Remortgage to clear debts

EssexHebridean

Sadly I suspect we may have seen the last of the OP from this thread, although hopefully I'm wrong. They had a previous "not-quite-a-LBM" back in 2019, but the debt figure hasn't really changed since then in spite of them being given good, solid advice at that stage. They have now been given more good solid advice but I fear they are heading straight past the usual "schoolboy error" of a regular consolidation loan and onto the potential "fatal error" of dumping the debt on the mortgage.  If so, then I imagine we'll see them back again in another few years with a similar amount of debt and mortgage arrears, or even facing a repossession notice. It's disheartening, but as has been said before you can't have a LBM for someone else - they have to be ready. All we can do is give the warnings. 

Mr_Clark1000

EssexHebridean said:

Sadly I suspect we may have seen the last of the OP from this thread, although hopefully I'm wrong. They had a previous "not-quite-a-LBM" back in 2019, but the debt figure hasn't really changed since then in spite of them being given good, solid advice at that stage. They have now been given more good solid advice but I fear they are heading straight past the usual "schoolboy error" of a regular consolidation loan and onto the potential "fatal error" of dumping the debt on the mortgage.  If so, then I imagine we'll see them back again in another few years with a similar amount of debt and mortgage arrears, or even facing a repossession notice. It's disheartening, but as has been said before you can't have a LBM for someone else - they have to be ready. All we can do is give the warnings. 

Thanks, but actually I am still here... I have read and understood all that has been said here and I do appreciate the advice.

To this end, I have formulated a pretty complex spreadsheet, detailing all the usual outgoings and such. I have immediately taken steps to save where possible, and have been able to cancel or adjust outgoings such as streaming services to save around £20 a month. Groceries will be carefully purchased to reduce by another £50 or so. I will be using our petrol vehicle less and using electric vehicle more by changing habits, saving another £20 a month.

Selling up a bunch of high value items that are not life critical and leveraging some hoarded crypto will allow me to close out both my PayPal account and my large loan outgoing of £277 a month. In total, with this approach, I should have 400 - 500 spare at end of each month that I will put into paying off Credit Cards.

Ultimately, sticking to this plan should ensure I am at less than £20,000 by the end of August, which is when our mortgage is up for renewal.

So, ultimately, I am looking at taking a hybrid approach. Life is often not black and white and I understand that a religious approach to cutting back and paying off debts is often needed, go too far to that extreme results in fatigue and ultimate failure. 

I am committed to this and will again revaluate in detail come August. It may be I won't feel the need of leveraging our property, having stuck to a good plan, likewise, a mortgage deal, via a good broker may make sense at the time to allow for some home improvements and flexibility. 

enthusiasticsaver

Mr_Clark1000 said:

EssexHebridean said:

Sadly I suspect we may have seen the last of the OP from this thread, although hopefully I'm wrong. They had a previous "not-quite-a-LBM" back in 2019, but the debt figure hasn't really changed since then in spite of them being given good, solid advice at that stage. They have now been given more good solid advice but I fear they are heading straight past the usual "schoolboy error" of a regular consolidation loan and onto the potential "fatal error" of dumping the debt on the mortgage.  If so, then I imagine we'll see them back again in another few years with a similar amount of debt and mortgage arrears, or even facing a repossession notice. It's disheartening, but as has been said before you can't have a LBM for someone else - they have to be ready. All we can do is give the warnings. 

Thanks, but actually I am still here... I have read and understood all that has been said here and I do appreciate the advice.

To this end, I have formulated a pretty complex spreadsheet, detailing all the usual outgoings and such. I have immediately taken steps to save where possible, and have been able to cancel or adjust outgoings such as streaming services to save around £20 a month. Groceries will be carefully purchased to reduce by another £50 or so. I will be using our petrol vehicle less and using electric vehicle more by changing habits, saving another £20 a month.

Selling up a bunch of high value items that are not life critical and leveraging some hoarded crypto will allow me to close out both my PayPal account and my large loan outgoing of £277 a month. In total, with this approach, I should have 400 - 500 spare at end of each month that I will put into paying off Credit Cards.

Ultimately, sticking to this plan should ensure I am at less than £20,000 by the end of August, which is when our mortgage is up for renewal.

So, ultimately, I am looking at taking a hybrid approach. Life is often not black and white and I understand that a religious approach to cutting back and paying off debts is often needed, go too far to that extreme results in fatigue and ultimate failure. 

I am committed to this and will again revaluate in detail come August. It may be I won't feel the need of leveraging our property, having stuck to a good plan, likewise, a mortgage deal, via a good broker may make sense at the time to allow for some home improvements and flexibility. 

Those are all great first steps to take.  Selling stuff, cutting back and overpaying the cards.  I would like EH though still urge you not to consolidate on to the mortgage but maybe look for 0% deals in August when the debt is hopefully much lower and there may be some good deals open to you. 

EssexHebridean

kimwp said:

EssexHebridean said:

Sadly I suspect we may have seen the last of the OP from this thread, although hopefully I'm wrong. They had a previous "not-quite-a-LBM" back in 2019, but the debt figure hasn't really changed since then in spite of them being given good, solid advice at that stage. They have now been given more good solid advice but I fear they are heading straight past the usual "schoolboy error" of a regular consolidation loan and onto the potential "fatal error" of dumping the debt on the mortgage.  If so, then I imagine we'll see them back again in another few years with a similar amount of debt and mortgage arrears, or even facing a repossession notice. It's disheartening, but as has been said before you can't have a LBM for someone else - they have to be ready. All we can do is give the warnings. 

I would personally find this a very off-putting and judgemental message, were I the OP. Are your conjecturings about what someone might be doing really necessary?

Yes - it was speaking from experience, sadly. In well over 10 years on here I've lost count of the number of times I've seen pretty much this EXACT situation play out. It's the reason why almost all the long-termers on here say "don't consolidate unsecured debt against a mortgage". It's ALWAYS heartbreaking to see - and all the more so when there are small children involved as well.  In this instance, the OP (Although they are far from unique in this scenario) had already made clear in their posts that they weren't actually living by the budget they have in place, and that they were still routinely using credit - there was no conjecture there whatsoever. With those two issues looming large then it is highly likely that the habits continue post consolidation. Add to that the fact that a previous LBM had seemingly happened, but in the event the debt level hadn't changed - and again, it suggests that the lightbulb may have flickered, but there is "form" there for it being likely to flicker out again. with unsecured debt, that may not be the end of the world, but if the debt is secured, and on the roof over the head of the family, then it's a rather bigger issue.  To add to that, the OP's previous post appeared that they had "signed off" from the thread - as others had also presumed - so my comments were as much as anything else intended to act as a bit of a "red light" for someone else who, considering the same path, stumbled across the OP's thread and deduced that as the OP was still considering their planned path, it was OK for them to do the same. The people that actually post on here are the tip of a far larger iceberg - the vast majority of visitors read, absorb, and then leave again. 

Mr_Clark1000 said:

EssexHebridean said:

Sadly I suspect we may have seen the last of the OP from this thread, although hopefully I'm wrong. They had a previous "not-quite-a-LBM" back in 2019, but the debt figure hasn't really changed since then in spite of them being given good, solid advice at that stage. They have now been given more good solid advice but I fear they are heading straight past the usual "schoolboy error" of a regular consolidation loan and onto the potential "fatal error" of dumping the debt on the mortgage.  If so, then I imagine we'll see them back again in another few years with a similar amount of debt and mortgage arrears, or even facing a repossession notice. It's disheartening, but as has been said before you can't have a LBM for someone else - they have to be ready. All we can do is give the warnings. 

Thanks, but actually I am still here... I have read and understood all that has been said here and I do appreciate the advice.

To this end, I have formulated a pretty complex spreadsheet, detailing all the usual outgoings and such. I have immediately taken steps to save where possible, and have been able to cancel or adjust outgoings such as streaming services to save around £20 a month. Groceries will be carefully purchased to reduce by another £50 or so. I will be using our petrol vehicle less and using electric vehicle more by changing habits, saving another £20 a month.

Selling up a bunch of high value items that are not life critical and leveraging some hoarded crypto will allow me to close out both my PayPal account and my large loan outgoing of £277 a month. In total, with this approach, I should have 400 - 500 spare at end of each month that I will put into paying off Credit Cards.

Ultimately, sticking to this plan should ensure I am at less than £20,000 by the end of August, which is when our mortgage is up for renewal.

So, ultimately, I am looking at taking a hybrid approach. Life is often not black and white and I understand that a religious approach to cutting back and paying off debts is often needed, go too far to that extreme results in fatigue and ultimate failure. 

I am committed to this and will again revaluate in detail come August. It may be I won't feel the need of leveraging our property, having stuck to a good plan, likewise, a mortgage deal, via a good broker may make sense at the time to allow for some home improvements and flexibility. 

Hey OP - I'm glad you're still about. I think clearing off those two debts by funds you have "created" as a starting point is a great move - progressing to then not being tempted by the "use PayPal credit" button from there is vital though - it's never easy when something is quite a long-term habit of just "how you do things" but that will make a big difference to how your budget actually works for you I'd suggest. Initially I wouldn't expect to have the full amount of those monthly payments available for debt either - as it will take a while to balance the "things you used to use Paypal for" into the budget. 

Budgets are a great thing - BUT they do take some adjustment to start with. Assuming that the one you have to start with it a bit like assuming that the first pair of shoes you buy your kids will last them until they hit 18 - they grow, their feet change, and the shoes need regular checking and then updating! Initially you might need to go through every month, with "check-ins" weekly to see where you're at. After a while you get to learn how much money should be in the account at each point in the month, and you pick up on all the little things that you'd forgotten when you first put the budget together. And eventually things become almost instinctive, and all that's needed aside from regular checks on the bank accounts is an annual review, updating changed prices etc.  Also on the budget front be scrupulous about putting away the things that you pay annually but budget for monthly - things like insurances etc come under this heading. If you budget (for example) £150 a month for car expenses, but don't save it somewhere so it's ringfenced - when the insurance  bill comes in you're going to be left high and dry. 

By the way I absolutely agree about the "100% all-in" approach to clearing debt generally not being the healthiest way of doing it. If you are absolutely at breaking point, and it's a case of do that or the whole house of cards will come tumbling down, you may have no choice, but more most people the sustainable route is about finding sensible levels that work for them. If you want to spend £300 a month on entertainment, and you have the disposable income to do that, they that's absolutely fine, but it's better to be upfront with yourself and budget that you're going to do that, and then be clear that's an absolute top limit. Similarly, a high grocery budget - all god if you have the money, BUT it's also worth seeing where savings can be made without sacrificing enjoyment levels - often those are "easy wins" and a great way of cutting back. 

Why not consider starting yourself a debt free diary over on the diaries board to chart your progress? It's a great way of staying accountable and you'll find as others start to interact you'll get not only great support but also lots of useful tips and advice, too.  

Mr_Clark1000

I agree with all the above. Things like vehicle tax and insurance I never really budgeted for and then I'm left wondering why I'm in my overdraft having to pay for them. I've now added that to my spreadsheet.

I think one of the harder things will be trying to reign in spending whilst keeping wife and kids happy. There's always been an expectation that I will just pay for everything as my wage is 3x my wife's, blissful ignorance of the fact that I pay all vehicle costs, grocery costs, most entertainment costs, most holiday costs and all house maintenance costs. That 3x amount means nothing by that point.

Doesn't help that this change is needed at a point where everything is going up in price!

I'll look at the diary thing when I have finally sorted my spreadsheet and it accounts for all variables I can think of, maybe try get it to track weather forecasts as well as I always seem to spend more when it's sunny on Cider and Burgers...

Andyjflet

Worth taking a look at this diary, one of the best on here, guy was sinking fast and spending like crazy, he's changed his life around and taking control of the things you mention above.

https://forums.moneysavingexpert.com/discussion/6190158/first-steps-to-solvency/p1

EssexHebridean

Introduce changes gently and with small (cheaper!) incentives for doing so, perhaps? 

And yes to everything increasing in price at the moment - everyone is feeling the pinch I think. 

Funny how warm weather causes financial leakage on the fun stuff too - I think that's another thing we can all identify with!

You'll get there. Never underestimate the help you'll find here either! 

otb666

From someone who remortgaged 3 times to include debt If I had my time again I would have changed my ways and saved a lot in interest over 30 years. The children will appreciate this important life lesson when they are older.  We were lucky and eventually kids grew up and moved on and we received redundancies and lump sum on our pensions Which cleared the 50k we owed AGAIN.  Each time we remortgaged we built up same debt again.  You need a diary so you know what you are really spending your money on and what you need to change.  The Old Style Money saving board has many tips on it.

stymied

Are you claiming child benefit and using your tax free childcare? Would it be worth considering a joint account with each of you keeping monthly spends back to make it more visible how much is really available, especially if you direct the annually budgeted amounts off into a separate savings account.

SusieT

If your wife/family "expect" you to provide everything, this may be a very good time to sit down with them and discuss things. She/the kids will know from the news that prices are rocketing, so you could say that you have gone through your budget and will need to make cutbacks for a while. Then they can help you by thinking of ways that they can help, they can plan holidays that are perhaps in the UK rather than abroad etc. There are a lot od cheaper days out at national trust places, they could help to make a picnic to take with you so that they are all involved and you can make it fun for them and cheaper for you.  Things like shopping from a list, dropping to own brands can make a huge difference to grocery bills, and home made pizza or burgers are a lot less costly than shop bought ones!