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Published on February 25th, 2014 | by Pete

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Goal MOT – Are You Heading in the Right Direction?

Back in August 2012, my wife and I visited a mortgage advisor. This meeting resulted in us being told that we needed to get rid of our debt to stand any chance of upgrading our home. We left that meeting a little deflated, but with a steely determination to continue making progress on this front. Since then we’ve been slogging away working towards this goal. Since that time, our situation has changed. My wife is now pregnant, and although we love our flat, it is going to be difficult to stay here beyond our daughter being three years old. With this in mind, and the knowledge that we would soon need a bigger home, and possibly a garden, we thought it was time to visit a financial advisor, to see if we were prioritising our finances correctly, and get a sense of when buying a bigger home might become a realistic option. Luckily, the advice given to us was free, as the financial advisor explained that he made his money at the point if/when he was able to arrange a mortgage for us.

As with our previous visit, the news was not super. The debts that we still have continue to present a bit of a mountainous obstacle to us moving on up the property ladder. A poisonous combination of negative equity, remaining debts and no available deposit mean that we are not realistically, close to being in a position to consider moving home. The advisor (who was very tall, and had a big booming voice, much how I imagine a thinner financially focused Brian Blessed would be) showed us a couple of calculations. With our current debt repayments, we could borrow around £120,000. Without the debts, it would be more like £160,000. This very clearly demonstrated the devastating impact of debts in this affordability based mortgage world. He suggested that in order to clear debts, cover the negative equity, and have a deposit and the necessary legal fees, we would need £27,000. We can’t access that, and he apologised for not being able to give us better news.

We were not too downtrodden though. We really just wanted to make sure that we were making sensible decisions about how we were using our money. We came away more determined to pay off our debts, and then start saving for a deposit. We also realised that we have been a bit individual in how we have approached paying off our debts. We had tended to focus on paying off our individual debts, not wanting to burden the other with our own past bad decisions. We.ve since realised that we now need to pool our debt busting powers, and use any ‘spare’ joint money to reduce debt quicker. We’re both going to be living in the new house (when we eventually get there) so it makes sense that we both do everything we can to get there quicker.

Are you confident that you know exactly where you are heading in terms of your finances? Or is it time that you have a bit of a review?

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