need to pick brains on refinancing

S

sarahhurray

Guest
I would like some advice on what to do next. I not sure how to approach our shortage of cash. My partner and I have a take home pay of just under €3500. We find it hard to manage. We both expect our income to increase substantially in the future due to training etc. so I want to balance paying debts with having a quality of life.

We bought an apartment last May for €185,000. We got a mortgage of €172,000 and a loan from my partner's parents for the deposit. Our repayments are about €700 a month. We have loans totalling about €12000. Which break down as
€5000 credit cards about €300 a month repayment
€1800 computer (scary interest rate) €70 a month (3yrs)
€3000 college fees loan €115 a month over 3 years
€2000 legal fees with credit union €65 over 2/3 years

I spoke to IIB about refinancing and they said €12000 over 3 yrs would be €350 or over 5yrs €218 with legal fees of €750 and a valuation of €127. The problem here is we were hoping to refinance at some stage to pay back the €13000 we owe my partners parents.
I guess the new kitchen will have to wait. We also have €1000 service fee due since last June and obviously due again in a few months.Plus my partner needs an implant and €1000. Aghhh!!!!!!I guess the new kitchen will have to wait. We're also engaged to be married.
any ideas?
 
Not an expert but first thing I would do is pay off the computer by getting a loan asap. Its price in the shop as €1,800 (pcworld or Dixons probably?). Over 36 months you will pay back €2520 on it! Ouch.. Your paying about 140% of the original cost of it over 3 years. So even break that down and its 13% a year interest. Some credit cards might be cheaper than that.. I think some personal loans are

Check this for loan deals
www.askaboutmoney.com/clu...ONAL_LOANS

Seriously there are far better deals on offer than the likes of Dixons and so on.

My own two recommendations would be
www.marx-computers.com
or
www.elara.ie

Or better yet Lidl or Aldi as they occasionally do great deals on machines. I know you have already got the machine so its a mott pointbut if theres anyone looking at this then it might be useful for them to know.

Anyway thats the first thing that hit me.

On the marriage side of things, registry office is always good... I don't understand the current mania for massively expensive weddings in the country. Especially with everyone in so much debt. Anyway thats just a personal opinion, everyones different.
 
too late I'm afraid

The computer was bought in Nov 2002 on one of those 12 mth interest free then we smack you with it jobs. Too late to be clever about it so I just want to pay off the balance with a sensible loan, it's the balance that is €1800.
We're not planning a lavish wedding, I just threw that in at the end because I feel so far away from saving for it. (don't think we'll do a registry office thing, don't want to do a catholic church thing but want some ceremony. anyway that's besides the point.)
Should we go with the mortgage refinance option? buy loads of scratch cards?
 
Re: too late I'm afraid

Refinancing may work as a once-off opportunity to get your cashflow under control. However, there is a real danger that unless you get your spending under control, you will refinance and then find yourself with another pile of short term debt in a couple of years time. As a first step, you need to look at your monthly income and outgoings, and reduce your outgoings to match the incomings. Refinancing may be one part of this adjustment, but it is unlikely to be the sole solution.
 
Re: too late I'm afraid

how is it done rainyday?
We live in Dublin and we're always trying to watch our spending but then we're 28 and thirty and we like to go out for pints sometimes and go for a meal now and then. I don't think we're very conservative in our spending but we never go to clubs, we usually have friends over , or have just a few pints out, and our meals out are in the likes of Gotham not exactly extravagant and not very often. We spend very little on anything else, our wardrobes are a disgrace!What are we missing are you supposed to live like a monk or do you just need to earn buckets?
 
The links and resources mentioned in this topic might be of help to you:
 
Re: too late I'm afraid

No easy answers, Sarah.

Good suggestions would be to first of all start tracking your spending by category - you will almost certainly be surprised by how much you are spending on certain things and see opportunities to cut back. You should also focus on clearing your most expensive debts (computer loan & credit cards) first to minimuse your interest payments.

You also need to prioritise your spending. Something just has to give - if you continue to spend more than your income, you are mortgaging your future (and your childrens futures) for your current lifestyle.

My niece & her boyfriend were in a similar position to yourselves, and found that by adjusting their lifestyle (less socialising, more cost-focused grocery shopping, avoid the local SPAR/Centra), they were able to start saving a substantial amount each month towards their future.

The answer must come from within. No-one can provide the solution for you. If you don't come up with and own the solution yourself, it just wont work.
 
Re: too late I'm afraid

We did work out once what we spent in a month and we actually don't fritter that much, it's constant expenses, bupa, dental bills, little costs and big costs here and there that end up eating away at our cash. I don't think we can realistically change much, as just once weekend relaxing about spending and we're broke. we buy a lot of our shopping in the supermarket, and are very price conscious.We do sometimes pick stuff up in centra, but we both work, we don't drive and it wouldn't be realistic to always go to LIDL.
We socialise as much as we need to keep sane, don't think we could cut back much more, we drink dutch gold beer at home for god's sake.
We are thinking long term of leaving Dublin to live somewhere more reasonable.
In the meantime I think we'll go for a three year or five year loan with the bank and save the remortgage for the in-laws payback.
thanks folks for the input.
 
Re: too late I'm afraid

According to your original post you are paying about €550 per month servicing debt. Another 700 on the mortgage. That leaves 2250 for living. That's more than most people take home!!!

Given €3500 take home that's only 15% going towards your debts. Which wouldn't be considered a serious debt problem.

Even when you include the mortgage, only 35% of your take home pay is going out on debts.

Are there any other big regular monthly costs?

Is it really this expensive to live in Dublin now?

-Rd
 
Re: too late I'm afraid

I think you have hit the sweet spot daltonr. There is not really a big debt problem - its a lifestyle problem.
There is around E600 available per week for living after debt and accomodation is paid. It a lot more than most have!
 
Re: too late I'm afraid

I make it 2250 left after debt and accomodation is paid.

3500
- 550
- 700
_____
2250

Am I missing something?

-Rd
 
Re: too late I'm afraid

House Insurance
Life Insurance
Car Insurance
Petrol
(since I presume there is a long commute involved here)
Electricity
Phone Bills

Out of the remainder you take
Groceries
Savings (if any. SSIA?)
Any other expenses

Well based on my own monthly bills the above are common enough. So factor these in and you have the real amount left over. If there is a surplus then it requires a bit of management.
 
yeah it's all the caviar

Last saturday we had champagne and chocolates for breakfast. It cost €13 for the champagne and €1 for the shared bar of lilly o' briens. see I'm very thrifty.

I've done some maths folks:

700 mortgage
550 loans + 50 token payment to the in laws
70 life insurance = bupa (for one!)
90 ssia
80 ESB
60 vodafone
20 O2
20 ntl
total 1642
i pay 170 on counselling for a course I'm doing and that's a cheap rate

so now its 1812
my partner has had a lot of dental work root canals and the like so that was 390 this month. I spent €65 at the docs this month. The dentist will need around 300 for the next three months anyway.
so total €2267
that leaves €1233
€600 a month each
€140 a week. not bad if you just need to buy food and spend €50 on socialising. But life just isn't like that, and in Dublin you leave the house you spend €20.
For example We went to a wedding last weekend and I spent €85 on a dress, €45 on shoes, and €20 on costume jewellry. I had no other dress, and no dressy shoes and the necklace was really nice. so €150. That's before spending money, or the gift.
This weekend I really want to get some DIY done, so we want get an attic ladder that's €60 at the cheapest. I want to paint the bedroom that's about €40. I want to go out too, call me crazy. you get the picture.
Now guys, you breakdown how you live so well and save billions and give me some tips!
 
Re: yeah it's all the caviar

While it may be small beans in the larger context note that some dental expenses may be covered by PRSI treatment benefit and some otherwise unreimbursed medical and dental expenses may qualify for tax relief:

www.welfare.ie/publications/sw24.html
[broken link removed]

You should use one of the budget spreadsheets in the topic I mentioned above or the one on [broken link removed] to do a full and detailed account of your income and outgoungs and then see where savings may be made and which debts need to be prioritised for tackling.
 
Re: yeah it's all the caviar

I think you need to ask Charlie Mc Creevy about the saving (or frittering away) of billions :)

I think the points you made are valid but the simple fact of the matter is if you're constantly spending more than you can afford then you are just storing up trouble for the future. I have a relations 21st next month and 3 different cousins weddings this summer to go to (and buy gifts, hotels, all the usual). We have set a limit on the amount of money we are going to spend on all these things this year as otherwise they get completely out of hand.

I've found the internet a great way to stop myself impulse buying (oddly enough). If i'm in a shop and see something I really need (so I think) I usually stop and tell myself I could find it cheaper on the internet. If its something I really do need or want I will go and find it cheaper online, otherwise I usually end up forgetting about it. Surprising how much that has saved me in recent times. Also the old question of "do I really need it" has to be constantly on your mind. Especially if you live in Dublin (or most parts of the country) as the cost of living and good/services is patently overpriced.

We occasionally get chance to do a decent shop up in Lidl down in Newbridge and compared to Tescos and the rest it definitely saves us money.

Given that we (my girlfriend and I) are in a 2 car situation as well I've been trying to figure out a way to get rid of one of the cars and use public transport (which will mean changing jobs or else finding a pot of gold to be able to buy somewhere with easy access to transport to the area I work). If we can do that we can trade the two cars in and get one half decent one if needs be and cut the insurance bills down by putting me as a named driver on the car. I won't be using it very often in those circumstances and being male I add quite a bit of cost to the insurance.

We recently setup a joint account in NIB (Freebank) which is freebanking as long as it has a positive balance. Internet banking and phone banking are both pretty good on it. We calculated our likely monthly outgoings, added a bit on top of that and both put in half that figure a month. All the shopping and regular bills come out of that account and it works as a means to allow us to budget our spending. We still have our own accounts as well but that we can use for our own bills, purposes and the like. I've found it one good step towards sticking to a budget so far though.

Anyway we have diverged quite a bit off the topic of refinancing here so perhaps someone else can be of more help in suggesting refinancing routes that won't cost you an arm and a leg in the long term.

(I just realised I've been staring at the screen to long. Gettng mixed up in which threads I'm posting too..)
 
Re: yeah it's all the caviar

Hi Sarah - A general point first - an expansion of the point I made earlier - and a poor attempt at amateur psycho-analysis on my part (in the best traditions set by financial advisors like Alvin Hall & Eddie Hobbs).

I'm concerned that you seem to be 'externalising' the problem by pushing other people to find the solution for you. No externally imposed solution will have a hope in hell in succeeding. Unless you internalise this problem and decide YOURSELF that YOU have to reduce YOUR spending, you will continue to get into higher & higher levels of debt.

Now the specifics - Cancel your future contributions into the SSIA immediately. It makes no financial sense to be paying high-interest rates on your computer loan & credit card loan while putting money into the SSIA. 60 for a mobile phone bill seems to be a little on the high side too - Could this be reduced via more sensible usage of your phone?

Is having your computer at home more important to you than clearing your debts? Is doing your counselling course more important to you than clearing your debts? Is painting your bedroom more important to you than clearing your debts? Can you make do with a cheaper folding stepladder rather than an attic stairs for a few years?

But you really, really need to be asking yourself these questions each time you go to spend. The answers MUST come from within.
 
making it stretch

It is possible, but not easy, to manage within your budget.

We have marginally less take home pay, but higher outgoings (childcare).

You just need to get really really money conscious, the old fashioned mantra of "cut your cloth".... Make your Lenten resolution to note every single expendidure. Believe me, you'll think twice before buying the latest "OK".

What strikes me are two things - your utility bills are very high, also you don't seem to plan for big expenses, you put nothing away for expenses like service charge, medical care etc.
 
Re: yeah it's all the caviar

Sarah,

I hope you don't think I was making light of your situation. I was just going on the original numbers you quoted which didn't look so bad.

Based on your additional info I'd say the following.

Your monthly spend on debt including your mortgage is
less than 40%, with the mortgage stripped out it's only 15% of take home, so this is not your problem. Refinancing might not be as appropriate a solution as you'd think, because Debt is not the problem.

You didn't give a figure for food and clothes but you've said already that you're reasonably thrifty so let's assume that's not your problem.

If we ignore the Health/Dentist issues this still leaves quite a bit say..1000 to 1200 per month of disposable income.

The Health issues are currently eating into that, but only by about 400 per month and unless I read you incorrectly this has been a recent thing.

So, there's still a black hole of about 600 to 800 per month.

Some other areas I can think of:

Service Charge: €80 p/m
Cars? Repayments? Tax? Insurance? Petrol? Parking?
Furniture? Appliances? Have you been spending much
each month on these since moving into the house?
Books? These are my weakness!!
CD's DVD's?????
Computer Supplies Peripherals, gadgets?
Lunch at work? €5 a day each is over €200

When you do the figures for what you're spending you need to be VERY specific. If you add up all the expenses and there's a couple of hundred Euro that you can't explain then you've got a black hole and you need to find it.

There may be some savings to be made, e.g. Dentist Treatment in Northern Ireland. But before looking at savings you need to be sure that you've first identified ALL the spending.

The Health issues are hopefully short term so don't treat them as normal expenditure. When you get on an even keel these will be paid for out of savings, so they shouldn't be part of your day to day budget just yet.

Your goal right now is to come up with a monthly figure that you could possibly have left over if there was no health expenses.

Apologies again if my original post appeared to be making light of the situation. That wasn't the intention.

-Rd
 
Re: making it stretch

Your dental and medical work appears to be something that cannot be compromised on, but how many of the other things can be avoided ?

New outfit for wedding ? Second hand shop. I know it is not the same as a new outfit, but there is a trade-off involved.
Painting room ? Maybe it can wait. Maybe it looks awful, but it is going to cost money to paint it.
New ladder ? Is there *nobody* you could have borrowed one from. Family, friends, work colleagues ?
Do you get 'posh' bread from the Spar on a Sunday morning for a nice leisurely read of the papers ?
Do you use your free texts from the web before using them from your phone ?

Refinancing may be a solution, but only a partial one as you will still have large outgoings and a constant income level for the moment.

From the sounds of it (Dutch Gold) you are already economising, but you could benefit from looking in more detail at your incidental expenses and seeing if there was any way to avoid or reduce them.

Hope some of this helps.

z
 
Spending

I wouldn't worry too much about your situation. Your join income is relatively high, and your outgoings, by any standards, are reasonable.

Everyone seems to be an expert right now, having seen Eddie Hobbes on the TV, and of course Alvin Hall, but these analysts deal with chronic over spenders, in many cases people with clear compulsive / obsessive disorders, mainly for the purposes of entertainment. It is cheap to come up with glib comments like 'cut your cloth' or whatever.

Remember it is good to spend money, it makes the world go around. There is good spending as well as bad spending. It can be good for the soul as well as for the economy. Think about the multiplier effect of spending, how many people are you keeping employed by spending € 50. This is spending in addition to that spent on necessities. It may also make you feel good. Since when did we become puritans.

Even when it comes to borrowing, there is good debt as well as bad debt. Debt to service lifestyle is unwelcome, but debt such as a mortgage, or borrowing to fund education is an investment. It is necessary, and it remains for you to borrow at the cheapest possible rate.

When looking at your spending profile, you have listed several one off expenses i.e dental treatment, home improvements and wedding expenses. These should not be included in you analysis, as they are not part of the pattern for the whole year. Particularly the dental treatment. If that is going to be a issue for the rest of the year, then worrying about finances is the least of your worries (or your partners at least).

Personally, I don't think that you have a problem, considering the plight of many (see the Dire Straites section).

JJ
 
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