Stupid spending and debt situation

zippygeorgeandben · 6 June 2018 at 8:30PM

andydownes123 wrote: »

I agree, selling the family home is nearly always a bad idea. You'll never get on the ladder again and repercussions further down the line are immense. The first think I would say is that you have a very good wage to service those debts, so I'd wager you could do it with a abit of help and a tight belt. Post you SOA so we have a better idea.

It's not a ladder, it's a treadmill. Home ownership is not the be all and end all.

shteca · 7 June 2018 at 9:40AM

I am speaking to Payplan at the moment. Has anyone dealt with them? Having a look at Trust Pilot and the reviews are so mixed. Mostly five star and one star.
Is this a good direction for me to go down or should I do it alone?

louloufox · 7 June 2018 at 9:45AM

I wouldn't sell my home either. It would be so much better to learn how to budget better and gradually pay down your debts, If you don't you may find yourself in the same state again without your own home.
There is so much help and inspiration on this board. Read some of the diaries they are great.
Don't forget to get an emergency fund together first as they keep happening and could derail your plans. Then go for it. You may enjoy the challenge. Good luck.

EssexHebridean · 7 June 2018 at 11:26AM

Selling a home to pay off unsecured debt is generally not a great idea. Your earnings are good and you have a good bit of equity in your home if the estimated value is correct - as long as you can make your (presumably quite low) mortgage payments then I'd say tackle the debt another way - giving up the security of owning your own home, in favour of renting, particularly when there are children in the equation too, would be a last resort I'd suggest, and it doesn't sound as though you're there yet.

First step as others have said is a full and honest SOA (Statement of Affairs) the link to this can be found in the "sticky" post at the top of the board, and also in my signature. FRill it in accurately - it needs to reflect your situation as it is now as a "hopeful" SOA doesn't help anyone! Remember the things that come out annually or quarterly as well as monthly stuff. that SOA will form the basis of the budget that you need to live by - and if you post it into here we can take a look and see if there are any savings to be made that you might have missed.

First thing to clear is the Overdraft - overdrafts are what I always describe as "dangerous debt" as they can be called in at any time so work on getting shot of that as a priority. Then MBNA. Is there any chance that you might qualify for a balance transfer card to reduce that one a bit as the interest rate is a bit yuck!

System · 7 June 2018 at 2:18PM

zippygeorgeandben wrote: »

It's not a ladder, it's a treadmill. Home ownership is not the be all and end all.

Maybe not the be all and end all, but something worth preserving over nearly everything else IMO

shteca · 7 June 2018 at 4:39PM

I feel the same way. I have a serious spending problem and although it would probably cover the loans I need to work at my personal problem with finances along the way. I think the hardest thing for me is just saying no.

shteca · 7 June 2018 at 4:42PM

Paul_DNAP wrote: »

In general terms you clear debts off in order of those that are costing you the most to service.

You don't state how much you are spending servicing that overdraft, but if you're getting fees and stuff on that it could be the most expensive debt you have.

Balance transfer the card to a lower or 0% APR card, keep up paying minimum (or just over min) payments.

Then look at if you can get the loans paid off sooner, but not all loan agreements allow this without penalty.

Keep on trying your best to continue the quell the urge to spend unless necessary, in particular spending money refurbishing your flat for any purpose other than to make it nicer to live in - yes it's increasing the value of the flat, was but unless you fully intend to liquidate the asset then that's only a gain on paper and it is locking cash away and won't help clear your debts. What you could do it postpone those projects until (a) your [near] debt free and/or (b) wanting to max the value for an upcoming sale.

Your comments are giving me so much hope. I need to start budgeting and take responsibility for this mess I have landed myself in. I would be tempted to take another credit card at 0% but it is just further pushing off the problem.
I spoke to PayPlan today and built a budget with them. I am not sure if going down the IVA route would be best.

shteca · 7 June 2018 at 4:45PM

EssexHebridean wrote: »

Selling a home to pay off unsecured debt is generally not a great idea. Your earnings are good and you have a good bit of equity in your home if the estimated value is correct - as long as you can make your (presumably quite low) mortgage payments then I'd say tackle the debt another way - giving up the security of owning your own home, in favour of renting, particularly when there are children in the equation too, would be a last resort I'd suggest, and it doesn't sound as though you're there yet.

First step as others have said is a full and honest SOA (Statement of Affairs) the link to this can be found in the "sticky" post at the top of the board, and also in my signature. FRill it in accurately - it needs to reflect your situation as it is now as a "hopeful" SOA doesn't help anyone! Remember the things that come out annually or quarterly as well as monthly stuff. that SOA will form the basis of the budget that you need to live by - and if you post it into here we can take a look and see if there are any savings to be made that you might have missed.

First thing to clear is the Overdraft - overdrafts are what I always describe as "dangerous debt" as they can be called in at any time so work on getting shot of that as a priority. Then MBNA. Is there any chance that you might qualify for a balance transfer card to reduce that one a bit as the interest rate is a bit yuck!

The thought of selling my home just made me sick. I want to do everything possible not to have to do this. As you say, it would end up costing me more in rent than i pay in total for my flat.
With the overdraft, I have built a budget now and started keeping track off every penny I spend, with doing a SOA I would struggle as recently I have had HUGE costs such as getting rid of my car which ended up costing me £2,400 + cost of renovating my flat £7,000 and the list goes on.
My spending in some ways is out of control and this is the accountability issue I have. I need to start to stop this stupid spending and impulse purchasing. I have a real issue saying no and this is my first step to the process.

shteca · 7 June 2018 at 4:47PM

andydownes123 wrote: »

Maybe not the be all and end all, but something worth preserving over nearly everything else IMO

Thank you, the thought of loosing my home is just sickening. I am trying to do everything I can to not have to sell my flat especially after spending the £7,000 doing it up.

Hopeless_Case · 8 June 2018 at 6:51AM

Autumnella wrote: »

I wouldn't sell. I think that's a terrible idea. Then what? Rent and have to pay out rent which probably costs more than the current mortgage or buy a new property with a possible worse mortgage rate due to current financial situation.

What about a remortgage to clear your debt? Problem with getting more debt to pay debt is once the debt's clear you end up spending it again, whereas when you work to clear it you learn your lesson and are less likely to make the same mistake.

Start on the overdraft and MBNA first. Make sure you contact the bank after paying the overdraft payments and reduce the overdraft amount so there's no temptation to respend.

I was going to suggest this, your mortgage is relatively low and I know turning unsecured debt into secured debt isn't necessarily advised, but if the alternative was selling, still have your asset if you remortgaged. You might even get a better deal so the cost change wouldn't be too great, which might allow you to overpay.

Looking at transferring the CC to a % is also a really good idea and better then adding it to the mortgage IMO, but I'd be thinking of looking at putting some (or all) of the rest on the mortgage

Stupid spending and debt situation

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