New thread, new me - hopefully!

I think it's time for a new thread. The last one I started in January 2018 after coming to the realisation in late 2017 that I was in a much bigger hole than I thought. 

Five years later things are better but I haven't made nearly as much progress as I'd hoped. I started with just under £40k debt and I'll be entering 2024 with just under £25k debt. Since then there have been pregnancies, one living child & mat leave (the light of my life) a master's degree, a pandemic, lord knows how many other ups and downs. 

I fell out of the habit of posting here but I know when I was doing it regularly it made a big difference to my mental health as well as my motivation. So I want to pick that up again. 

We are hoping to move house in the next few years and I really just want to sort myself out. 

Recently I've hit a bit of a dilemma. We're going to receive a very generous inheritance gift of £50k - a bit of a shock. We were told we would get *something* towards our next home, but didn't think it would be this much. 

My husband has suggested we use it to pay off the £24+k I still owe, which still leaves us with about half to put towards our next deposit. Our current house cost us £150k and we still have about £80k left to pay on the mortgage, houses on our road are selling for about £250-280, so chances are we will have a few quid in equity to put towards the deposit too (I haven't bought a second house before so I'm not 100% on how that works). 

I feel immense guilt that this money (from husband's side of family) could be put towards paying off my poor life choices from before we even got together. But at the same time it would impact our debt-to-income ratio and would mean I could afford higher mortgage payments as I wouldn't be paying 100s to debt every month. However, it would be 25k less towards a down payment.

I just want to do what's right for us all overall. 

So hard to make a decision. I believe I have the strength not to slip into debt again but also still feel a deep fear of making financial mistakes. I have a lot of anxiety around money (well-deserved, I'd say!) 

Anyway, hello again. Hope to be on here much, much more frequently. 

Debt-free wannabe since Jan 2018.

Total debt: was £39,220.58, now £24,897


  • joedenise
    joedenise Posts: 16,367
    First Post Name Dropper First Anniversary
    Quite honestly I'm with your husband in this.  Mortgage repayment is probably far cheaper than loan or credit card debt so as long as you are now living within your salary then I think it's the best thing to do.  You will still have a decent deposit towards a new house.

  • Thank you, joedenise - I really appreciate your input. I think I have been holding out because of a sense of "unfairness" - that his family money would pay off my debt - but overall we are partners and I think it would be better for us in the long run. 
    Debt-free wannabe since Jan 2018.

    Total debt: was £39,220.58, now £24,897
  • MatyMoo
    MatyMoo Posts: 3,162
    Name Dropper First Anniversary First Post
    Assuming you sell for £250k you would repay the £80k still outstanding and have £170k equity (plus all or some of the inheritance) as a deposit towards your next home. Just don’t forget about fees, stamp duty, removal costs etc.

    if you & your husband bought the house together you have helped to pay off the mortgage & build up the equity, possibly to the detriment of clearing your debts.

    Also do you see family funds as our money or his money and my money?

    just throwing things at you to help your thought process before you use the inheritance in any way!
    :j Proud Member of Mike's Mob :j
  • MatyMoo - this is really useful, thank you. For some reason I had in my head that we would have had much lower equity, and I don't know why I've had that misconception! 

    We did buy the house together and we've each ploughed money into it over the years - not huge renovations but it was not in good nick when we moved in and it now has new bathroom, new carpets etc. 

    Your family funds question has really made me think. We share bills equally and we share the responsibility for them equally too - I know pretty much everything is done with direct debit these days, but for example one of us manages looking at energy bills and how we can bring them down, one of us is responsible for renewing our tax-free childcare account and making sure nursery get paid etc. So we are very good at splitting things up. 

    However, I think I've always felt a bit unbalanced about this stuff. I feel like he works a lot harder than me - he's freelance and works a lot of hours and multiple side jobs too, whereas I have a 9-5:30. I'm the higher earner but have less disposable income/ability to save each month due to the debt repayments. I feel a lot of guilt and anxiety about that as I feel I should be saving more, or covering more of the bills (he does his best to reassure me and has been so supportive on my debt-free journey). So I suppose I often see my money as "ours" but his money as "his", and that's coming from me not him. My family struggled when I was growing up and I think money has always been a touchy subject for me and I let my pride and sense of fairness sometimes get in the way of common sense. 
    Debt-free wannabe since Jan 2018.

    Total debt: was £39,220.58, now £24,897
  • MFWannabe
    MFWannabe Posts: 1,945
    First Anniversary First Post Name Dropper Combo Breaker
    I’m with your husband on this, pay off your debts and start with a ‘clean slate’ 
    Look forward to the future and make sure you don’t get into debt again x 
    28/12/23: Debt total £12,900/13,192.13
  • Are you paying interest on your personal debts? If you have 0% interest on them all then that could be a reason to put down a bigger house deposit and continue to pay down the personal debt. Also putting down a bigger deposit would mean a smaller monthly payment on your mortgage. It takes time to sell a house, find a new house and to go through all the legal processes so during that time you will be able to pay off more of your personal debt. I understand where you’re coming from re using someone else’s hard earned money to pay off your own personal debts. I was in the same situation many years ago albeit with a smaller inheritance and decided to use all the money to pay off some of the mortgage as it felt as if I’d invested the money in something worthwhile (i.e. bricks and mortar) rather than using it to pay for holidays and other things that I’d previously put on a credit card. One option could be to use 25% (£12.5k) of the money to pay off half the debt then look to get the other £12.5k onto 0% interest if it isn’t already. 
  • Thanks all. Really useful to get these different perspectives. 

    I am paying interest on all of the debts - did a lot of credit card 0% transfers in the early days of ploughing through the debt but ran out of those and most of it is a big personal loan. If I paid off the debts now - or at least the personal loan, I'd knock off about £5,000 in interest compared to if I keep making the monthly instalments until the end of the plan.

    We're not looking to move until 2025-ish so there's no great rush to decide. 

    Spoke about it with him last night and we haven't landed on a decision yet, but thought that if we pay off that loan at least, that's just over £500 that I could put into savings for a house/emergencies instead. Nursery fees are going up in January too (will cost us an extra £150pm) so it would be nice to have the buffer. Luckily they will drop slightly again in April when my little boy should hopefully qualify for a few free hours. 
    Debt-free wannabe since Jan 2018.

    Total debt: was £39,220.58, now £24,897
  • Hi good to 'see' you back!

    Another option would be to pay your debts off using the inheritance and then pay what you've saved from the debt repayments back in to savings so you'd save on interest accrued on the debt but then earn interest on the savings?
    There's some decent interest rates on savings at the moment so could end up with a few extra pounds!

    Make sure you're comfortable with whatever decision you make though, sounds like your other half will be onboard whatever option you go with which is great.
  • I think if you are paying interest then definitely use some to pay them off, you wont get that kind of interest on your savings or if you do you'd start paying tax on it. Could you look at using the money you pay towards debt and splitting it, so some goes directly into a monthly saver, some towards nursery fees and some into budget to give you some freedom. I think you'll be amazed at how much better you will feel without the debt hanging round. Maybe make it a challenge to yourself to see how much of the £25k you can save in the 2 years before you buy. You will also get a better mortgage if you don't have the debt hanging round. 
    *Dad loan - £5300 - £3100
    *Virgin Credit Card - £3552.50 - £0
    *Barclaycard - £0

    *Total debt - £3100*

    *Sinking Fund - £1500/£3000*
    *Emergency Fund -£0/£3000

    *Debt Repayments Pot - £0/0*

    New diary-
  • Hi I think you need to do a proper schedule of what you owe and what the interest rates are and the repayments. Have you looked lately to see whether there are any 0% deals around, if not for you for hubby? I much prefer to have savings and know that if I wanted to I could pay the debt off as it keeps me focused. Get the numbers together and maybe share them and we can give some focused thoughts if that may help? Good luck V x

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