Debts and spending ... what would your next move be?

[Indecisivelurcher]

Hi folks would really appreciate thoughts on what your next move would be if this was you. Everything is bits and it's what order to tackle things in...

My current thinking is, pay off the car loan this week. Manage with the smaller car for a bit if we can, so we can pocket this money. But know that we will prob have to get a new car on a payment plan whenever we crack. Save up to do the home improvement works next summer. Then try to nuke the loan on 10% during 2022.

Debts:
Old house loan - £6500, horrible 10% interest rate but low repayments £76/m, can make overpayments flexibly
Small car - £3000, repaying £200/m, final payment Sept 21
Credit card - £1700, 0% interest, min payment £18/m - paying about £50 flexible
My mum - £4700, repaying £100 but flexible

Savings: £4500 managed to save this during coronavirus due to not having any childcare costs or using any petrol!

Saving potential going forward: est £500 a month
Can be used to save for things or to pay off debts

Upcoming spends:

Shed roof - £350 quoted

Car - we have a dying estate and a small car which we're still paying for. Change of DH job means we can go down to 1 car, ideally needs to be an estate or big hatch (dog plus children), petrol or hybrid/electric. Est £8-12k.

Home maintenance - list includes a new flat roof with skylight, replacing failed glazing, getting ds bed built over stair boxing, reconfigure back room to be a home office (I am home based) and built-in storage (we have none!) I am costing it up in my head as £6k of works. We have held off for a few years but these jobs are getting to the point where we need to make them happen.

I would take out a bank loan to consolidate the Old house loan - £6500 and the small car loan £3000 .At the moment there are plenty of lenders offering loans with around 3% interest (have a look on moneysavingexpert).How long is the 0% on the credit card?
As you managed to accumulate savings in the last few months I would recommend to add to it and put it in an ISA (you should have 3 to 6 months savings to cover essential expenditure in case of emergencies like a job loss or an illness).
Can you get a low mileage used car instead of a new one on a payment plan?
This is how I would prioritise if I was in your situation ;
Pay all debts (Mum included)
emergency savings
second hand car
savings for house refurbishment

I would prioritise the highest interest that, in this case the 10%. To be honest I would be tempted to put all savings against that, and then somehow find a way to move the remaining £2000 to a zero interest rate. Not sure how that would work without looking into it, but my absolute highest priority would be to get rid of that as soon as possible.

We would 100% get a used car not a new one.

The old house loan will not let us pay it off with credit. They won't let us pay it off with a credit card, a new loan or put it on the mortgage. Basically we can only pay it off with cash. Gits.

Agree with prioritising the highest interest rate - the 10% loan. So pay off as much as you can now (keep some savings as an emergency buffer). How much is the small car worth - can you sell if off to clear the loan, and you can then use the £200p/m saved against the remainder of the house loan and get it paid of asap.
With the level of debt you have, you should really look to pay it off before taking on any more - you're not in a position to spend 8-12k on a new car, bearing in mind you want to spend money on the house as well. Something cheap and cheerful will have to do you for now.

Similarly don't take out more credit for the house work - pay off the debts you have as quickly as you can, and then save for the work on the house - making sure you keep an emergency fund intact.

MSE is good for advice on budgeting/managing debt - look at the Debt Free Wannabe forum.

The small car is worth maybe £4k, that will go towards a bigger car. But we will have to take on more debt to fund the difference.

Equally the work to the house cannot wait more than another year, the roof is on borrowed time, my ds can't stay in a cot bed much longer and my desk can't stay in his tiny room when he's got a full size bed.

This is why it gets complicated!

@Indecisivelurcher

The old house loan will not let us pay it off with credit. They won't let us pay it off with a credit card, a new loan or put it on the mortgage. Basically we can only pay it off with cash. Gits.

If that is the case I would use the £4500 saved and make it top priority to clear it in the next few months.No point in saving £500 monthly when you have £6500 with 10% outstanding loan.

You can get a prefectly usable car for £5,000.

Instant saving right off the bat.

In addition you can probably do the shed roof yourself with two ladders and the materials. Roof felt and some adhesive.

Messaged received to tackle the loan on 10%. May be able to split funds to do overpayments on that loan and save towards house works, if it doesn't spread too thin.

Can you do a bit of make do and mend with the house? Do the shed roof yourselves, get a second hand bed etc? Household works always cost more than you think - way more, especially if you’ve only done back of fag packet calculations.

Everything I've outlined sort of is the make do and mend version!

The shed roof the wood is knackered and warped and needs needs totally replacing, we would struggle to DIY it as have 2 little kids in the way, I have slipped discs and dh isn't strong either.

A single bed won't fit in DS room without building over the stair boxing, so that needs to happen. We tried putting him in with Dd but they were disrupting each others sleep.

The flat roof we've been warned to get it done before it fails so we don't end up with a more expensive job on our hands.

Ideally I would be taking down the conservatory and pushing out the brick wall but all of that has been scrapped. I will build the storage and fitted desk myself.

The car we can manage until we get too pissed off with trying to cram 2 kids and a large dog in a seat ibiza :)

@Indecisivelurcher

The small car is worth maybe £4k, that will go towards a bigger car. But we will have to take on more debt to fund the difference.

Equally the work to the house cannot wait more than another year, the roof is on borrowed time, my ds can't stay in a cot bed much longer and my desk can't stay in his tiny room when he's got a full size bed.

This is why it gets complicated!

I don't know where you are but in London you can buy a good used car for £5000/6000 (we paid £3500 in 2012 for our used Ford from 2004 and it is still going strong!). Try to sort out the shed roof yourself. You can buy a good child bed from Ikea if you want new . Can't you move your desk to the living room for a period of time while you save money to do the refurbishment? Same for the roof...can't it be "patched up" to last a while longer?

Take a personal loan and use the cash from that once its in your bank to pay off the expensive loan?

I don't know what kind of shed we are talking about but if it is a normal shed and not a luxury one (cabin size) ,you can definitely buy a new one for £300.

Can you surrender the small car sooner than Sept 21? That would save £200 pcm.

Pay the most expensive loan off first.

You can get a second hand Ikea Kura bed I think and "hack" it to go over the stair well box (I know a few people who have done this, can get for about £50) you can find ideas for this on Pinterest or Ikea hackers - there was even an idea on a TV programme with it.

Book a handyperson for a day - day rate about £350 and get them to do shed roof and bed on the same day. We did our shed roof and it only took about 2 hours.

Pay off small car and sell it is what I mean. Manage with the dying estate for as long as possible.

Petrol estates are a bit more than that. The shed is big. The roof no have had expert advice from a trusted person.

Personal loan is an option, could get bigger and roll it all in there.

Have a look at Dave Ramsey's babysteps.

He says you need an emergency fund of a 1000 pounds, the rest needs to go on debt repayment. He uses the snowball method.

I think you need to be honest with yourself about what you can and can't afford. The bed I would tackle as a DIY task. I'd go for a much cheaper car. You can't afford inbuilt storage. Desk can be bought secondhand etc.

I'm assuming the small car is newer you see. See if you could pay the debt off and then sell it for £3,000?

That way that lump sum of money works very hard for you.

pin.it/1gLHkIo

Kura bed over stair well box.

I'd get rid of one car asap if you don't need two. They cost a lot in petrol/tax/insurance/maintenance.

Also a 10% interest loan is ludicrous. I'd have that changed as soon as possible. Then I'd do the snowball method.

Thanks for the bed idea I'll defo look into that one.

Kind of thinking now,

Step 1: sort shed before gets totally trashed. Get flat roof on back of house safety checked to see if it's OK for another Yr or 2.

Step 2: Pay off existing car loan, scrap big car, put up with little car until we crack, pocket that £200/m into savings, so could save £700/m.

Step 3. Put money into savings autumn /winter. £4000 by Christmas.

Step 4: spring 2021 Make low cost DIY changes with whatever we've saved, DS bed, reconfigure rooms to create home office area and use existing stuff / make it. Was intending to make basically a sliding door wardrobe style storage using B&q kit so batons on wall and ceiling, screw it all to that. And big deal similar batons to wall and do it like a kitchen counter. I hope to take out stud wall myself. Just expaining to make a point not going mad with it but I do need to sit comfortably somewhere I can concentrate. Costs will be materials only. YouTube will be my friend. And my brother who is good at DIY!! Thinking I don't know, £2k tops?!

Step 5: Go mad at the 10% loan, aim to pay it all off within a Yr.

Step 6: review car situation if haven't cracked already.

Step 7: Do roof and glazing. This will be officially 4yrs over from what we were advised.

*big deal was supposed to say desk!!!