# Married, 2 Kids,  Mortgage, Carloan, 3 Credit Cards, Personal Loan....Advice ?



## Ive2MuchDebt (9 Jun 2009)

Hi,

I'm 32 Years old, I have a mortgage (with my wife), I've a lot of debts at the moment and am struggling to keep ontop of them, I've never missed a payment on anything, but I'm finding things difficult at the moment:

I've 3 Credit cards, with balances of, 1300, 800, and the third is almost 9 Grand now. I've mortage payments of 700 per month, I've a Loan with a balance of about 25K, give or take a couple hundred and a personal loan with a balance of 6000, so all in all, I'm up to my proverbial neck in debt, totalling around 33000.

I want to honor my debts so I'm doing my best to pay what's owed, but as I've said, I'm struggling to manage everything along with my general monthly expenses and household finances. 

Myself and My wife both have reasonably good jobs, we can cover most things, but after the 2nd week after pay day I'm finding difficult.

I've considered remortgaging the house to pay these off, but my wife is against this idea, but I've reconsidered this after our discussion and I guess she is right.

I'm basically looking for a bit of advice on what to do here, should I consolidate, or should I just keep on chipping away at them and in 5-6 years, I should be clear.

Any advice, help at all would be greatly appreciated.

Cheers !


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## so-crates (9 Jun 2009)

Could you layout your post in the standard format for this forum? It will make it clearer for others to read.

http://www.askaboutmoney.com/showthread.php?t=61289


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## Bronte (9 Jun 2009)

Welcome to AAM, can you try to do the money makeover section so we have a clearer idea of all your debts and incomes.  If you take the time to fill out all the details you will get better advice.  

One observation - in the current climate you might find that consolidation is no longer available from your bank.


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## dockingtrade (9 Jun 2009)

Im no expert (there are real experts here) but you need to get that 9k away from the credit card.
Dont remortgage, but consolidate the non mortgage debt to one best available low rate loan.
Maybe even talk to the mortgage bank and ask for interest only for a year, then try eat into the loan. 
Make sure ye have your tax bands and allowance split to the optimal level as both of ye are working.
Id say more cutbacks on spending also (if possible). Write down everything ye spend something not so obvious now may pop out. 
I could be wrong but one or both of your kids are under 5 so you're going to have another hit next year.
Once that debt is cleared it will be like on huge pay rise. Assuming both still working you can then over pay the mortgage a bit make up for the interest only year with some extra left over each week.


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## Ive2MuchDebt (9 Jun 2009)

Hi Guys,

Thanks a mill for the replies, I've tried to lay it out as suggested by the Forum, is this ok ?

*Age:
*32
*Spouse’s/Partner's age:*
32

*Annual gross income from employment or profession:*
E54,000
*Annual gross income spouse:*
E45,000

*Type of employment:*
Both private sector employees

*Expenditure pattern:*
We don't have much savings, everything we earn, we spend.

*Rough estimate of value of home*
E330,000

*Mortgage on home*
E280,000 - we've been paying our mortgage for almost 5 Years now.

*Mortgage provider:*
AIB

*Type of mortgage: Tracker, interest only, fixed rate*
Tracker

*Interest rate*
Current Commercial Rate for AIB, not sure what it is though at the moment.

*Other borrowings – car loans/personal loans etc*
Car Loan - 25000
CC1 - 9000 - This card is currenly on 0% interest on a balance transferred of 4500, so I'm paying the interested in the rest at the moment. I think there is another 2 months before the 6 months interest free is up.

CC2 - 800
CC3 - 1300
Personal Loan - 6000

*Do you pay off your full credit card balance each month?*
No

*Savings and investments:*
We have about 4000 in Savings, I have a with profits policy with Royal Liver that I took out in 2000, I've put about 9500 into this, but to cash in now, would probably only get about 8 back from that.

*Do you have a pension scheme?*
No


*Do you own any investment or other property?*
Yes.
We have an aparment in Wexford, it was bought 3 Years ago for 217, but not worth that now, might be worth 180, but would have to sell for 160 to get rid of it. It is rented at the moment, but doesn't cover mortgage, we contribute about 300 ontop of the rent received for the mortgage payment

*Ages of children:*
3 (In August) and 1

*Life insurance:*
Yes.


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## Diziet (9 Jun 2009)

Take your savings and pay the debt with the highest interest (this would probably be the credit card). Can in the policy if necessary - the interest will cost you more than the hit you will take for cashing it in.

Consider if the flat should be sold. You are subsidising it at the moment, which is no good.

Then transfer the money you are saving on the repayments to the other debts. Don't spend it! Once they are gone, make a regular direct debit to a savings account.

And start living within your means. You cannot afford a champagne lifestyle so don't kid yourselves that paying for it with borrowed money will help. What happens if one of you becomes unemployed?


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## infinity (9 Jun 2009)

can you switch the wexford mortgage to interest only ?

you can use the surplus cash to pay down the credit card bills.


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## WaterSprite (9 Jun 2009)

OP, you should post your spending pattern - for a family of 4 with an income of 100k, there has got to be savings.  You are clearly living beyond your means and, considering your means are substantial, with spending cuts I'd imagine you will be able to get the loans under control.

Agree with other posters that the bank is unlikely to agree a consolidation, particularly with such weak evidence of savings.  Also agree with Diziet about the profits policy - if you can get 8k back on 9.5k in this climate, that's not bad going.


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## so-crates (15 Jun 2009)

Hi,

simple things first. 
You have two mortgages but have only listed details for one of them, the mortgage on your primary residence. What are the details of the other mortgage? I am assuming it was originally for about 200k? Or was it for less? Is it also on a tracker rate? If so what is the rate. 
You have referred to "Current Commercial Rates for AIB" as being your interest rate, but if you have a tracker that is not necessarily true. The tracker is tied a certain number of basis points above the ECB base rate. So if, for example, you have a tracker that is always 1.00 above ECB, it would currently be 2%. 

In relation to your credit cards, you say that CC1 is currently in an interest free period. But it seems you have used it since you transferred your balance? You transferred 4500 but now the balance is 9000. Have you been paying this off at all? You say you are "paying the interested in the rest" - does this mean you are paying interest on 4500 on CC1 or your are only paying interest on the other two cards? It looks to me like you have too much reliance on your credit cards. You need to stop spending money on them, this is very expensive debt and it will only get more expensive in two months time when your interest free period is up. I know this sounds preachy but you ought have used that period to pay off the 4500 instead of running up another 4500... Hard and all as it is to take the hit, it may be better for you to cash in the policy and use this to reduce your CC debt immediately. It won't, unfortunately, be sufficient to clear it but it will give you a better starting position to bring your credit card debt under control.

You have a gross income of €99000 between you, €52000 in various non-property debt and are servicing two mortgages one of which is part serviced by rental income. It would seem quite a bit of debt to me but it should be manageable.

I would start by looking at the debt management tools on the MABS website. List and prioritise your debts, draw up a budget which allows you to start making a dent in that debt and stick to it. You are going to have to make some hard choices and sacrifices.

Selling the rental property at a loss may not be the best option. You would still be liable for the difference between the outstanding mortgage and the price you achieve for it. I think for the moment it may be best to hold on this although it is costing you. On the rental property are you paying interest only or are you paying capital + interest? As infinity suggested it would be sensible to have that mortgage as interest only, since it is an investment property. Will the rent cover the cost of the interest?

One thing I would definitely recommend, and this should be done in concert with a budget is to start a spending diary. You are very likely spending more money than you need to or are aware of. Little things each day add up. Are you buying tea/coffee? Each cup is around €2 when you can make it yourself for a fraction of that price. Are you buying bottled water? Again say €2 a bottle, works out significantly more expensive than tap water. Are you buying newspapers and magazines? Do you eat out or buy takeaways? Do you buy snacks during the day? Do you drive when you could walk? Do you get a taxi when you could get a bus? Do you smoke? All of these things add up.

You are in the same situation that lots of thirtysomethings are now facing. Easy access to credit and universal employment has encouraged lax attitudes to debt control and tempted us away from the sensible save and buy. We need to relearn the lessons of our parents in that spending other people's money is an expensive exercise.


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## Bronte (16 Jun 2009)

OP can you tell us the interest rates on your 3 credit cards, 2 loans and also what you are repaying on the investment property.

I agree that you should cash in your policy and pay off the highest interest debt first and you can then using the money you were repaying on this to pay off your other debt as quickly as possible.  Be careful some loans such as the car loan may have a penalty clause.  

You should not consolidate, as based on the figures you've posted and bearing in mind your large salaries you have a lifestyle spending issue.  You and your wife need to tackle this, therefore you'll both have to be honest and do a spending diary.  

Without full figures for the rented property it is impossible to give advice on whether to hold it or sell it, but in any case you should only look at that once you've paid off your other debt.  

You are very lucky in that you have enough of salary to tackle this debt fairly quickly before it gets further out of control.


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## Welfarite (16 Jun 2009)

Have a look at the www.mabs.ie site. Fill in the budget sheets.


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## chlipps (19 Jun 2009)

sounds like you are spending well beyond your means...why do ye have 3 credit cards? pay off CC2 and CC3 first and get rid of them asap  (note you are paying government stamp duties on each). Get a spreadsheet in place asap to record all spending. With more controlled spending on 100k salary you should be able to get your debts under


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