Advice required

kimwp

zAndy1 said:

Ok, I get why people are sceptical about me being able to manage my finances without resorting to overspending and incurring more debt. My past record is poor and I can see why people would think that might happen. However if you want to know whether I've seen the light, yes I've seen the light. That doesn't mean I'm going to palm our dog onto someone else (I would rather have nothing than do that) or sell a car that we need but it does mean that I'm going to stop putting anything on credit cards, be far more strict about how much we spend on food shopping each month and on eating out. Basically anything we can control will be looked at and cuts made where possible. I see there's just been another big interest rate rise which will no doubt filter through to my mortgage payment soon, I don't think the last rate rise has filtered through yet so I expect to be paying another 1.25% interest at least shortly which will equate to around another £170pm which means the mortgage payment will have gone from about £450 to almost £1000 this year. Does make me more inclined to overpay the mortgage than pay credit cards off I must admit , it's just the not knowing whether I'll be able to transfer my credit card debt to a new promotional rate that's making me hesitate to do that really. What a year this has been , what a wake up call for many people including myself, should have overpaid the mortgage when interest rates were low and we could have made a good dent in what we owed but I didn't and I regret that very much right now. Anyway at least we're keeping our head above water and can still afford to pay everything. I'm going to throw every spare £ each month at the debts (not 100% sure whether to prioritise mortgage or credit cards as I've said) and just keep grinding.
Oh one question I have, should I decide to get some help with my debts and consider entering a DMP if that's what it comes down to (last resort), can I reasonably add mortgage overpayment to my monthly outgoings if I'm on interest only and want to try to pay off the mortgage by the end of the term or is that not allowed? Obviously it would reduce what I had left to pay debts off but I feel it is a legitimate expense really. 
Thanks for the continuing advice I appreciate it.

You have two debts which have higher interest than your mortgage so it doesn't make sense to switch to paying your mortgage.

A DMP is for when you do not have enough to pay your debts after paying for essentials and a basic standard of living. Never say never, but with your current income, it is unlikely you will need to resort to this.

DrEskimo

zAndy1 said:

However if you want to know whether I've seen the light, yes I've seen the light. That doesn't mean I'm going to palm our dog onto someone else (I would rather have nothing than do that) or sell a car that we need but it does mean that I'm going to stop putting anything on credit cards, be far more strict about how much we spend on food shopping each month and on eating out. Basically anything we can control will be looked at and cuts made where possible. 

Sounds good on paper (if not slightly tame), but as I understand it, one of the issues is that you have not tracked your spending, so how do you know if you reduce your spending in theses areas, or if these will have sizeable impacts on your outgoings?

How much did you spend last year per month on food shopping and how much did you spend on eating out? If you can't answer this, you can't possibly achieve this.

I think the point members are making is around that final sentence above. What precisely and by how much?

zAndy1

MEM62 said:

zAndy1 said:

Can we take a step back perhaps and work out exactly what the impact of me taking the tfls from my DC pensions is going to be on my retirement income as that's the crucial thing really at the end of the day isn't it. 

No, it is not.  The crucial thing is to address the fact that you are living beyond your means and racking up large amounts of debt.  You are then proposing to raid your future income to pay for it.  You are already spending more than you earn in your working years. How on earth are you going to survive in your retirement years when your income will be lower, and you are looking to lower it still more.  You consistently justify your decision to take your 25% TFLS when, frankly, it would be madness to do so.  If you cannot remove the blinkers and get your head around some of the very sound advice other posters have offered you, you are setting yourself up for a retirement in poverty.           

'a retirement in poverty' , sorry but that's a ridiculous comment. I've already said that we will be looking at a pension income of around £45k even if I take the tfls from the 2 DC pensions at 55, I hardly call that poverty in fact looking at the retirement living standards website it's pretty damn close to the 'comfortable' amount of £49k. I'm in a mess , of my own doing. I either prolong the pain and don't start making a dent in my mortgage for a couple of years which with the interest rates as they are now would be a really bad idea in my opinion or I take a probable £2k a year hit on my pension income to sort the mess out now and give myself a chance of being mortgage free by the time I retire. I'm going to look at the numbers again and see what makes most sense but I'm sorry taking the tfls will absolutely not result in me living in poverty in retirement.

zAndy1

enthusiasticsaver said:

Yes you can add an overpayment to the mortgage to a DMP if there is no repayment plan in place if that is the eventual outcome or convert to part repayment which is what I would do but do note that lenders do not tend to agree to suspend interest if you are able to make minimums on your credit cards/loans which you are at the moment.  If you were to use your TFLS as I say I would use that to reduce or pay off the mortgage rather than unsecured debts. That is a priority debt. 

 I personally feel though that your surplus is so high it should not get to that point. If I were in your position I would focus on living within your budget, saving for emergencies and overpaying the most expensive debts or the ones which have deals due to expire soon.  At the same time I would be weighing up whether or not to convert the mortgage to part repayment or include overpayments to reduce interest on that and that would mean it would be lower at retirement when you could then feasibly use the TFLS to reduce or repay it. 

Presumably you would only advocate using the TFLS to reduce the mortgage balance once I have ensured the credit card debt is at 0% interest longer term? I'd be vary wary of paying it off the mortgage and leaving £40k of credit card debt there which could be incurring interest at 20% in a few months....I'll pay as much off the credit cards as possible for now and see if the pension funds recover a bit and then when the credit card situation is looking a bit better I'll think about using some of the TFLS to reduce the mortgage balance , especially if interest rates continue to rise...

jimi_man

zAndy1 said:

MEM62 said:

zAndy1 said:

Can we take a step back perhaps and work out exactly what the impact of me taking the tfls from my DC pensions is going to be on my retirement income as that's the crucial thing really at the end of the day isn't it. 

No, it is not.  The crucial thing is to address the fact that you are living beyond your means and racking up large amounts of debt.  You are then proposing to raid your future income to pay for it.  You are already spending more than you earn in your working years. How on earth are you going to survive in your retirement years when your income will be lower, and you are looking to lower it still more.  You consistently justify your decision to take your 25% TFLS when, frankly, it would be madness to do so.  If you cannot remove the blinkers and get your head around some of the very sound advice other posters have offered you, you are setting yourself up for a retirement in poverty.           

'a retirement in poverty' , sorry but that's a ridiculous comment. I've already said that we will be looking at a pension income of around £45k even if I take the tfls from the 2 DC pensions at 55, I hardly call that poverty in fact looking at the retirement living standards website it's pretty damn close to the 'comfortable' amount of £49k. I'm in a mess , of my own doing. I either prolong the pain and don't start making a dent in my mortgage for a couple of years which with the interest rates as they are now would be a really bad idea in my opinion or I take a probable £2k a year hit on my pension income to sort the mess out now and give myself a chance of being mortgage free by the time I retire. I'm going to look at the numbers again and see what makes most sense but I'm sorry taking the tfls will absolutely not result in me living in poverty in retirement.

Actually it isn’t a ridiculous comment at all. Someone who earns £45k in retirement but spends £46k is in a far worse position than someone who earns £25k but only spends £23k. 

Personally I feel that you are using the fact that you’re a reasonable earner now and that you’ll be a reasonable earner in retirement to justify why you don’t think you have a debt problem. In my opinion you are burying your head in the sand and it’s rather sad, especially bearing in mind your life approach to spending and your previous history with bankruptcy. You are now talking about DMPs.

It’s also very significant that you haven’t addressed the questions that I, Seashell and many others have asked about your past and future spending, whether you’ve cut up your credit cards and what other changes you’ve made. You’ve come onto the Debt forum presumably for advice and yet you don’t seem to have any intention of following any of it. 

Personally I think that without addressing the important issues (the spending) you’re unlikely to be able to deal with the level of debt you have £226m I think) in the time available and so are likely to carry at least some of it into retirement, therefore £45k may not be sufficient. Especially if the spending continues at the current level. 

MEM62

jimi_man said:

zAndy1 said:

MEM62 said:

zAndy1 said:

Can we take a step back perhaps and work out exactly what the impact of me taking the tfls from my DC pensions is going to be on my retirement income as that's the crucial thing really at the end of the day isn't it. 

No, it is not.  The crucial thing is to address the fact that you are living beyond your means and racking up large amounts of debt.  You are then proposing to raid your future income to pay for it.  You are already spending more than you earn in your working years. How on earth are you going to survive in your retirement years when your income will be lower, and you are looking to lower it still more.  You consistently justify your decision to take your 25% TFLS when, frankly, it would be madness to do so.  If you cannot remove the blinkers and get your head around some of the very sound advice other posters have offered you, you are setting yourself up for a retirement in poverty.           

'a retirement in poverty' , sorry but that's a ridiculous comment. I've already said that we will be looking at a pension income of around £45k even if I take the tfls from the 2 DC pensions at 55, I hardly call that poverty in fact looking at the retirement living standards website it's pretty damn close to the 'comfortable' amount of £49k. I'm in a mess , of my own doing. I either prolong the pain and don't start making a dent in my mortgage for a couple of years which with the interest rates as they are now would be a really bad idea in my opinion or I take a probable £2k a year hit on my pension income to sort the mess out now and give myself a chance of being mortgage free by the time I retire. I'm going to look at the numbers again and see what makes most sense but I'm sorry taking the tfls will absolutely not result in me living in poverty in retirement.

Actually it isn’t a ridiculous comment at all. Someone who earns £45k in retirement but spends £46k is in a far worse position than someone who earns £25k but only spends £23k. 

Personally I feel that you are using the fact that you’re a reasonable earner now and that you’ll be a reasonable earner in retirement to justify why you don’t think you have a debt problem. In my opinion you are burying your head in the sand and it’s rather sad, especially bearing in mind your life approach to spending and your previous history with bankruptcy. You are now talking about DMPs.

It’s also very significant that you haven’t addressed the questions that I, Seashell and many others have asked about your past and future spending, whether you’ve cut up your credit cards and what other changes you’ve made. You’ve come onto the Debt forum presumably for advice and yet you don’t seem to have any intention of following any of it. 

Personally I think that without addressing the important issues (the spending) you’re unlikely to be able to deal with the level of debt you have £226m I think) in the time available and so are likely to carry at least some of it into retirement, therefore £45k may not be sufficient. Especially if the spending continues at the current level. 

This is exactly my point.  The OP cannot live on what they are earning now and yet seem to think they will be fine in retirement when their income is less.  Problem is they just cannot see that it is folly. 

@zAndy1 You will follow your own path no matter what advice you are offered.  I hope that you have your lightbulb moment before your financial future is too compromised.      

enthusiasticsaver

zAndy1 said:

enthusiasticsaver said:

Yes you can add an overpayment to the mortgage to a DMP if there is no repayment plan in place if that is the eventual outcome or convert to part repayment which is what I would do but do note that lenders do not tend to agree to suspend interest if you are able to make minimums on your credit cards/loans which you are at the moment.  If you were to use your TFLS as I say I would use that to reduce or pay off the mortgage rather than unsecured debts. That is a priority debt. 

 I personally feel though that your surplus is so high it should not get to that point. If I were in your position I would focus on living within your budget, saving for emergencies and overpaying the most expensive debts or the ones which have deals due to expire soon.  At the same time I would be weighing up whether or not to convert the mortgage to part repayment or include overpayments to reduce interest on that and that would mean it would be lower at retirement when you could then feasibly use the TFLS to reduce or repay it. 

Presumably you would only advocate using the TFLS to reduce the mortgage balance once I have ensured the credit card debt is at 0% interest longer term? I'd be vary wary of paying it off the mortgage and leaving £40k of credit card debt there which could be incurring interest at 20% in a few months....I'll pay as much off the credit cards as possible for now and see if the pension funds recover a bit and then when the credit card situation is looking a bit better I'll think about using some of the TFLS to reduce the mortgage balance , especially if interest rates continue to rise...

I would say that the situation with your mortgage is a ticking time bomb given that interest rates are rising and you have no plan to repay it and unlike unsecured debt the mortgage is a priority.  Yes I would sort the unsecured  debt now given you have the means to sort it before interest rates escalate on it but I would not leave it too long before tackling the mortgage given you are already on a high mortgage rate which is only likely to get higher.  Otherwise that income of £45k (assuming that is correct) will not sustain a mortgage given that you may find difficulty getting one which goes past the age of 70. 

zAndy1

Just paid the barclaycard £700 off , one down, five to go (credit cards)

enthusiasticsaver

That’s a good start. Are you closing them as you clear them? 

Which one are you tackling next?

zAndy1

enthusiasticsaver said:

That’s a good start. Are you closing them as you clear them? 

Which one are you tackling next?

I've moved the amounts that were at standard rate on Lloyds (£402) and Halifax (£367) to a 6 month interest free balance transfer and will pay that off over the next 6 months. Not 100% sure which to tackle next really, I guess the Nationwide £3500 at 12.9% makes most sense really, going to see if I can transfer some of that to the same 6 month interest free offer I take advantage of for Lloyds and Halifax. 
So far this month I've paid £175 off MBNA (min £120), £150 off Virgin (min £105), the £700 previously mentioned to pay off Barclaycard, going to pay Nationwide probably £200 today (min £146). Might pay an extra £200 off the mortgage this month like I did last month, a drop in the ocean really but I just feel like I need to start doing something on the mortgage as well....
BTW you said 'Yes I would sort the unsecured  debt now given you have the means to sort it before interest rates escalate on it'. There's no way I can pay all the unsecured debt off before the interest rates increase from April next year, well not without using my TFLS anyway....