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Getting out of debt

I am a new member here and since looking through the forum can't find anything that applies to our situation.
My husband and I had to max out two credit cards to buy our home almost two years ago. We also have an investment property due to good timing of my divorce when we didn't have much equity and I bought out my ex :) We have great tenants and are happy to keep them.
Our problem is this - we seem to always be falling behind and have been using credit to get us through whilst I was on maternity leave.
We are currently refinancing to pay off credit debt. I know in the long run hanging onto both properties will be the best way to get ahead but my husband is pressuring me to sell it.
I need good news stories from people who have gotten themselves out of debt please :)

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Permalink Reply by ff123 on August 6, 2008 at 7:49pm

this is going sound boring but do you have a budget - like have you figured out how backwards you are going - if it is like $50 get a paper round - we have been there so many times - and i ended up using spice jars to hold the money we were allowed to spend in 1 week bottle A was for food bottle B was for wine etc.. lived like that for 6 months but got rid of the cards and then the magic bit was to create a buffer of $300 so that I didn't need the cards - hated it but we ended up with our property and cash to get stuff for it.

In general refinancing to pay of debts is not really a good way to go cause you'll end up paying for the chinesse in 08 in 2038 - if you are refinancing to hold onto the investment property have you figured out how much money you need to borrow to cover stuff this year etc...

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Permalink Reply by Bandwidth on August 6, 2008 at 8:20pm

A question are employees or have your own business, because tthere are a number of cash flow strategies if you are in small business.

What is your husband's reasoning behind selling the property

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Permalink Reply by jacquesk on August 7, 2008 at 12:48pm

Hi Ellen
Fixing the credit card debit is a great start since the interest rate is a killer. But it is no use doing this if 2 months down the track you have maxed them out again.

My advice is firstly to get yourselves a financial advisor. If you cannot afford this then its time to start hitting the books, internet, etc and start working towards a long term strategy of dealing with containing/reducing your current level of debt and not increasing it. This involves having a budget and sticking to it like glue.

There is an interesting show on Foxtel called Till debt do us part or something like that. It is a U.S show (well it would have to be wouldn't it?) where a financial advisor looks at a couples situation and then offers solutions. If you have Foxtel then it might be worth a watch.

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Permalink Reply by Karen on August 7, 2008 at 1:54pm

This is good advice from Jacquesk - a budget is the first step for you here so you can figure out what costs are killing you and where you can cut back.

This needs to be a long-term shift in your behaviour if it's going to work, otherwise you'll get yourself back in the same position again.

[try to hold onto the property!!!]

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Permalink Reply by Miffy on August 7, 2008 at 2:33pm

If you have Foxtel that might be something you could get rid of to cut your costs ;)

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Permalink Reply by Bytta on August 7, 2008 at 4:11pm

I think Centrelink can provide free financial assistance too.

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Permalink Reply by Karen on August 7, 2008 at 4:56pm

While it's true that Centrelink can help, I think Ellen probably needs either to work out her own finances a bit better with some of her own planning, or a financial planner - because she already has some assets but just needs to control spending and saving habits.

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Permalink Reply by Miffy on August 7, 2008 at 4:57pm

Yes, Centrelink is good for those in a bit of financial trouble, although I don;t think Ellen is in that boat:

Centrelink website

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Permalink Reply by ken on August 12, 2008 at 5:22pm

They do not need a financial advisor. They know & Have acknowledged they have a problem. What is the financial advisor going to do, charge them Up to $5000 for what they already know. The best solution is to sell & clear as much debt as they can allowing for CGT there acct can give them this advice at a fraction of the price of a financial advisor. If planning for the future I would suggest looking at salary sacrafic into Super.

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Permalink Reply by Bandwidth on August 12, 2008 at 5:46pm

Hello Ken

Given what little we know about this situation i would see saying this is the best solution to this situation as coming very close to crossing the line between forum discussion and direct financial advice.

This may look like the solution to you that does not make it the best solution for others.

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Permalink Reply by Karen on August 13, 2008 at 11:47am

OK, this is true - perhaps they don't need a planner/advisor, given they already are aware that there is an issue that needs fixing.

Ellen, I think that one of the advantages of property is that there is a forced savings, so it makes you build up wealth. While you may be doing it a bit tougher now, I have seen others get rid of property and regret it later. It's tough to get back in again once you've sold up and transaction costs are a killer. Do you have a budget? What are your biggest expenses? What could you do without?

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Permalink Reply by jacquesk on September 16, 2008 at 3:28pm

Hi Ken
I was re reading some old forums and I re read your comment. Financial advisors can be obtained at a range of costs. Some friends of mine in a situation similar to that of Ellen saw an advisor and it has cost them $1000, not $5000. They considered it as money very well spent.

A financial can take a look at a situation and provide you with strategies and a plan to get out of a bad financial situation and into a better one. That is their value.