# FTB with money probs - am I making the best decisions?



## rsta (5 Sep 2007)

Age: 28
Spouse’s/Partner's age: n/a

Annual gross income from employment or profession: €31K
Annual gross income spouse: n/a

Type of employment: admin staff

Expenditure pattern: I get paid weekly and I'm always down to my last tenner the day before pay day.

Rough estimate of value of home: €210K
Mortgage on home: €210K
Mortgage provider: EBS
Type of mortgage: Tracker, interest only, fixed rate: Fixed rate, and I'm paying interest only for the first 3 years.
Interest rate: 4.99%

Other borrowings – car loans/personal loans etc: Personal loan with credit union - €4500 - I'm paying in €40 a week.
I own my car.

Do you pay off your full credit card balance each month? No, i pay about €20 a week.
If not, what is the balance on your credit card? €900

Savings and investments: 
Credit union savings of €1500 - I put in €5 a week. 
Rabobank savings of €400 approx - I put in €10 a week

Do you have a pension scheme? 
No

Do you own any investment or other property? 
No

Ages of children: 
None

Life insurance: 
yes


*What specific question do you have or what issues are of concern to you?*
My weekly wage is €500.  My mortgage is €700 a month, each week I put aside 200 out of my weekly wages for the mortgage and any bills. Then 40 and 10 goes out to my loan and savings.  Leaving me with 250 a week.  I spend about 60 a week on petrol and 50 on food. Leaving me with 140 approx.   I always seem to be left with nothing the day before pay-day.  How can i manage my money better? I keep dipping into my savings account. I've only moved into my house about 6 months ago, but feel im struggling. Its so difficult if an unexpected expense comes up, for example I had to go to the doctor last week and that was 50 and then 30 on the prescription.  I know i can claim 20 of the GP bill back on the VHI, but that takes ages. Living week to week is worrying me. 

Is it worth keeping the rabo account going? Its only a tenner a week.  

Should I take a loan to pay off my credit card and then cancel it?

Half my wages are gone each week before I can even buy a pint of milk.

Am i making the best of my money situation or can I do better?

Any suggestions or advice welcomed.


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## paddyodoors (5 Sep 2007)

Hi Rsta

One quick observation - you should not be saving when you have high interest debt - priority should always be to repay this.

Look at this very simply: 
How much are you charged each month on your credit card?
How much interest do you earn on your credit union savings.

In a nutshell, raid the CU savings and clear the CC.


Paddy


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## Martinslan (5 Sep 2007)

Suggest you take the €400 out of Rabo and pay off the c.c ...That gets the balance down to €500 ...then move it to a zero interest rate for six months and use the €10 Euro a week "savings" to get another €260 cleared off it. Then move again and clear it off with the second 6 month deal.


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## Martinslan (5 Sep 2007)

Sorry I did not see you are paying €20 a week off the c.c. anyway to move it to zero rate for 6 months and add the €10 euro and it will be long cleared off with the balance from rabo


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## moondance (5 Sep 2007)

Do you have a spare room you could rent out? Could you car share with anyone to reduce petrol costs or get a car that's more fuel efficient?


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## MrMan (5 Sep 2007)

Would you consider taking in a lodger might free up some extra cash that you could put to savings.

Definitely clear the cc bill, it makes no sense sitting on the interest every month, if i had to go hungry I wouldn't pay interest on a cc.

Otherwise you are living pretty much as most people except you are lucky enough to have a home of your own at 28. Your financial situation may improve with time, I wouldn't overly worry about it because your not being flambouyant with you money.


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## irishlinks (5 Sep 2007)

You more than likely will  qualify for a GP Visit card - which would mean free GP visits . See  http://www.medicalcard.ie/calc.htm  to find out if you do.
Also  - you say you have 140 a week left over - what doe that get spent on? If you can tie down where that 140 is going and control it - that is where you will find the savings if there are any.


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## marathonic (5 Sep 2007)

I assume that you can't remove the entire €1500 from the Credit Union with your loan but can you take any of it out? If so, withdraw as much as possible from the Credit Union and pay off some of the credit card bill.

Definately stop the €10 savings to Rabo and the €5 to the Credit Union and redirect this, together with the current €20 per week, to the Credit Card.

You may prefer to keep the €400 in the Rabo account for emergencies but I'd suggest to pay it off the credit card too. You can use the credit card in emergencies but make sure not to use it unless totally necessary, i.e. don't carry it around.

Even if you keep the €400 in the Rabo account for emergencies and can't withdraw anything from the credit union, you could cut up the card. The worst case scenario is that you'll then be paying €35 per week (€20 + €10 + €5) which is €150 per month off the CC. That should have it cleared in less than 7 months.

You can then redirect the €35 per week to the credit union loan which, when you consider your savings, is €3,000. You'll now be paying €75 a week towards this or €325 a month. It'll be clear in less than 10 months.

That means that, without worrying about where you're spending the €140 a week you mentioned, you can be debt free in less than 18 months. Of course if you cut back to, for example, €120 per week instead of €140 this will go even quicker.

You can then work on saving the €75 a week in Rabo and building up on the €400 you already have. You should aim to have a reasonable amount of money in Rabo for emergencies before the 3 year interest only period is up on your mortgage.

Things will always be tough when you purchase your first home. However, as your pay increases every year, it will get easier.


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## irishlinks (5 Sep 2007)

Also - one more thought - do you need the health insurance? If you think you really do then Quinn seems to be cheaper then VHI and switching can be done at anytime.
You mention life insurance. Is this just the basic mortgage protection insurance or do you have more?


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## ClubMan (5 Sep 2007)

rsta said:


> Other borrowings – car loans/personal loans etc: Personal loan with credit union - €4500 - I'm paying in €40 a week.
> I own my car.
> 
> Do you pay off your full credit card balance each month? No, i pay about €20 a week.
> ...


As ever ... saving while carrying debt makes no sense in this sort of situation. Use your savings to reduce/clear your debts and only worry about saving again when you are clear.


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## bleary (5 Sep 2007)

rsta said:


> I know i can claim 20 of the GP bill back on the VHI, but that takes ages.


Are you paying for the day to day cover is it really worth it ? 
Is the amount you are paying for that less than waht you typically get back?
Also clear your c/c


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## Madangan (6 Sep 2007)

OP,

sure shop around for vhi/vivas/quinn but dont cancel altogether.I seriously considered cancelling my vhi a couple of years ago but didnt.I was 34 as healthy as a trout and out of the blue I ended up in hospital for 3 weeks needed every test under the sun and finally major surgery on a vital organ. My hospital bill was over €7,000 and it was never a worry as it was totally covered by vhi..best money i ever spent. Cancelling vhi etc... is seriously penny wise and pound foolish...your health is your wealth.

Definitely think of taking in a lodger on rent a room scheme.. even if only for a year..you might end up with a new friend out of it as an extra bonus!


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## irishlinks (6 Sep 2007)

Madangan said:


> OP,
> 
> I ended up in hospital for 3 weeks needed every test under the sun and finally major surgery on a vital organ. My hospital bill was over €7,000 and it was never a worry as it was totally covered by vhi..
> Definitely think of taking in a lodger on rent a room scheme.. even if only for a year..you might end up with a new friend out of it as an extra bonus!


 
But - that 7000 cost was because you went private. You could have had the op and tests  for free if you weren't insured. You would have been charged 60 euro per night (capped at 600 euro in any year) for using the bed.
 For a young single person I feel health insurance is an added extra that could be done without if income is tight.


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## pinkyBear (6 Sep 2007)

I think you are doing quite well. When you purchase a home for the first 2 years financially it is tough.
I would agree with the others about clearing the cc, one less debt hanging over the head. 

Renting out a room that will really help. We did that for the last 2 years (we no longer do it). have a look at gumtree.ie and daft.ie as you can advertise for free.

What I found is try and minimise the DD's comming out of your account on a monthly basis, you can use your savings to pay car insurance and stuff. 

If all else fails: and I know this is a tough suggesting but you could try and find a second job - I doubled jobbed it for 3 years.. Maybey a shop - on a saturday for a few hours....
P


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## ClubMan (6 Sep 2007)

Before taking another job the original poster should definitely seriously consider using existing savings to clear existing debts.


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## Madangan (6 Sep 2007)

irishlinks said:


> But - that 7000 cost was because you went private. You could have had the op and tests for free if you weren't insured. You would have been charged 60 euro per night (capped at 600 euro in any year) for using the bed.
> For a young single person I feel health insurance is an added extra that could be done without if income is tight.


 

I did not go private, I entered as an emergency case through a+ ethe bill included surgery and all sorts of weird and wonderful tests, I came out looking like a pincushion.If VHI hadnt paid I would have had to as I would not qualify for any type of medical card. 

IMHO  Young or old health insurance is not an added extra! I was only 34 and thought I was in perfect health!
Anyway if you have ever had to wait on a waiting list for tests or to see specialists you would appreciate private health insurance..it can be  alife or death situation.


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## ramble (9 Sep 2007)

Madanga, I know this forum is not about medical expenses but I had to point out that we have universal  health care in the public system.  You were billed because you have  VHI.  Anyone entering a public hospital through an A&E (exceptions for non- residents etc) is entitled to free care save for the 60 euro a night  (capped at 600) mentioned by another poster.  If you did not have VHI you would not have gotton billed beyond the 600 euro.  With a medical card you don't pay the 60 euro a day.

There have been some articles in The Business post about whether from a purely financial point of view health insurance is a good idea.  Unfortunatley for someone on a low income with no savings it is probably necessary because it allows you to queue jump for elective procedures that  could put you out of work for months if you had to wait on a public list.  If you are well off, young and have savings and especially if you pay tax at the higher rate health insurance does not make financial sense.  For the poster he probably needs it, for example if he needed his tonsils out he would loose a lot of days at work before getting the operation in the public system.  He'd have it immediately with VHI.

If he were a young healthy investment banker with a few bob in the bank he could pay the couple of grand for the op and get a tax rebate of 42% of the cost.


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## rsta (10 Sep 2007)

Hi everyone, I’m overwhelmed with all you replies and sound advice.  Thank you so much.

I agree Paddyodoors, Martinslan, MrMan and everyone else who advises to pay off the cc, the interest is high.   So I’m going to cancel the Rabo 10 a week and add it to the 20 to pay off 30 a week into the cc.  

I’ll leave the money in Rabo for emergencies or to put towards my car insurance/tax.  My car insurance should be gone down a bit more this year, its up for renewal in October so I will shop around for sure.

Thanks to Moondance and MrMan who suggested a lodger, it would be a help financially, but I love having my spare room for family and friends to stay in when they visit.  At least twice a month I have guests in the spare room, so if I can manage with out a renter I will. Good idea though. I’ll keep it in mind.

Irishlinks, that’s a great website! It looks like I might be elligible for a Medical card, so I have rang my local HSE this morning and they are posting me out an application today.   If I am elligible then I will switch from VHI to Quinn’s lowest health insurance which is only 331 a year, (as it doesn’t include money back on GP visits, which I won’t need if I get the Med. Card)  I’m paying approx 520 a year with VHI.  

I think you asked about my Life insurance too?  It is level term to cover the mortgage only.

Marathonic – great advice on paying off the cc, loan, then working towards building up the rabo savings.  I am so stuck in the present right now that I never though of what will be my situation when the interest only payments finish, and my mortage will jump up by a few hundred a month.

Also, the 140 that I have left gets spent on going out on the weekends, also I smoke (gave up for 6 months and only back on them a few weeks ago, have to give up again) then there is always something each week, need something for the house, someone’s birthday present… 


Thanks everyone so much for all your replies I’m taking them all into serious consideration, even the second job! Might do bartending again one night a week..

Rsta


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