Help Please - Debt Disaster

fio1978

Registered User
Messages
11
Hi there,

Im hoping someone might be able to advise!

€41k in debt.

Owe:

€29k to BOI car loans (topped up last yr for deposit for house) 4 of 5 yrs left costs me about €670 per month

€8k - MBNA credit card costs me about €200 per month min repayment (now cut up and not used anymore)

€4.k - MBNA second credit card - costs about €120 per mth min repayment (now cut up and not used anymore)

Mortgage with EBS - €280k. House bought 1.5 yrs ago for €320K (deposit of €40k). Prob only worth about €290K now. Costs €1280 per month.

I earn €43k per annum. Take home monthly - €2830
Partner lost job about 6 mths after we bought house. He is a bricklayer so things dont look good. At the moment he has bits an bobs of work, temp working here and there and nixers etc and is managing to pay his half of mortgage and bills. Left with pretty much nothing for himself.

Im paying:

My half of mortgage: €640 per month
My half of Bills (gas, elec, bins, broadband, phone, aa, insurances, sky) etc €200 per month
Monthly travel expenses to and from work, petrol, toll fares car tax etc €320 per month
My loan - €670 per month
2 credit cards - €400 per month ( thats only paying off the interest on one of them and about €80 a month extra off the other)
Food (€65 euro per week in Lidl for 2 people) - €260 per month

This all leaves me with about €170 a month disposable - I dont drink thank God! But in case of emergency we have nothing! Also, I am making little or no headway with the credit cards. And we have NO savings whatsoever.

I have missed one mortgage repayment and one car loan repayment which I contacted both institutions immediately and am currently paying off the arrears bit by bit. This happened last year when my partner lost his job initially and we have missed nothing since. Im on top of all my other bills and have extra in my gas and elec accounts to help us get through the winter without any major bills. ( i managed to do this when I got a tax rebate earlier in the year and also got 4 new car tyres and car service while I could!!)

I missed a car loan payment about 6 years ago with BOI and I wrote to them explaining my situation at the time - I then sold that car and paid off the loan in full early.

Im thinking if I could start putting €100 a month of the €170 I have left into a credit union savings account. Do this for a few months and then see will they consolidate the car loan and two credit cards. Ive got used to living on nothing so it wouldnt bother me. Id rather be actively decreasing what I owe rather than largely just paying off interest and getting nowhere.

Ive looked at the credit union loan calculator and reckon If I borrowed €36k in about 8 months time to pay off the remainder of the car loan and the 2 credit cards, I would have an extra €400 a month disposable and would be then actually gradually paying off the borrowed capital.

Is this realistic do you think or has anyone any ideas of what I can do? Would MABS discuss with the credit union on my behalf?

We dont spend outside our means now as we physically cant! Noone would lend us anymore money even if we wanted it.
We only ended up in this situation as we stupidly went mad on the credit cards 1.5 years ago when we bought the house to pay for furniture and solicitors fees etc and both of us were working full time at the time and could afford it then but things have now changed.

Any suggestions would be greatly appreciated.

Thanks!
 
You should use your 170 to bring down and clear your highest debt which is probably your credit card. How much are you paying for sky/phone/broadband, can you get rid of them? I don't think a credit union will let you borrow unless you have some savings with them. How much is your car worth? Would it be worth selling it and buying a cheaper car? I don't understand how a car loan was used for a deposit? Have you though about what could happen if your partner can no longer pay half the bills, do you have an agreement in relation to the house. What is your estimate of the value of the house based on? If you give more details of the interest rate you are paying on the debt it will be more helpful for others to give you advice.
 
As Bronte said, you may not be able to borrow as much as you need from the Credit Union if you don't already have some savings with them. €100 per month for 8 months would give you a start on saving there alright, but the amount you can borrow is limited by the amount of savings you have.

Take a look at the interest rate on your credit cards, then look here http://www.itsyourmoney.ie/creditcardcomparison for a card that offers a lower interest rate AND 0% on a balance transfer. Switch both of your current cards to one of those, but cut up the card as soon as you get it. You'll get 6 months of interest-free payments on most balance transfers, which should help you to make a big dent in your credit card debt.

Is there any way that you could use public transport to get to/from work? You should be able to get an annual ticket through your employer, and it would save you a fortune on fuel and toll charges.

By the way, you didn't "stupidly" go mad with your credit card when you bought your house; it's only natural to want to fill your new home with nice things! It's just unfortunate that your partner lost his job so soon afterwards, but neither of you could have predicted that.
 
would it be possible to let out a room in your house? Even if you have a 2 bed, perhaps tidy up that 2nd room and let it out, depending on where you are it might bring in €200-350 per month, and you won't be taxed on that.
As we're heading into Xmas period, there are a number of companies looking for Xmas staff, could your other half do retail for a few months just to get a regular income coming in? Would you consider some evening / weekend work?
These won't clear up your money concerns, but might give you a bigger cushion than you currently have.
The credit unions used to be very specific on 3 x your savings when offering loans, but I believe that this may have changed recently, but I'd still go in and talk to them (or pick up the phone and ask).
I'd second the question on the car, can you sell and pick up a nice small engined japanese 5-6 years that will keep going with basic maintenance for a few years?
Make sure that your family are aware of the situation, maybe not the bottom line numbers, but that his being out of a regular job is putting you under pressure... YOu'll need their support.
Good luck
 
Hi,

Thanks for the responses.

The car is only worth about 6k now and its the only one we have - he has a construction tipper truck type thing which gets him to and from work and does bring in some nixers but is not suitable to go anywhere else in - like if we were going to a christening or wedding or anything, we cant go in a tipper truck and I certainley couldnt drive it to work!

I live in rural north county dublin and while there is public transport, nothing that goes to Dublin West where I work so thats out of the question!

When we applied for a mortgage we were told we could have 95% loan to value and based on this we found a house we loved and put a deposit on it. Then at the last minute the EBS told us they made a mistake with the application and they would only give us 92% LTV meaning we had about a week to come up with about 12K as far as I can remember or the sale would have fallen through. I just topped up the car loan to do this. I had previously topped it up by 3k to go back and do a night course and 1k to get some dental work done which is why its so high now.

My partner uses our spare room as a home office for doing up any quotes etc when he has nixers. He also uses it for storing tools and materials for jobs as there is very little storage space else where. The nixers are starting to pick up a bit as because the house prices have decreased lately, many people are choosing not to move and are getting extensions/renovations etc instead so the small builder has some hope of survival!

A few of our neighbours tried to let rooms but had little response as we are kind of in the middle of nowehere!

Im thinking of a second job. Ive done it before working my full time job during the week and two night shifts in a garage on Friday night and Saturday night. Its tough but if it has to be done it has to be done. It also is barely worthwhile when you consider the tax on it but if it comes to it I have no choice.

Its also just disheartening when I studied hard for years and went to college etc and he completed his FAS apprenticeship in bricklaying and now we are in this rut. I know there are probably people in a lot worse situations then us though and there is not much point moaning about it.


As for the interest rates on the 2 MBNA cards - Im not too sure what Im paying but could find out easily Im sure. Would another card company be willing to take on the comibned total of 12k on a 6mth interest free option do you think??

I have about €700 owed to me from health expenses which is due in any day now and will get me through xmas so at least I will manage that though it willl be a quiet one!


If I took a second job and put every spare penny I had into a credit union savings account between now and next August, I think I could get about 5k together while continuing to pay off the bits that I currently am paying monthly. This would include the few bob I would get from family for Christmas and birthday and my Christmas bonus and next years salary increase etc ( at the risk of sounding presumptuous!!)

Do you think the credit union would lend me 30k based on 5k savings?

If things get worse here he is thinking of going to Canada to work where he has some family and to send money home. Sad but true!

Also just to answer the question - Im basing the current value of the house at €290k on the prices of the other similar houses in the estate.

Thanks,

Fiona
 
Im thinking of a second job. Ive done it before working my full time job during the week and two night shifts in a garage on Friday night and Saturday night. Its tough but if it has to be done it has to be done. It also is barely worthwhile when you consider the tax on it but if it comes to it I have no choice.

As suggested by a previous poster, could your partner take a Christmas job in retail? Most shops take on extra staff for a few months. Some give shifts, so he should still be able to fit in a few nixers.

As for the interest rates on the 2 MBNA cards - Im not too sure what Im paying but could find out easily Im sure. Would another card company be willing to take on the comibned total of 12k on a 6mth interest free option do you think??

The interest rate should be printed on your statement. It will say something like "interest charged at x.xx%". Multiply this by 12 to get the APR. Or check out the MBNA website. Any new credit card provider will look at your history. So long as you haven't missed any payments, there shouldn't be a problem transferring 12k to a new one. I have transferred more than that from one card to another (admittedly within the same bank) without any problems. If there are limits to what you can transfer it should state that on the application form. It's definitely worth doing, though, as at least every penny you pay will go straight off the actual balance rather than being eaten up by interest.

Do you think the credit union would lend me 30k based on 5k savings?
Do you already have a Credit Union account? If you do, then maybe (and I do stress maybe) they'll lend you that much. If you're a new customer, then I'm afraid they'll be a bit more strict. I think, as another poster mentioned, that the rule is no more than 3 times your savings. I know of cases where that limit was waived, but that was for people who had been with the Credit Union for a long time.
If things get worse here he is thinking of going to Canada to work where he has some family and to send money home. Sad but true!

Hopefully it won't come to this! Best of luck.
 
Does EBS allow you to take interest-only periods on the mortgage? If so - and if you're not on a fixed rate which forbids it - it might be worth looking into that, and concentrating on paying off capital on your most expensive debts. Since you're very early in your mortgage it'll probably free up only a little more (~€100 / €110 pm), but it's much more cost effective to pay down your credit cards and then your car loan.
 
I know it is the voice of hindsight but you shouldn't have borrowed for the deposit - you should have walked away at that point. Being that as it may you don't need anyone to point out to you why that is a bad idea. Spending on the credit cards wasn't the best idea either but probably not the worst mistake of the two.

You really, really need to adjust your attitude towards debt. What you are currently planning to do is to save in order to engage more debt to pay off existing debt. Probably because it is a very unpleasant feeling to have no flexibility, no room for manoeuvre and it is incredibly stressful to have to live hand to mouth. Unfortunately, there is no quick and easy fix to this. Paying off extra on your credit card will in the long run be the most efficient and cheapest and surest way to pay off your debt. You would be taking a gamble on being able to save enough to get a sufficient savings cushion built up on which your CU would allow you borrow. Those savings would not be accessible to you while you are paying off your debt in the credit union. Several CUs are now with the ICB so they check credit history in a similar fashion to the bank. The rules about multiples of savings etc varies from CU to CU but a good rule of thumb is that if this is the first time you have borrowed from them it will be at best 3 times - so I would think it unlikely that you would be able to access 30k with 5k savings. However, it is no harm to go and talk to them and ask the question. Why would you want MABS to do this for you? Firstly you need to do this for yourself.

Also think of it this way. If you think you can save 5k, that means you think you can conceivably in the same period pay off the balance on the 4k credit card.... Wouldn't it be better to be rid of that definitely?

You are probably already doing this but you need to cut every expense you can and as ruthlessly as possible. Sky is luxury you can't afford you need to get rid of it. Turn your heating off as much as possible and wear jumpers instead to reduce your heating bill - given that we are heading into winter your bills will in all probability naturally rise from your current expenditure. Reduce your electricity bill as much as possible by ensuring that you switch off appliances, lights etc. Investigate if there is a possible route to work that doesn't involve having to pay the toll (this would need to be carefully balanced against any change in cost of fuel). Really and truly and honestly is it totally impossible for you to use public transport? Even if it means two or more buses? It may not be fun but it may be your biggest potential income expander to get rid of the car. Try and find if there is anyone else in your vicinity travelling to work in West Dublin, they may not be able to take you the whole way but they may be able to drop you at a bus stop that you can use. It is not good enough to say that because there isn't a direct bus there isn't an option. Truly and harshly evaluate whether there is any possibility of changing, the flexibility the car offers you is costing you too much at the moment. Other people I know are travelling 40, 50, 60, 70 miles using trains, buses, trams, bicycles, feet on a daily basis - it is doable.

Find out what the interest is on each of your debts - that should be at the tip of your tongue! I would be surprised if another credit card company would be willing to allow you to transfer but it is always worth asking the question - the worst they can do is say no. if there is any chance of you being able to do this it may be easier to transfer one than two, do your cards attract the same rate or is one more expensive than the other?

Another thing that may be worth asking but may not be possible due to your missed payments and current climes is to request a payment holiday on your mortgage, this obviously comes with the warning that the interest continues to mount but as it is likely your lowest debt cost (interest rate) and your highest salary chunk it would give you some liquidity that you could redirect to paying off your credit card. It may also be worth asking about going interest only for a spell, although the vast majority of your repayment is interest - it isn't the whole thing and it would free up some money.

You are in difficulty but you are head above water, this is something that you can get out of, it isn't hopeless. It will be hard work though, and it will cost you a great deal of effort, time and comfort.
 
Can your partner get a full-time job somewhere? It is unfair on you that he is only doing jobs every now and then. Call centres are always looking for people. A sales job would bring him in a reasonable wage.
 
Hi there,

Thanks for all the responses. My partner is currently looking for full time work but as Im sure you all know - its not easy out there now particularly when your only skill set lies in the one area that has suffered mostly of late - construction. He is not really skilled in anything else - computers -absolute basics etc, he would be used to more manual/outdoors type work.! He has applied for a lot of warehouse and forklift/driver positions but I work in recruitment and am all too aware that the demand for this type of work at the moment is a lot higher than the supply!! But all he can do is keep trying.

I had heard about a government incentive to retrain a lot of the now unemployed construction workers in sustainable energy practices seeing as this is going to be such a big thing in the future. Im sure I heard Brian Cowen talking about it on the news with SEI? Does anyone know anything about this?

I know I made a lot of mistakes with my borrowing - I personally think the main one was assuming that things wouldnt change in terms of both of us being in full time employment. Anyway, there are no two ways about it - until he finds f/t work this is going to be a nightmare but Im willing to work hard to get rid of the debt.


I could get a bus in to town and another one back out to work but I would rather work every hour god sends than do this and we definitley need the car. Like many we had to move a good bit out from where we grew up due to the price of houses at the time. Apart from the stress of the debt, we are kind of isolated in our misery - the car at least allows us to drop in to friends or family. I think without it we would kill each other!

I found €4 in my drawer here at lunch time and am going to buy a €4 Quick pick in the hope of a miracle!

Thanks,

Fiona
 
Quote:
My half of Bills (gas, elec, bins, broadband, phone, aa, insurances, sky) etc €200 per month
Monthly travel expenses to and from work, petrol, toll fares car tax etc €320 per month

Hi,

My simple adivse, as advised already i think, is to cut these expenses above. Examine your ESB and gas bills. It is very easy to cut electricity bills and gas bills substantially. example- my ESB bill is 30euro per month and gas bill is about 40e,and i don't live in the cold and darkness. Check the esb and sei web sites on really simple examples, put the excess saved towards your credit cards.
Cut sky, AA etc.. your car insurance should have a break down service included. Nobody needs SKY.
400 a month between you seems very very high.

Is it possible to cycle to work (i'm not joking)? Or at the very least public transport. You need to avoid the toll bridge.

SEI training for construction people is to train contruction workers on energy efficient measures for people homes. Upgrading insulation levesl, foam pumping, triple glazing etc...Its basically to give people taining on more sustainable energy efficient buildings as this will be a large portion of construction work in the years coming.

Regards
Colm..
 
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Hi

If it helps I am in a very similar situation with my debts. I split with my ex-partner about 2.5 years ago and as a result my monthly outgoings doubled - I pay the joint mortgage in total by myself. Unfortunately I am not in a position right now to buy him out. He bought another house with new GF and does not contribute towards our joint mortgage. I earn €45,150 so thankfully have just about been able to keep head above water but it has been tough as I was left with quite a lot of debt.

Current Situation

MBNA Loan €16,730
AIB Loan €6,900
MBNA Visa Card €5,000
Credit Union Loan €5,300
Total: €33,630

My house is worth about €290,000 with mortage repayments at €1,250 per month (balance on mortgage is €262,000 plus on top of this I have been paying €1,162 per month off my debts.

I have €2,300 savings in the Credit Union and recently took the bull by the horns and wrote a detailed letter to them explaining my situation and to see if they would considering consolidating some of my higher interest debt. They agreed they would clear my visa card and aib loan and add this amount to my existing loan, this will be paid off at €420 a month. This added to my MBNA Loan payment will be €785 a month. Still a lot but my aim is to get rid of these loans as quickly as possible in the shortest time frame and at least each month I see the figures decreasing!

I think you should definitely approach the credit union. Each case is dealt with on an individual basis. I found the most important thing was to make a financial plan showing your current situation and one showing a scenario if they were to grant you a loan. Also enclose loan/credit card statements, a bank statement and a recent payslip. Make an appointment and go see them. Even if they aren't in a position to give you the loan straight away they may consider your application in a couple of months when you have a few bob saved with them. Make that appointment as soon as possible. Good luck, there is light at the end of the tunnel and you aren't alone. A lot of people are in the same boat and at least you aren't ignoring the situation which is the first step!
 
Nobody needs SKY.

Yep. I got rid of my TV about 3 years ago.

Not only has this freed up my time to work on more constructive things instead of sitting on my This post will be deleted if not edited to remove bad language watching TV, but it means I have no Sky or TV licence bill. That's gotta be a couple of hundred a year right there.

I also don't drive - again, this is a conscious decision. I walk or use public transport (and sometimes taxis.) This saves me a couple of thousand per year.
 
Its about 1,000 per year actually on TV alone. Sky is up to 60 a month plus electricity to run your TV, not to mention the waste of time watching most of the crap on tv these days. And wait for the next TV licence increase!

Great stuff..
 
Have you considered selling your house and renting, what is the rent of a similar property in town/near your workplace?
 
Have you considered selling your house and renting, what is the rent of a similar property in town/near your workplace?

In the current climate, potential buyers expect real bargains. It might also be extremely difficult to sell. Not sure if this is a good idea
 
Hi all,

Thanks so much for the responses and advice etc. Ive had some really interesting suggestions too in private mails.

My partner has two interviews for night warehouse jobs next week so fingers crossed. This way he could still do a nixer or two during the week if and when the come up. Im praying he gets one of these jobs - we would be in a great position to start paying things off if he has a steady weekly wage coming in.

Just to reply to some of the questions asked:

Bronte/MeathCommute - To sell this house now I think is madness as firstly we would prob make a loss on it now, adding to our debt and secondly its our home! Absolutely no way - if I have to take three jobs to make ends meet I will! I think I just have to accept that the immediate future is going to be tough but at least I have a home. We have no kids either so at least its only ourselves we have to worry about so if it means beans on toast for the next six months so be it!! I think I would be worse off if I sold it as Id still be left with all the debt but also with no home and paying someone elses mortgage.

Colm5 - Cycling to work?? Can you cycle on the M1 ?? Seriously, Id do it if its legal!!?? I could go through the Naul, Ballyboughal, the Ward and accross that way but would it be safe?? Cant afford to be out of work if I get knocked down or blown off the bike!!! Also, the SEI incentive - how does someone get into this? Ive checked their website for the last few months and I dont see any jobs posted for those who are 'laid off' construction workers?? The only ones Ive seen posted are for Financial Directors and the like!

Thanks again,

Fiona
 
Fiona,

You have a good grip of your financial situation which is a significant first step. Go and talk to MABS to see what they have to say and talk to he credit union about consolidating loans. Neither of these meeting will cost you a penny but could save you a lot.
 
Go Green!

Hi Fiona,

You have the will to do this and the tenacity so I hope you persist in driving down your debts but always remember it just takes one little loan to start edging those debts back up again! Doing little projects around your house or garden might take your mind off the stress of all of this too.

Everyone has given you great suggestions here so I can't offer you much more except to ask you about considering reducing your bin charges - I used to have a bin and SKY but got rid of both. You can give your partner a job by getting him to do the recycling - my local recycling centre is free and nearby and I go once a month - would you consider doing this as it would save you a little per month and use up a little bit of time that might be on his hands ? It would also make more use of your or his car. If you have a garden you can compost your vegetable cuttings. This is how the germans do it, I don't know why we don't do it here more.

Installing a free-to-air satellite dish gives you enough channels with great reception and your partner might be able to install this too for an initial outlay of around €150-€200 - make it a Christmas present and you'll have no monthly SKY bills. Again reducing your electricity bill might be also something you could try to address if you think it's high.

Best of luck
 
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