# early thirties and too many loans



## nomoney (25 Apr 2010)

Age: 30
Spouse’s/Partner's age: 32

Annual gross income from employment or profession: 49k - €2800 after tax and pension
Annual gross income of spouse: 31k - €2000pm after tax and pension

Type of employment: e.g. Civil Servant, self-employed 
private sector

In general are you:
(a) spending more than you earn

Rough estimate of value of home: at a guess €295k but who knows!
Amount outstanding on your mortgage: €310k
What interest rate are you paying? 2.1% -tracker +1% €1100pm plus morg protection of €100

Other borrowings – car loans/personal loans etc
Loan 1 - €430pm €15k remaining
Loan 2 - €297pm €3.5k remaining
Loan 3 - €170pm €3k remaining
Loan 4 - €375pm €7k remaining


Do you pay off your full credit card balance each month? NO
If not, what is the balance on your credit card? 
Card 1: €6400 - €150pm
Card 2: €7500 - €200pm
Card 3: €7000 - €300pm

Savings and investments:

€1500 credit union

Do you have a pension scheme? 
Yes

Do you own any investment or other property? no

Ages of children: na

Life insurance: yes


*What specific question do you have or what issues are of concern to you? *

We foolishly racked up a lot of debt over the years due to a period of unemployment and stupidly living beyond our means.
Basically we just seem to be living month to month and can't seem to get savings together or even have money for emergencies.
Along with our loans, we have management fees of €200pm, utilities of €150pm phone of €100, car insurance of €100, medical bills of €150, petrol for 2 cars €160, food €350 etc etc.
We just never seem to have any money left or able to save. We can't afford to even go away for a night this summer let alone a holiday. I am awake at night thinking of the loans as if one of us lost our jobs we'd be screwed. Every month we think we should have our self sorted and something comes along eg car repairs/car tax, birthdays, weddings etc.
We don't go out anymore other than than a few drinks in friends house and haven't bought clothes etc in ages. We are married and in our early 30's, suddenly thinking we'd like to start a family soon and that at the moment isn't an option. 

I was thinking of approaching the bank for a interest only period on the mortgage in order to clear one or two of the loans but am wondering is this stupid considering we can pay the loans?

Any advice welcome.


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## circle (25 Apr 2010)

Loans, payments & Mortgage: 3122
Current spending: 1210
Current excess montly cash: 468

You need to focus on reducing your costs and ploughing the money into getting rid of your credit cards, one by one. 

- Move your credit cards to some that have a 0% interest period and use this time to pay off the balance 
- Pay your savings off the most expensive card
- Look at the interest rates on all of your loans and see if there are any options there to refinance at a cheaper rate
- Forget about spending money on birthdays, weddings etc. you cannot afford it. You need to be mentally adding a years' credit card interest to every purchase you make, as this is the real cost to you, and then considering if you really need it.
- Check if you're getting the correct amount of mortgage interest relief, tax relief on bin charges, medical expenses and claim for previous years if you can
- Consider suspending payments to your pension until you have cleared your debt
- Move all your providers to the cheapest option - Electricity, Gas, get PAYG mobiles, car insurance
- Do you need two cars? It might be difficult to manage getting to two jobs with one car, maybe one of you could drop the other to public transport? You need to look at absolutely everything that you spend in a critical way. 

Best of luck, I'm sure you'll get through it


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## D8Lady (25 Apr 2010)

Going interest only may be the only option available but before you approach your bank, there's some groundwork you should do.

0. Take a long hard look at how you got into this situation. If you got 6 month interest free from bank, would you really use it to pay off loans?
1. What is the interest rate fro each of your loans and cards?. If you had 6 month respite, which ones could you pay off completely or significantly reduce. 
2. See if you can move your credit cards to 0% rate or even just a lower rate so that any money you pay is paying off the amount outstanding, not just the interest. 
3. If not done already, you need to stop using credit cards...
3. Medical expenses - is this 150 per month normal? Have you claimed you tax back on med1 form for last year, also health insurance? Have you got drug payment scheme card so that you expenses are capped?
4. Consider suspending pension payments until you have this debt under more control. 
5. Get a copy of your ICB credit report. It will list all loans and will show if you have ever missed a payment.   
6. Contact your bank. Many now have a financial review service. Bring your ICB report, salary slips, demonstrate your credit card switching to reduce costs and your 6 month plan. Then ask for interest only period. I don't think there would be a problem in granting it.


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## niceoneted (25 Apr 2010)

Excellant points already made by other posters.
Start a spending diary - absolutely everything you spend money on to be written down. Cut out on newspapers, birthdays and the rest. 
The 350 on shopping cut be cut, shop around there are greats specials and bargains to be got. I have my shopping down to about 100 a month for one and reckon it would be easier to if cooking for 2 to keep it below double that. I eat very well.
Look at your utilities and note that they should be lower for the next 4 -6 months - longer days and no need for head.
Switch if you can 1, 2 or all cc to interest only periods.
Snowball the payments. Lots of people say pay off excess on loan with highest interest and that makes sense but in your situation I think I would target the lowest amount loan as psychologically it might be easier to see loans actually disappear instead of just reduce. 

Best of luck - a hard 12 - 18 months should see you get a long way.


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## dmos87 (25 Apr 2010)

D8Lady above has an excelling point about the medical expenses. Obviously if these are necessary there is nothing you can do about it, but perhaps see can you lower this monthly amount. Possible reduction of €50 euros or so?

Your monthly shopping amount of €350 for food is also high - switch shopping to Aldi or Lidl for 1 month and you will see the difference. This is what we do, and I buy our meats from a local butcher who does great deals. Aim to get it down by 100 euros this month, and maybe a further 20 the next once your into a routine. Roughly saving €100 per month.

Phone - €100 a month can definitely be reduced somehow. Switch to PAYG, there are great deals on either free calls or free texts every month once you top up by 20 euros. That should show a savings of €60 per month. 

I would also broach the possibility of freezing or deferring your largest loan for a small period (3-6 months) if possible - it would allow you to remove the smaller loan of 3K sooner and would save you on interest if it is a variable loan. IF ANY of your loans are variable, prioritize that one. If you are in a position to do this for 3 months, combined with the 1500 euros in the CU, you can clear the 3K loan. 

Moving forward, do your best to pay the little things like car insurance and tax in full - not only is it cheaper its one less thing to stress about each month. I have only started to do this myself this year and it has helped. Maybe consider downgrading one car? Whomever does the least amount of driving. Either downgrade in year or size or model etc. as this will not only free up some money it will also lower insurance and tax costs further. Combine your insurance to one policy for both of you with one provider - this year I received a quote 300 euros lower for simply stating that I drive my partners car occasionally. I'm 23 years old and I pay 370 euros for the year now with BestQuote.ie (no affiliation - just a happy customer). At yer ages above ye should be paying far less for insurance.

Also, have you considered your options with the CU? You currently have savings there and they allow lending x3 times above what you have saved. It could free up one of the loans you currently have with a bank and the CU generally have a lower interest rate and allow additional extra payments should you have a few bob left each month. check out every avenue and do what you can to clear what has the highest interest - I suspect it is the Credit Cards. 

The best of luck to ye both, stay positive!!


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## jaja (28 Apr 2010)

Check out MABS (Money Advice and Budgeting Service). They are an excellent service with great advice and help with money worries. Maybe some of the loans could be combined into one loan for lower repayments.


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## dubrov (28 Apr 2010)

€100 per month for mortgage protection seems crazy. It must be one hell of a fancy policy. I'd shop around for a better price.

I'm paying a fraction of that for a much larger mortgage


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## doubledeb (28 Apr 2010)

I'm paying €150 mort protection p.m., I have a few health problems (not life threatning BTW) and some family history of health problems, its dual life on 280k!


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## dubrov (29 Apr 2010)

I just entered the details for a couple of 30 ear old non-smokers with a mortgage of €310k spread over 26 years in 123.ie. Basic mortgage protection comes back at €25 per month.

If you add serious illness it increases to €184 per month. I suspect the OP has serious illness cover. Unless the OP has health problems that would only be covered under this ectra, I suggest switching to a basic protection asap


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## nomoney (29 Apr 2010)

Thanks for all the responses.

I checked and my mortgage protection does not cover serious illness. Its €92 pm.
We took this out through a broker when we took out the mortgage should I get back onto the broker or do it myself? When I put my details into the site of Irish Life who I have the protection with it comes back as €42 (one smoker!) so still a saving of €50 so I imagine there is something else included. I have a vague recollection of an allowance if you were hospitalised or something? but we wouldn't need that now, I think I took it at the time as I didn't get sick pay in my last job.

I have also applied for a 0% credit card so I am waiting to hear on that. I didn't think I'd get one as mine are pretty much maxed, payments are just about covering the interest accumulating. 

I can't use the credit union savings as there is a loan secured against it but this is the smallest loan so I will aim to pay this one first and when I get it down to the savings amount clear it off against it.


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## dubrov (29 Apr 2010)

Some types of mortgage protection pay out a fixed amount (usually the initial outstanding mortgage maount) while with others the amount depeciates in line with the value of the mortgage.

The second type is cheaper but more appropriate for most people.

Forget contacting the broker. He probably oversold you the product in the first place.

If you want to stay with Irish Life ring them directly and explain the situation.

Otherwise if you want to switch to someone else you'll need to tell Irish life and your bank that you are switching but there shouldn't be an issue


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## csirl (29 Apr 2010)

> it comes back as €42 (one smoker!)


 
I think you've just found your first significant saving on your weekly outgoings - the smoker has to quit.


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