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    • Lydia42
    • By Lydia42 6th Jun 18, 1:46 PM
    • 124Posts
    • 413Thanks
    Extracting head from sand and facing the truth
    • #1
    • 6th Jun 18, 1:46 PM
    Extracting head from sand and facing the truth 6th Jun 18 at 1:46 PM

    Not done anything like this before, not even sure what I'm about to write but i'm hoping this will keep me on track now that i am facing our situation once and for all. Joined years ago, started reducing debt, had two kids (now 8 and 10) and need to finally get a grip on finances as they are spiraling again.

    I'm currently signed off work - due back 25th June. Trying to use the time constructively to sort money and budget. Feeling positive about the changes i have made so far, but still lots to work on.
    Current debts, excluding mortgage:

    Santander O/D £2,560.00
    Barclaycard (1) £1,133.00
    Barclaycard (2) £4,058.00
    Virgin CC £5,508.00
    MBNA £5,267.00
    Total £18,526.00

    I've compared and reduced our car insurances, home insurance, gas/lecci, pet insurance, mobile phone insurance, council tax is already spread over 12 months. Currently re-jigging above debts to 0%, awaiting a decision on Santander CC - keeping fingers crossed as Barclaycard 2 0% runs out at the end of this month so i'm hoping to transfer as much as i can to new card if approved.

    Have been trying to keep a food spending diary and note alcohol spending too as i know we over-spend massively on food and alcohol. Absolutely horrified on what we are spending. This MUST be addressed!!!!

    Have also been introduced to Dave Ramsey from reading others posts. It's finally hitting home this time. I want financial security and peace - not sleepless nights, stress and kids learning bad money habits!
Page 5
    • Lydia42
    • By Lydia42 28th Oct 18, 10:46 PM
    • 124 Posts
    • 413 Thanks
    Thanks for the comments everyone. Feeling a little calmer now that i can see i have made the best of the situation as far as i can.

    So plan of action for this month is to get to grips properly with YNAB. I've watched a few more videos so i have been adding more details and refining things eg. dates of DD and putting it all in order to make things easier. Everything has a category now, and as i work my way through the month i am going to set up the regular DD and SO as they leave the account. I think it's too over-whelming to do all at once, but doing it daily makes me check the bank account to see what has cleared each day and is making sure i haven't missed any categories such as my son's scouts subscription which i had forgotten about.

    Hubby has now been paid so i have been able to allocate that for the month too. I can see already that it is going to be a tight month especially as i have had to pay extra on my car insurance to transfer policies due to new car, etc. Also, seeing the over-running debits from October as i start to properly watch every penny. So i'm going to be careful what over-payments i make this month to the cards. I'm also waiting to see what Barclaycard minimum is going to be now that i have filled it again. Everything else i have logged on to and bumped up the minimum payments to round them up by a few pounds (i like things tidy haha).
    Next month i plan to start the over-payments to MBNA 1 as that is the card with the 0% deal that runs out soonest - Dec 2019. So my snowballing is going to go by end of deal date as everything is on 0%.

    On a really positive note my Dad has just given me £500 towards the car chaos. Totally shocked and completely out of the blue as he's never given me anything (wasn't brought up to expect anything either) and things have been strained between us for years due to how he treated my mother. I've decided to add this to the emergency fund as all debts are on 0%. Hopefully this will give us a little more breathing space if things occur over the next few months before we can build up our 'sink funds' (car maintenance, boiler, vets, etc).

    Right off to bed. Actually looking forward to tomorrow and logging in to check bank balance and update YNAB. Other than a few essentials like milk i'm hoping for a minimal spend day tomorrow too.

    Off to bed to hopefully sleep a little better than i have been recently.
    Last edited by Lydia42; 28-10-2018 at 10:48 PM.
    Total Debt November 2018: £23, 795
    • Lydia42
    • By Lydia42 8th Nov 18, 5:41 PM
    • 124 Posts
    • 413 Thanks
    Wow, not been on here for just over a week and so many things have happened!!
    We recently had a mortgage statement through as our current 2 year fixed deal ends in Jan. So i got on the phone to our mortgage broker and to cut a long story short in the space of a few days we have decided to rent our current house and buy a new one which we saw and had an offer accepted on two days ago. Mortgages agreed in principle and solicitor sorted to start the ball rolling. If everything works out our mortgage will be pretty much the same as we are paying now, and rental will bring in £300ish per month after the mortgage is accounted for.

    So........the bad points. After having to replace my car two weeks ago, hubbies car cost another £350 yesterday

    On the plus side we have over the past few days started clearing the loft and selling everything that isn't nailed down. As Dave Ramsey would say we intend to sell so much stuff the kids are gonna think they are next!!!! I've managed to sell some old jewelry (£650), an old camera (£150), planning on taking my shotgun to dealer to get quote but looking like it's worth approx £400-500. Lots of other small things selling on FB like old clothes, shoes, coats, etc. Hubbie is doing the same and also had a refund from the tax man (£1800)
    Hoping to tally everything up after the weekend when some of the FB stuff is collected and the refund and other stuff has cleared but it's amazed me how much we have raised so far now that we have become so focused.

    Another major plus point is i have actually gotten to grips with my extended free trial of YNAB and things are looking good. I can actually see where our money is going, and how quickly it is going through the month. We currently have over £1000 in our current account and i would normally think we were ok, but i can see that all the money has a plan and we don't actually have that to spend!!!! Another plus is that my barclaycard isn't calling for a payment this month as we have only just done the balance transfer to it, so that should help cover some of the over-spending carried over from October. Going forward, there wont be an over-spend as we can see everything in black and white and know that we have everything budgeted for, or we can't go out and buy it!!! Having to move money from one 'pot' to another if we over-spend has really made me start to choose and prioritise what i spend on. Early days and don't expect miracles in the first month. I expect us still to be slightly over on what i want to spend on food, but we are definitely heading in the right direction.

    Actually feeling really positive.
    Total Debt November 2018: £23, 795
    • Spendy Spenderson
    • By Spendy Spenderson 8th Nov 18, 8:55 PM
    • 29 Posts
    • 174 Thanks
    Spendy Spenderson
    Great to hear you are feeling positive! Wow lots of change there. Just some initial thoughts from me for what they're worth:

    - I guess the Broker factored in that it would need to be a 'buy to let' type mortgage that he'd be looking for on the current house when the fixed term was up in Jan? And therefore based on that type of mortgage rate, you would still be looking at bringing in approx £300 in rental income, after paying the mortgage?

    - As you are renting your current house rather than selling, how will you raise the funds needed for buying the new house: solicitors fees, land registry checks, surveys etc? Let alone the deposit itself?

    - Will you manage the rental yourself or have it managed by an agent? There will be costs associated with both methods but they will differ depending on your choice. Definitely worth getting Tenants Insurance either way (that pays out to cover rent if they stop paying and legal fees if you need to evict them).

    Good luck and well done on getting the hang of YNAB - that is something I am yet to achieve!
    • Verbatim
    • By Verbatim 9th Nov 18, 7:49 AM
    • 4,667 Posts
    • 14,305 Thanks
    Your new house will count as a second home so you will have to pay the 3% surcharge in stamp duty. You'll need an electrical safety certificate, gas safety certificate and an epc. The tax relief on mortgage interest on rental property is reducing steadily until it finishes completely in I think 2020 and other reliefs that you can set against income for tax have also changed to make them less generous. Remember to put the deposit into one of the approved government schemes and to give all the required information at the start of the tenancy.
    CCs @0% £24k Dec 05 £19,621.41 Au £13400 S 12600 Oct £11,981 £9481 £7500 Nov £7250 D £7100 Jan 6950 F £5800 Mar£5400 May £4830 June £4660 July £4460 Aug £3200, S £900, £0 18/9/07 DFW Nerd 042
    • redmel1621
    • By redmel1621 9th Nov 18, 10:35 PM
    • 5,951 Posts
    • 25,750 Thanks
    Wow what a lot has happened in a short space of time. Good luck on the house rental and don't forget to ave some of that £300pm for general repairs or repairs that you may no want to claim on the insurance for. We are currently renting and we have just had a boiler leak, which has caused the ceiling to all fall in. Landlord is a bit crap and took 4 days just to get the leak stopped on the boiler, god knows how long he will take to sort the ceiling. I have also asked that he replace the stair carpet as it is ruined... I doubt he will. We had our front wall kicked down 5 years ago and he has never replaced it. The guttering around the car port was blown down in a storm and he never fixed that either, in fact we ended up fixing that (in a fashion, cheaply) ourselves as the dripping was driving us insane. All of these small jobs are things that you wouldn't want to claim on insurance for, but are the responsibility of the landlord.... Just make sure you get yourself a pot of money in case these things happen.

    Well done on mastering YNAB. I am going to get another free trial at some point. I may even purchase it in DS1's name/email as he is a student and I think it is cheaper...
    Unless someone like you cares a whole awful lot,
    Nothing is going to get better. It's not.

    • Lydia42
    • By Lydia42 11th Nov 18, 8:41 PM
    • 124 Posts
    • 413 Thanks
    Thanks for the replies everyone. We have a fantastic mortgage advisor who is making sure we do everything properly. I have an appointment with the Rental Agents tomorrow to find out all the details, but am definitely aware we have to provide all the safety stuff. We have fire alarms fitted by the fire brigade (they offered a free service a while ago which we took them up on). Boiler was serviced last week. Working our way through the list. But any advice welcome. We definitely intend to save a buffer fund for the rental property first with any profit we make.

    Redmel - your landlord sounds awful. Have you thought of moving somewhere else? Hope he sorts the carpets for you, etc.

    Selling on fb, etc is continuing. Even the kids have started sorting old toys which we have sold for them - all of these proceeds have gone to the kids though as obviously the profits are theirs.
    Total Debt November 2018: £23, 795
    • Lydia42
    • By Lydia42 15th Nov 18, 3:53 PM
    • 124 Posts
    • 413 Thanks
    Popped in for quick update. Not much happening at the moment. Had the valuation people into both properties today so just have to sit tight and see what they go back to mortgage providers with. Fingers crossed.

    Debt wise we are still selling everything we can and slowly clearing the loft. It's definitely a work in progress. Still very surprising what we are finding tucked away. Kids are having a clear out of old toys too and adding money to their savings pots. Really want them to learn to be sensible with money - and not like us.

    YNAB is still going well, and i can see straight away that the biggest area we need to get a grip on is food and alcohol spending. I knew this was a problem but monitoring it properly has highlighted just how big a problem it is. We've got 10 days until we get paid again, and £40 to buy essentials like bread and milk and any bits for the kids packed lunches. And this has come from another budget category as we have spent everything we allocated to food already this month. On the plus side we have spent way less than normal, and i knew it wouldn't happen overnight, but we need to work harder to get control of this. Especially as December is typically a higher spend month too.

    Goal for the remainder of the month is to avoid dipping into recently cleared overdraft.
    Total Debt November 2018: £23, 795
    • Kitten868
    • By Kitten868 15th Nov 18, 8:20 PM
    • 1,129 Posts
    • 2,798 Thanks
    Wow. That's most certainly a turn around. Are you upgrading or downsizing?
    Loan 1 £5000/£8000
    Loan 2 £3000/£5800
    Total £8000/£13800 42% PAID

    And CC £1300/1900
    • Lydia42
    • By Lydia42 15th Nov 18, 8:59 PM
    • 124 Posts
    • 413 Thanks
    Hi Kitten868
    We're upgrading. We outgrew out little bungalow a few years ago (kids are 8 and 11 now). Have looked at moving every time our mortgage deal comes to an end, but each time we have sat tight due to money and the fact we could 'make do' with the space we had. Two years ago we consolidated (i know it's not advised but it was the cheapest option at the time) and drastically upped our mortgage payments and dropped our term to 12 years. So we have now cleared what we consolidated plus some. It's meant we are now in a better position even with our credit card debt to move to a larger place - just to have an extra toilet will be bliss. Sounds silly but you can't even have a wee without someone banging on the door saying they need the loo in our house!! lol

    We've decided to keep our bungalow on as a buy to let mortgage as they don't tend to build bungalows nowadays, so long term it should give us better financial security. Using equity we are putting a deposit down on a house just up the road which needs work doing to it. So long term we will add value to the new property but also get the much needed space. That's the plan anyway.

    I know its a massive step, especially with the credit card debts, but it feels right and in financial terms our mortgage payment on the new place will be pretty much the same as we are already paying now. With any extra from the rental property being a bonus (although this will go into a savings pot for repairs etc - with the possibility to skim a little off the top if it builds up sufficiently - this will of course go to clearing the cards too.

    Ooooo - another bit of good news - i actually did my tax return yesterday (have always left it late before). For the first time ever i don't owe them any money!!!! Hoorah!! They owe me £59. So that will go straight onto a card when it arrives. Yay!
    Total Debt November 2018: £23, 795
    • redmel1621
    • By redmel1621 17th Nov 18, 10:21 AM
    • 5,951 Posts
    • 25,750 Thanks
    Congratulations on the new house . I hope it all goes through quickly for you. Does it need a lot of improvement, or it is mainly cosmetic?

    I'm impressed with how you have got to grips with YNAB. I know you were struggling with it as much as I was I gave up when my free trial ended. I can't decide whether to give it another go in DH's name

    Glad things are looking up for you
    Unless someone like you cares a whole awful lot,
    Nothing is going to get better. It's not.

    • Lydia42
    • By Lydia42 19th Nov 18, 10:58 AM
    • 124 Posts
    • 413 Thanks
    Hi Redmel1621
    Thanks for the luck. Think we are going to need it. Just hoping that the valuations all come back ok and they agree to the mortgages. It's mainly cosmetic stuff as it was occupied by an elderly lady who went into a home. It'll be a long term project as we wont be able to afford to do anything when we move in. Just going to hire a carpet cleaner and clean everything up while we concentrate on getting the rental side of things sorted.

    If you're interested definitely send YNAB an email and ask for an extension to your free trial. That's what i did. I just explained that i hadn't got to grips with it yet but really wanted to give it another go and they extended mine by another month. I'm still learning bits as i go and setting it up how i want it, but by the end of this week we will have done a full month so all my direct debits and standing order, etc will be set up and it will be completely up and running. You can set it all up in one go, but i didn't have time and it was all too much to do in one go, so i have been doing it daily as each recurring payment leaves our bank account. It's been such an eye opener. I know we have a long way to go to reign in our food spending which is the worst over-spending category but already this month we have stayed out of our over-draft that we cleared last month (a first!) and have reduced our food spend by about £300 (i wont tell you what we were spending - i'm mortified!). Still a long way to go but i aim to cut this again next month by £100, and then further once Xmas is over. The You tube tutorials are awesome and brilliant at explaining how to set things up to get going and how to use it in more detail if you want to.
    Total Debt November 2018: £23, 795
    • BabyStepper
    • By BabyStepper 20th Nov 18, 7:04 AM
    • 263 Posts
    • 762 Thanks
    Ok Lydia, I'm sorry if this sounds harsh but really, someone has to say it.

    You phoned your mortgage advisor to get a new deal on your mortgage, and ended up spending thousands and thousands of pounds you don't have buying a second house? You are struggling to pay your husband's car repair bill, your budget doesn't work, the debt is going up, you have no savings, but you are taking on another property? With less than a week's thought about what that means and how it will work? Have you at least done a forecast of expenses? What to do when there are no tenants? How to maintain the rental property? Without any savings you are about to become a landlord like redmel's, no cash to fix anything, no repairs getting done. Without a plan you are completely dependant on good luck. I have no idea how this can even happen in this economic climate when you have no money. I think your mortgage adviser definitely saw you coming.

    No wonder you feel so positive. You are on a 'buyer's high' right now, in the process of spending an absolute fortune on something you cannot afford. I hope someone in RL can talk some sense into you.
    • Lydia42
    • By Lydia42 1st Jan 19, 3:33 PM
    • 124 Posts
    • 413 Thanks
    Happy New Year everyone.
    Not been on here for a while as we have had so much going on. I have read everyone's messages, and yes BabyStepper i can see where you are coming from too. We do have a very good mortgage advisor, and if we couldn't afford to do it with the equity we have in our current property she wouldn't get us the mortgages. As it is we looked at doing this two years ago, but decided to sit tight and over pay on our mortgage and reduce the term too. So we upped the payments significantly and reduced the term to 12 years. We now have 10 years to run on it. This has given us the equity in our current property to have a few more options available to us.

    As it is we have actually sat back and decided not to jump into it all so quickly. Our current mortgage deal ends on 31st January 2019. We have just completed all the paperwork to continue with our current provider on a 3 year deal. Our monthly payments will more than half, and we have no tie in penalties. The money we will save in mortgage payments is ear-marked for over-payments to debts in order of when the 0% deals run out. The first one ends December 2019 so that's the one we'll focus on first.
    On another note we have managed to have a good clear out and are still selling things as we clear the loft and have managed to raise over £4500, including hubbies tax refund. This is currently in a savings account as our CC are all 0% at the moment. We're still using YNAB daily and are actually doing pretty well with our budgeting, although Christmas messed a little with the figures - we were able to cover most of this with the savings pot we set up last year specifically for Xmas. DD is still in place to carry this on for the coming year as it was invaluable.
    I'm looking at setting up savings pots at the end of January for further things like Car maintenance, school trips, dentist, etc. I'm feeling much more positive with each step we take towards being more organised with our money and savings pots for annual stuff is definitely the next step.

    Happy New Year everyone - here's hoping 2019 is a good one.
    Total Debt November 2018: £23, 795
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