Debt

kfunnelli

First time posting, all constructive advice appreciated. We have 1450 monthly mortgage (standard house, bought wrong time) plus 500 a month personal loans (car loans, attic conversion - taken out in better times). So although we both working in 30k jobs we are basically screwed every month. We have 900 on credit card and are nearly always maxed - and an overdraft of 500 on. 2 accounts - most months we go over this. We had a bad year - boiler broke, car problems - so added to credit union loan. Personal loans will be paid in 3 years - is it better to sit tight and wait for loans to be paid or try and consolidate to try and have some sleep at night. We trying our best to stick to weekly budget re shopping etc but just can't seem to get to payday without being way in the red.

Snake

You could start by not borrowing so much money. Getting the credit card gone would be a good start they're a drill in the pocket. You might benefit from talking to your local MABS

kfunnelli

Yes that's it with the borrowing - trying to focus now on getting the debt down. The problem is we have no slush fund when things go wrong - and they invariably do! quote="GrayFox208;91349340"]You could start by not borrowing so much money. Getting the credit card gone would be a good start they're a drill in the pocket. You might benefit from talking to your local MABS[/quote]

Nody

//MOD

Please note this thread has been moved from the Works & Jobs forum to Soc -> Personal issues as I think you'll get more relevant advice here; please note that a new charter is now active.

Personal issues Mods if you find it a poor fit feel free to return it.

//MOD

Snake

I can understand how why you're borrowing by the way but when you start to borrow to pay back debts things get messy. Hammer down payments and pay your debts. If I were you I'd get rid of that credit card and even one of the overdrafts it's too easy to use them while there active but if you chop the credit card and cancel the account once it's paid off fully that small thing will make things easier. Just pay your debts and bills etc and when they're paid don't think to borrow more you'll run yourself into trouble really easily mate. Just be careful

thefeatheredcat

I'd have to agree with GrayFox208.... contact MABS and look at what your options are. You're paying interest on each of the loans, it would make sense to consolidate. Have you renegotiated your monthly mortgage repayment? Have you lowered your credit card limit? These are things you can probably discuss with MABS in finding out what you can do.

Have a look at what you're paying in charges with overdrafts, even just for having the facility you can be charged around €30 (bank of Ireland), withdrawals, govt card duty on your cards. With your credit card you might be paying interest charged back to the original purchase date, rather than monthly statement date, so if you don't clear the minimum balance or the whole balance, you're going to keep getting charged from the original purchase date.

Sit down with MABS and discuss your finances, you're servicing too much debt, they will give you the help you need, and if they can't directly help, then can get you onto people who can.

Toots

I've been in your shoes - my husband had lost his job and I'm on long term sick leave from work so our income went from about 5k per month to less than 2k so I went through our outgoings and cut anywhere I could.

If you don't mind me asking, roughly what is your take-home pay each month? You need to sit down and have a good long look at your finances. First you have a look at the variable expenses ie your bills, petrol, shopping etc and see what you can do to reduce those.

What TV package do you have? Could you downgrade it? Same with your phone and internet. Are they all with the same provider? If not, it can often work out much cheaper to bundle them with the one company. For example we bundled the whole lot to UPC and saved about €50 per month.

Have a look at your mobile phones plans. Are you paying more for a package that has more minutes/texts than you're actually using? Would it be cheaper to switch to another network?

Gas & electricity - go on bonkers.ie and put in your details and see what savings you can make. I switched my electricity from ESB to bord gais and my gas to flogas. Inquire about a 'Level Pay' system. This is where you pay a fixed amount every month instead of varying bills, I found this hugely helpful because I could budget better and it took away that fear of opening the bill because I knew how much it was going to be (especially in the winter months when the bills could be higher).

Groceries etc look at where you're shopping, and could you substitute some of the 'own brand' products for more expensive products.

Next you need to look at your debt, especially your short term debt. You're living off your overdraft and your credit cards, which is probably costing you a fortune in fees. If you're going over your overdraft you could be looking at up to €10 per excess transaction which is a massive expense. I know you have a loan with the credit union, but are your other loans with the same institution as your current accounts and credit cards? If so, see will they restructure them. Most likely they'll get rid of the overdraft and the credit card (no harm in that anyway) and the restructured loan will be for a longer term, however the repayments will be more manageable than what you're paying at the moment.

As the other posters have said, get on to MABS, they're really brilliant and will sit you down and work with you to get yourselves into a more manageable situation with your debt, while still being able to live your lives.

Best of luck with everything. As I said, I've been in your situation and it's horrible, but keep your head up and don't be afraid to ask for help.

Lou.m

Hey OP it took me a few yrs to clear student loans. Loan companies and banks loan you money for their benefit not yours. There’s this huge disconnect between the way companies think and the way individuals think. Companies have a clear debt strategy. It really puts a halt on so much personally and you don't really see it at the time. I went through some of the worst personal stuff at the same time. Didn't deal with it until now. I am lucky I am not much for material stuff. Living frugally was fine. But it wrecks your head. I am debt free now YAY! But I was careful not to get into the red. Weird I still FELT in the red simply in debt. Maybe thats to do with my feeling about what the debt went on and guilt on my part I don't know. Also I was unwise in the type of college debt I got into. Debt was scary for me.

Balancing loans against each other whilst you have interest on both is like trying to fill a hole with a hole. They collapse into each other. You are getting another loan to pay off debt without consolidating. Usually taking out a loan to pay one is to consolidate a loan. You already have personal loans. And someone mentioned transferring the balance to a lower rate credit card if you can. You need to move beyond covering interest.

You have different types of debt and should treat them differently.You should only consolidate your debt if you are able to significantly reduce your interest rates, and are able to pay off the new debt in roughly three years or less. So obviously that will not be the mortgage. Usually consolidated debt is not investment debt. Mabs can help you realize if focusing on one debt at at time is best or to consolidate depending on diff rates.

Consumer debt must be avoided like the plague. When you buy anything worth €100 and you pay it back in one year you will pay on average about €120. This is just dumb. You not only bought something that you probably didn't need but also paid 20% more.

Investment debt is a whole different game and you should be making controlled decisions on what to invest in and what not to. If you could borrow at a 2% rate and be guaranteed to make 5% it might make sense. Your mortgage should be your investment debt. It all depends on whether your return on the money is greater than your cost. For things like groceries it makes no sense. For a car it makes no sense. For property it might. So can you trade in stuff for cheaper stuff? Sell stuff you don't need.

Also look at your tax situation and what breaks you can get if any. What is tax deductible?

Bank charges and interest charges are great to start with but it sounds like you are not touching the principle sum you owe a lot of the time. You need to run the numbers and realize what your income can handle. You say you are in the red each month. Do you expect your income to grow? Because your interest is growing. Can you increase your income?


Remember we are average morons not real estate investors and getting into debt with the hope of it being worth it might not make sense for us. The personal cost alone is worth thinking of. Get any free advice you can. Take there advice not mine! I'm an average moron!

Work a cash envelope system! No cards! Work a spending plan. Without an emergency fund, your finances are at the whim of any urgent situation that comes up. Unexpected medical bill etc, if you don’t have an emergency fund, you’ll either go into debt to pay for them, or you’ll sacrifice your debt repayment for this month to pay for it.
And get an emergency fund.

And keep your spirits up and your head strong. Weirdly credit scores punish people being debt free sometimes , if you live debt free and beneath your means. A well-managed credit card or two can definitely contribute positively to your score, without a credit card, a good credit score can still be built using any type of credit that’s reported to the credit bureaus, such as loans, home equity lines of credit and retail cards. Get to a point where you don't need that card.

Run the numbers get advice and get a plan. Learn what debt makes sense and what does not. Every year is a bad year, in some way. Life is not money it is not the most important thing so remember that. What is worthwhile investment debt and what is not?

There’s no cost to open the line of credit, and there’s no cost IF you never access it. But judge on whether you can do that or not ..if not ditch the cards.

My friend gave me this mental game to play...there is an evil gremlin stealing your money..you have to be two steps ahead don't let them win!

Sit down with MABS run the numbers and come up with a plan not just for structuring your debt but for spending.Pay balances off high to low pay the highest interest rate loan off first if poss. When you pay off one loan you have more money to throw at another.

Remain, sane, cheerful and human. And seriously take advice from someone more clever than me. Apologies if what I said was largely rubbish. {:-)

kfunnelli

Thanks guys all v helpful. We take home over 4k a month so on paper we should be fine. Obviously 2k goes on mtg & loans before we even pay a bill, we also have reasonable petrol and childcare costs. If we could start the month without being behind/in the red, we'd be fine I know we could live on that wage - I know there are plenty out there in worse positions and we lucky to have jobs.
We in contract with phone provider until November am changing then, only have basic sky and shop around for all others. Also aldi is my new best friend - brands are a thing of the past. I know I need to get bank account sorted - aiming now to get c card and overdrafts gone. Thanks