking net and not gross and if you’re a saint with money and not interested in the lifestyle fair enough and good for you but I’d rather be burning petrol at the rate of 15mpg in my Supercharged Range Rover than taking my foot off the throttle to save a penny in a Kia and so would the OP by his own account. My choice / his choice. The point of my post was little to do with cars and more to let him know there are other people on here with a similar mindset also on a debt journey, give him a bit of moral support. Yeah I’ve been harsh about the BTL - for his own good not to be a self righteous little p***k.
    Relax a little. The point of my post was to let OP know that image isn’t everything. You can drive an average car and use the money you save to pay down the debts (talking from experience). If you want to have super expensive cars that’s up to you. Personally I value other things, that’s up to me. 
    As for parties, I haven’t been to one since covid, but previously yes I was the life and soul. Kisses. 
    Debt free October 2020 🎉

    FTB 12 2020 🥳

    Life happens fund filled 11/22

  • alt80
    alt80 Posts: 4,346 Forumite
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    @Beeboo23 fair enough mate. I faced an awful lot of flack for my lifestyle choices on here and just wanted to give a bit of moral support to the OP and let him know there are people out there with similar mindsets but tbf I probably overreacted a bit to your post. Absolutely up to you what you value in life I definitely agree with you there.
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