The Seven Stages of Grief

Hi Scott,

My fiancé and I purchased our house in December 2021 and had a fixed rate for two years at 2.59%.

With the constant increase in rates, he says our repayments will revert to around $5,000 a month come December, and I am freaking out! He earns $115,000 a year (pre-tax, less his child support!). I earn zero. What do we do? Should we sell our house and hold on to our money until rates come back down and try again? This is so overwhelming and confusing.
 
Natalie
 
Hi Natalie,
 
My calculator just broke: you’ll be paying 70 PER CENT of your take-home on your home loan?!
 
Cracker Jack!
 
So it sounds like you’re in a state of shock …    
 
Excellent!
 
That’s the first step. Now we need you to move through the other stages of grief, and pronto.
 
The next step is denial.
 
Here’s you: “Maybe everything will sort out … and rates will come down … and we’ll be okay?”
 
Here’s me: “No you won’t. Even if rates come down slightly, you’ll be shooting in a paper bag with only 30% of your take-home left over.”
 
Let’s move on to anger.
 
Here’s you: “It’s the bloody bank’s fault for lending us so much!”
 
Here’s me: “That’s it, let it all out! Do you feel better? Good. Still, it won’t change your situation one iota.”
 
Next, let’s move on to regret.
 
Here’s you: “Why did I borrow so much money?”
 
Here’s me: “Woulda, coulda, shoulda … but you did … and here we are.”
 
And now, to depression:
 
Here’s you: “It’s hopeless … there’s no way out.”
 
Here’s me: “This is where most people who are in severe debt end up: feeling defeated and depressed. That causes them to stop talking to their lender, and the situation gets worse.”
 
Natalie, I know it’s hard but you need to break through to the final stage of grief – acceptance and hope:
 
You may need to accept the harsh truth that you can’t afford your home based on your current income. So, unless the two of you can bring in substantially more, it’s likely you’re going to have to sell your home.
 
And what about the hope?
 
Well, the hope is that you take control of your situation early, rather than letting things happen to you.
 
So please call 1800 007 007 and team up with a financial counsellor, and take control today.
 
Scott.