I am £94,761 in debt

peaceandfreedom

tyllwyd wrote: »

I hope this works out for you - it was very kind of your MIL to do this for you, but you have a huge responsibility to her to make sure it doesn't go wrong again. One thing I'd say - don't overpay your mortgage until your MIL's loan is paid off. Put the money aside in a savings account, then if things go wrong you have got an emergency fund. If you pay off the loan and haven't touched the emergency fund, then you could put it in the mortgage, but if you do it now you will probably have trouble getting it out again if you need money urgently.

Sound advice and I agree with the caution advised by In Search of Me and JenJade as well. It is so important now that you keep close track of your spending and keep strictly to your budget. Put the credit cards away somewhere and don't take them with you when you're out and about.

I've been reading this thread this morning (in bed with a cup of tea ) and you have said 'where does it all go?'. You need to put yourself in the position of knowing EXACTLY where it is all going. That way you can make savings and budget properly. You also need to build emergency savings so you have funds should money be required for unexpected things, like a washing-machine going kaput.

I think when you take out a consolidation loan like this, there is a sense of relief because now all your debts seem to be sorted out. So you relax a bit on the whole money front. But your debts are not sorted out, they have just been moved somewhere else, and now in someone else's name. I'm not saying it was a bad idea, but I'm saying you must be very careful about things still.

I speak of course from bitter experience with taking out a loan to cover existing debts, and then building up more debts on credit cards etc. I've been very foolish and learned the hard way. Just trying to prevent the same thing happening to you, you've been doing so well so far. :T

Jo4

Just wanted to say hi and well done with your debt busting, I don't know where you get the time or energy with 3 little ones. Keep a track of your spending and your income and you'll get there, good luck!! :money:

iwanttosavemoney2008

I think when you take out a consolidation loan like this, there is a sense of relief because now all your debts seem to be sorted out. So you relax a bit on the whole money front. But your debts are not sorted out, they have just been moved somewhere else, and now in someone else's name. I'm not saying it was a bad idea, but I'm saying you must be very careful about things still.

I speak of course from bitter experience with taking out a loan to cover existing debts, and then building up more debts on credit cards etc. I've been very foolish and learned the hard way. Just trying to prevent the same thing happening to you, you've been doing so well so far. :T

All our debts from cc's are now gone apart from one emergency cc with a limit that is not going to be a problem ever!! i promise the other ccs that we had have already been cancelled

One thing I'd say - don't overpay your mortgage until your MIL's loan is paid off. Put the money aside in a savings account, then if things go wrong you have got an emergency fund. If you pay off the loan and haven't touched the emergency fund, then you could put it in the mortgage, but if you do it now you will probably have trouble getting it out again if you need money urgently.

good idea though this was a long term plan as i would hope that in the current climate a savings account would pay more in interest on that money that it would save on the mortgage

also we are desperatly needing to convert our loft space into bed rooms as we have only 2 bedbrooms and one of those is barely more than a box room and we cant afford to move to a bigger property so the 5 year plan is to get that saved up for and done (see saved up for!!! my hubby says we will need a loan to do it but i will not allow another loan ever ever ever again!) I am so determined not to get in to this mess again

i am loving the fact that when my OH gets paid there will be so much money left after the bills have come out now rather that worrying wether we have enough to cover the bills

the plan now is OH wages go on bills any surplus goes in to savings. our weekly money from tax credits is what we have that week and that is it. we have almost £100 per week to live on which should be plenty for what we spend after using the old style board and watching what we spend properly

ok off to bed for me will post back later

andrinaperry

Welcome and well done for taking control, will watch your thread with interest,

Andrina

AdrianHi

iwanttosavemoney2008 wrote: »

see saved up for!!! my hubby says we will need a loan to do it but i will not allow another loan ever ever ever again!

There's no room in your monthly income for more loan repayments if I remember rightly from you early posts on this thread

iwanttosavemoney2008 wrote: »

the plan now is OH wages go on bills any surplus goes in to savings.

I can see the sense in having an emergency washing machine repair etc. fund, but is there really a savings account that pays enough after tax to be better than clearing debts with the money?
If there is please do tell where, I might want to put some money there myself
You might have thought of this already, but just in case - If you don't have a personal income yourself or you are in a lower tax band than your OH you can avoid the (or some) tax on savings by having them in an account in your name. For bank and building society accounts you will have to ask them about it, fill in a form and stop them deducting the tax automatically from the account.

iwanttosavemoney2008

AdrianHi wrote: »

There's no room in your monthly income for more loan repayments if I remember rightly from you early posts on this thread


I can see the sense in having an emergency washing machine repair etc. fund, but is there really a savings account that pays enough after tax to be better than clearing debts with the money?
If there is please do tell where, I might want to put some money there myself
You might have thought of this already, but just in case - If you don't have a personal income yourself or you are in a lower tax band than your OH you can avoid the (or some) tax on savings by having them in an account in your name. For bank and building society accounts you will have to ask them about it, fill in a form and stop them deducting the tax automatically from the account.

now we have the mil loan as i have taken to calling it we do have money spare for another loan but rest assured we will never take one out again!! but my hubby was thinking about once the mil loan is paid off we would need a loan to get the loft converted but i say (in the style of amy winehouse) no, no, no.

now that our debts are all in one place (the mil loan) it doesnt make sence for us to pay off extra on it as we would incuur a penalty so saving up to get the loft converted is now the top priority as we have a 2 bed house for 5/6 people (depending if my stepdaughter is here) this is a massive task as we will need about £20,000:eek: to get it done properly

evrythiing is in my name anyway but i never thought about not paying tax on the savings what is the limit on the saving for that? i can then put that amount in to an account in my name and then one in each of the kids names that way we can have 4x the money the tax man cant touch :T


thank you for this info

[Deleted User]

Just read through your thread and came to give you my best support - you can do this!

I joined the 'A Payment A Day' thread and it really is working for me. Try doing small things too, like saving pennies or 5p's/20p's in a jar and then when it's full get it changed and put it towards your debts.

Every little helps! x

kellywelly_2

Lorne wrote: »

I just wanted to say welcome and congrats on the light buld moment. In March 2006 we were £92k in debt (over 23 debts) so I very much know where you are coming from. Our saving grace has been budgeting, everything is on a spreadsheet and we use the snowball calculator at www.whatsthecost.com to keep track of our debts - it is a fantastic tool.

We have so far managed to pay off £54k by reducing our outgoings dramatically, being smart with paying off the highest APR loans with the 0% cards and overdrafts, taking 2nd jobs, ebaying, mystery shopping, etc, etc. We really have treated it as a project and so far it is working.

Just wanted to let you know that it is possible to tackle such a large sum of debt, keep visiting here for lots of help and support.

Good luck, Lorna

Thats is a truly amazing achievement I am in awe :beer:

AdrianHi

iwanttosavemoney2008 wrote: »

now we have the mil loan as i have taken to calling it we do have money spare for another loan but rest assured we will never take one out again!! but my hubby was thinking about once the mil loan is paid off we would need a loan to get the loft converted but i say (in the style of amy winehouse) no, no, no.

now that our debts are all in one place (the mil loan) it doesnt make sence for us to pay off extra on it as we would incuur a penalty so saving up to get the loft converted is now the top priority as we have a 2 bed house for 5/6 people (depending if my stepdaughter is here) this is a massive task as we will need about £20,000:eek: to get it done properly

evrythiing is in my name anyway but i never thought about not paying tax on the savings what is the limit on the saving for that? i can then put that amount in to an account in my name and then one in each of the kids names that way we can have 4x the money the tax man cant touch :T


thank you for this info

Tax paid on savings is dependant on your whole personal income, of which interest earned is a part.
You personally can earn a certain amount in a tax year April-April tax free which is usually around £4000 to £4500 a year. At a rough guess you would need £100,000+ in a building society account to earn this much in interest.
Not relevant to your circumstances, but you cannot put money in your kids names to avoid the tax, the tax man put a stop to that as the wealthy were using it as a means of saving on their tax bill.
You'll need to ask your building society / bank about reclaiming the tax on savings for earlier years if relevant and ask them about getting interest paid on your account without the tax being deducted automatically.
Putting the money into an ISA, up to £3600 cash ISA - like a building society account except tax free or a stocks and shares ISA up to £7200 a year also avoids tax on savings.

£20,000 is a lot of money to raise and the amount you need to do the job will increase in future years. I don't know what you are able to save each month for this, but at £100 a month invested at 6.55% (MSE's tip for top instant access saving account, you could do better) it will take over 11 years to raise the money.
You might have to be realistic here and look at what increased mortage payments you could afford to pay for and put the £20,000 (or part of it) on the mortgage. Builders are going to be having an increasingly tough time next year, you might be able to get the price down. Also that £20,000 is improving the value of your home, it's not completely dead money. Might be worth asking an estate agent what they think your house would be worth with the conversion, they might want to be paid for that kind of valuation though. It would be interesting if it added more than £20,000 to the value of the property.