Anxious about getting back into debt. Can`t sleep, advice needed.

MEM62

SnowDrop said:

I recently paid off a huge amount of debt that I carried for nearly 10 years. 

SnowDrop said:

Since paying off debt I have managed to save £6000 in six months. 

Well done on both of those.  

SnowDrop said:

So I have been thinking about getting a loan. 

If you are anxious about getting into debt why are you considering this?  The two statements contradict one another.

SnowDrop said:

I absolutely hated being in debt. But I don`t really see another way to handle this. 

The don't get into debt.  Learn to live without relying on borrowing. 

The expenses for your car are not excessive and should ensure that you get another year out of it.  Your re-mortgage is three years away to it is too soon to get stressed about that.  As for your lease extension, as stated, the costs can be added to your mortgage - and this is a necessary expense.

For perspective, you are not poorly paid and you should be able to deal with life's day to day expenses on your salary - particularly as you now do not have debt repayments.  Careful budgeting will be the key to you peace of mind and a good nights sleep.
       

SnowDrop

RAS said:

You are wise to plan for the car replacement and lease extension, but given how much you've saved in the last few months, you can easily save up enough sort out both of them.

But when you've lived with years financial uncertainty, getting your head round the different choices you now can make can be a headache until you get used to it. It takes time to feel secure, even when you are more secure.

The lease needs sorting in the next 5 years, preferably. But the car may be more urgent. Follow tacpot's advice and even if you can get the car through the MOT, start saving for something about 2-3 times the current value, or more if you prefer. You don't need to spend that until you know the car needs replacing shortly, unless you find what you want and can sell on your existing one.

Once you have enough for an emergency car replacement, start thinking about the lease, splitting your monthly savings between the two projects. You could add it to the mortgage but it may be wise to have the legal fees available up front. There is advice on lease extension on the Buying, Renting and selling subforum. 

I'd also suggest you think longer term about income protection and pensions, depending what your employer offers? If they cover a period on full pay, then half pay, how far would your current saving go if you were injured? Presumably you will soon have some redundancy cover as well?

I'd add it's probably also time you had a dedicated holiday/treats fund or pot alongside your savings. Yeh, I know it's mind-bending to think of wasting money on non-essentials but you are entitled have some fun and your will extend your working life if you decompress sometimes.

Thank you, there is a lot of good advice there.

I think all those years of being in debt are still causing me anxiety.
But when I do think about these future expenses I find myself panicking and as someone who relied on credit cards to pay for essentials in the past, my mind jumps to `just get a loan` problem solved. I am still practicing the debt-free mindset. I do agree with what everyone is saying. The worst thing I can do to myself, is to put myself in that situation again.

powerspowers

There’s nothing wrong with being in debt per se if it’s manageable, but generally it’s better to be earning interest rather than paying it!

you’ve done great getting out of debt and building up an emergency fund. I’d follow the advice above about assessing whether you need a new car yet. In the meantime, start some saving pots for lease, car and I agree a treat pot. Then top each up as you go month to month. 

When the car does need replacement, you might not have enough in your car pot to pay it but you can make a decision then about using your car pot, maybe some of your emergency fund and maybe some credit as well. Don’t buy something really flashy for the sake of it but equally you don’t want a banger. Then you can repay what you’ve “borrowed” from your EF and build it back up. 

Get a quote for the lease and decide whether that’s best going on your mortgage or if you can save towards it. 

Planning ahead (rather than just panicking) will help with the anxiety as it gives you a feeling of control. I think having someone in real life you can talk to about finances helps as well, or on here. And reflecting on how far you’ve come. Good luck x