Feeling positive about banishing a decade of debt

pippa_pelada

Thank you for your advice, it's much appreciated. The only problem is that we need essential work doing on the house. We haven't touched it since we moved in some years ago and I have a list of urgent repairs as long as my arm. I will take on board what you said about the car loan though. 
I guess after a year of debt busting, I'm feeling more in control of our finances and I know that I'll do everything in my power to clear this debt for good asap!
I'll talk to hubby and see what he thinks as I was the one suggesting we re-mortgage to pay off the car too.
Thank you  

enthusiasticsaver

I know it probably seems like a quick and easy fix to consolidate existing debt especially high interest debt on to the mortgage but there are massive pitfalls to consolidation normally because the initial reasons for the high debt (ie overspending) have not been dealt with. Now obviously you have addressed that because you have repaid £20k over the last year but absorbing historic debt means you could be paying for your husbands car and other past overspending  over the next 15 or 20 years which will cost a lot more in interest than dealing with it over 2 years which ideally should be what you are aiming for. 

Increasing the mortgage by consolidating old debt leaves you vulnerable if either of you lose  your jobs and the temptation is there to think you have repaid the debt whereas in fact all you have done is move it. Look on this forum to see how many people have consolidated and regretted it afterwards. If there are essential home improvements which need doing then putting that on to the mortgage is not the worst idea but it would be better to save up and pay for it without borrowing. 

pippa_pelada

@enthusiasticsaver - thank you We're yet to contact a broker - we'll do that at the beginning of next month so I guess when we have a better idea of deals available etc, we can make a more informed decision but the work on the house is unavoidable with a leaking roof just one of the main issues
We're ending the year with a bit of good financial news as the dishwasher is going to cost a lot less than I thought. I'd put aside £650 for a new dishwasher etc but for both the electrical work that still needs doing and fixing the dishwasher (with additional no call out fee cover for the next year), it will come to around £250 in total thanks to having appliance and electrical cover. That means I can add a bonus £400 to the savings pots.
We're having a night with just the two of us. Cheesy films, open fire, steak and pepper sauce and a decent bottle of wine. I hope everyone has a peaceful and safe New Year and here's to us all banishing those debts in 2021!

savingholmes

Well done on reducing your debt £20K in a year. That's fab progress. Happy New Year. Having taken the consolidation route in the past - and just reaccumulated the debt - I agree with ES it is not a good route forward. How long would it take you to save up for the works you want doing? Are there any priority areas you could cashflow while getting out of debt? We did our patio this year and repainted the kitchen cupboards and got a new counter fitted - and still repaid £10K+ of debt... 

pippa_pelada

savingholmes said:

Well done on reducing your debt £20K in a year. That's fab progress. Happy New Year. Having taken the consolidation route in the past - and just reaccumulated the debt - I agree with ES it is not a good route forward. How long would it take you to save up for the works you want doing? Are there any priority areas you could cashflow while getting out of debt? We did our patio this year and repainted the kitchen cupboards and got a new counter fitted - and still repaid £10K+ of debt... 

Thank you We also have a problem in that we have no savings other than around £2000 in an emergency fund but I'm working on that. With everything that's going on in the economy, I think that we need a cushion of at least £10,000 for now so that's my priority in the coming year as well as paying off the maximum we can on the debts. I'm fairly sure we won't consolidate the car debt (will look to move that and the loan to 0% card hopefully) but additional borrowing on the mortgage is certain for essential work on the house - if we qualify, of course.

pippa_pelada

Happy New Year to everyone! 
We've had a fairly frugal start to the year and with the re-mortgage application coming up, hubby is on his best behaviour with his spendy ways. In fairness to him, he does seem to be changing and being more aware that the even the smallest purchases add up. Saying that, he persuaded me to buy a lottery ticket on my app last night (I buy one ticket twice a week - chance to dream and all that!) as he'd been tinkering with a number randomiser and he won £30. He's happy to put it into the savings account so it was worth the punt in the end!

I used a snowball calculator yesterday with some fairly conservative overpayment figures and that suggests we will be debt free by May 2022 but I'm aiming to put every spare penny towards debt and savings this year. We still managed to spend way too much last year but I don't think hubby was totally on board until recently. I reminded him that our debt repayments add up to almost £2k a month and that seems to be keeping him on track.

The only big expense I'm expecting this month is settling the balance on our week away in Scotland but I'm not 100% sure that will be going ahead. The house owner has said he will reimburse everything paid should covid get in the way so either way, I'm not too worried at this point but it would be good to have something to look forward to.

pippa_pelada

All the big direct debits have come out now so it's that usual satisfying part of the month where I can see the debts going down. We're a little low in the current account but the combination of lockdown, dry January and hubby on his best non-spendy behaviour should mean that we don't go too near the overdraft but I'll shuffle some savings around before that happens.

It's all such a slow process this paying off of debt but I now know that there's no other way than slow and steady to get in the debt free mindset. I've read too many threads about people consolidating loans only to build the debt up again (hubby was also previously guilty of that) so I definitely don't want to go down that route - but I can't say I'd have felt that way prior to finding this forum and receiving some great advice!

I thought I'd had my light bulb moment back in Nov 2019 but I can see now that the journey involves a number of LBMs

enthusiasticsaver

I am glad you are thinking twice about consolidating debt now.  As you say your DH has also consolidated in the past only to rebuild debt back up again.  Obviously anything like roof repairs need sorting before they become a major issue but getting quotes first and seeing if you can cashflow it over a much shorter period than a 20 or 25 year mortgage.  Many people say they intend to overpay but never quite get around to it. May 22 is not too far away at all.  

pippa_pelada

A bit of a spendy month all in all thanks to hubby deciding to buy a rather large tv. He did discuss it with me first and it's one of the daft issues that we've argued about most over the last few years. I'm all for using TVs, computers, phones, cars etc until they fall apart but he'd been whinging that the TV we had was over 10 years old and we needed a smart tv - sigh - anyway, he finally wore me down and I guess they'll be fewer subjects to argue about now! Don't tell him but it's actually rather good. I'd never confess to that after the long running fight I put up

End of month review is -

Savings Pots = £200

Emergency Fund = £400

Premium Bonds = £1150

= £1750 

 Overpaid the mortgage by £50

 Debt

Car loan - £7510

NW loan - £16,700

Credit card - £8900

Total = £33,110 (down from £34,673)

We still don't know if the trip to Scotland will go ahead and whether we'll have to settle the balance soon plus it's hubby's 50th birthday at the end of Feb so next month isn't going to be a thrifty month either. We'll be contacting a broker about the remortgage in the next week or so.

pippa_pelada

Ah well, it looks like our trip is cancelled and while I’m sad we won’t get to go to such a beautiful place this year, the saver in me is also relieved that we can pay off more debt with the money saved. I’ve asked the owner to hold on to the deposit for the next available week which I imagine will be next year now. 

I don’t mind another year of cancelled trips and very little social life if it means we get rid of the debt once and for all but as soon as it’s all paid off, I’m saving for a fabulous trip to somewhere far flung.

Hubby’s breaking dry Jan this weekend as he’s bored of it now which is fair enough but I’m pushing on for an alcohol free feb too as I’m sleeping so much better. It’s quite shocking how low the supermarket costs have been this month without the addition of beer and wine so that’s motivation for me too. I’ll make up for it when we can meet up with friends and family again!