Feeling very cash poor

Jaco70
Jaco70 Posts: 177
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Have plenty of assets (3 properties owned outright, equity in others) but struggling to keep up personally day-to-day right now.
I have a long term view on money, so am tempted to take a loan out to keep everything running, rather than sell property, as I know I’m unlikely to buy another if I do, and I’ll have to pay CGT.
Its a perfect storm of high rates and increased living costs (one kid in college and helping the other buy first car, along with general cost of living).
I also have a very good credit rating which I’m almost obsessive about maintaining (unclear if a 10k loan will harm this).
I’ll take some money out of my business to boost things but don’t want to do that until the next financial year, in four months, for tax reasons, so the mini crisis is fairly short term. 
I know I’m lucky, so I’m not exactly stressed, just can’t decide what to do at this moment 🤯

Comments

  • Brie
    Brie Posts: 9,305
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    Rather than think about a loan why not look at your budget.  If you pop over to the debt board there's a link to a statement of accounts where you can list your incoming and outgoings and people will be happy to point out where savings might be made.  

    Of course a loan is one way to handle money issues but not the only one.  What access do you have to credit cards?  Possibly a couple of cards managed with one having a 0% balance transfer offer would ease things for a couple of months - much more flexible than a loan in some ways too. 

    Don't worry about your credit rating overly - it only matters if you want to take out more credit but it sounds like a hit on it right now with a loan or credit card application wouldn't affect you much in the long term.
    "Never retract, never explain, never apologise; get things done and let them howl.”
  • Jaco70 said:


    I’ll take some money out of my business to boost things but don’t want to do that until the next financial year, in four months, for tax reasons, so the mini crisis is fairly short term. 

    Is this a limited company? Any reason why you can't take a directors loan?
  • Personally I would hate to be asset rich but cash poor. The problem of tying up most of your wealth in property is the lack of flexibility. Yes you will pay CGT on selling a property but the only way you can avoid doing so is to die, in which case you will have failed to benefit from your own wealth which is something I am sure your beneficiaries won’t fail to do. 
  • Jaco70
    Jaco70 Posts: 177
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    Brie said:
    Rather than think about a loan why not look at your budget.  If you pop over to the debt board there's a link to a statement of accounts where you can list your incoming and outgoings and people will be happy to point out where savings might be made.  

    Of course a loan is one way to handle money issues but not the only one.  What access do you have to credit cards?  Possibly a couple of cards managed with one having a 0% balance transfer offer would ease things for a couple of months - much more flexible than a loan in some ways too. 

    Don't worry about your credit rating overly - it only matters if you want to take out more credit but it sounds like a hit on it right now with a loan or credit card application wouldn't affect you much in the long term.

    Thank you for this, it is extremely helpful, particularly about credit cards. I have one card with a 7.5k limit and 1.5k balance, and I had intended to use the loan to clear this first.
    I always think of credit cards as being expensive credit, but maybe I’m behind the times on this. I will do more research.
  • Jaco70
    Jaco70 Posts: 177
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    Jaco70 said:


    I’ll take some money out of my business to boost things but don’t want to do that until the next financial year, in four months, for tax reasons, so the mini crisis is fairly short term. 

    Is this a limited company? Any reason why you can't take a directors loan?

    It is limited company and I have quite a lot of surplus funds in there. Two reasons, one practical and one embarrassing.
    1). My accountant says that if I take a directors loan up to 10k it’s interest free, but has to be paid back during the same financial year.
    2). A family member is a fellow director and I don’t want to divulge my personal lack of ready cash. Silly I know, but I’m being honest with you 🤦🏻
  • Jaco70
    Jaco70 Posts: 177
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    Personally I would hate to be asset rich but cash poor. The problem of tying up most of your wealth in property is the lack of flexibility. Yes you will pay CGT on selling a property but the only way you can avoid doing so is to die, in which case you will have failed to benefit from your own wealth which is something I am sure your beneficiaries won’t fail to do. 

    I think you’re quite right and I have a bit of a blind spot on amassing some value, although our life is quite comfortable. Though definitely not extravagant.
    I didn’t grow up poor, far from it, but I am slightly obsessed with helping the kids and then also having enough in retirement.
    I think if my kids do ok in their careers (one now works, other has two years left in Uni), I’ll hopefully loosen up a bit. Also I do have cash, it’s just in my business rather than my personal accounts, and the higher rate tax threshold is about 40k under where it should be imho. I bet there are hundreds of thousands of small business owners holding money in their companies for this very reason. Money that could and should be out in the economy, if only the government could see the wood for the trees. 
  • Martico
    Martico Posts: 911
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    I'd agree that seeking advice on the debt-free wannabe part of the forum could help with budgeting and debt. You don't clear debt by borrowing, so a budget adjustment might be best before risking debts rising higher than the current 1.5k. Good luck
  • enthusiasticsaver
    enthusiasticsaver Posts: 15,325
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    I personally would not borrow.  I would either adjust your budget even if it means helping the kids less or sell an asset. 

    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 [email protected]. All views are my own and not the official line of MoneySavingExpert.
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  • DrEskimo
    DrEskimo Posts: 2,334
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    A loan is just borrowing money from your future self (with an added cost of interest paid to the finance house), so I don't really understand how this is helpful in your situation?

    You need to have surplus money in your monthly budget to service the loan, which I understood from your post is what is lacking?

    If there is no immediate need to have £10k today, then simply set aside the monthly cost of the loan and watch it build, with interest paid to you instead. 

    As others have said, look at your budget and see where outgoings can be reduced to increase your monthly savings.
  • Jaco70
    Jaco70 Posts: 177
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    Thanks for all the advice. I decided to just take a 10k directors loan instead, which I will pay back when I take a dividend in April.
    Never borrowed from my company before, but have loaned the company money in different times, so feel fine about it actually.
    My personal finances have changed dramatically because of high interest rates, and I admit I fell into the trap of thinking low rates were here for eternity.
    I know I have options, and that’s a great comfort. If I sold some properties I could be debt free (and my wife favours this plan) but I know I’d regret it if/when house prices soar again at some point. 
    So I’ll just keep juggling 🤹 😂
    Thanks again. 
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