# How to manage finances better to avoid getting into debt?



## DinkDong (11 Aug 2009)

Age: 38 
Spouse’s/Partner's age: 43

Annual gross income from employment or profession: 74K (3250 monthly)
Annual gross income of spouse: unemployed (made redundant in 08) - 200 per wk job seekers allowance (for another 6 months I think) (was approx 65K before hand)

Type of employment: e.g. Civil Servant, self-employed - Private Sector

In general are you:
(a) spending more than you earn, or
(b) saving? - saving

Rough estimate of value of home approx 800K
Amount outstanding on your mortgage: 250K
*What interest rate are you paying? variable rate with AIB - approx 1000 per month (not sure as DH manages - I just transfer 1000 per month) - over 20 years*

Other borrowings – car loans/personal loans etc
DH - Car loan 08 35K (wont sell it - commercial)
ME - Company Car

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? 

Savings and investments:
Me - approx 50K (also various shares from different companies I worked in - really no idea of value to be honest which is really bad form)
DH - approx 45K

Do you have a pension scheme? 
ME - Defined benefit
DH - None

Do you own any investment or other property? 
Investment property bought in 2004 as PPR 365K
current value 300K - Tracker Mortgage AIB 25 years left @ 1400 per month - Rented at 1125 - home insurance 43 - only rented since March 

Ages of children: 1.5 year
(potentially planning 1or 2 more in couple of years pg)

Life insurance: yes - both - me ark life 24.15 per month (not sure for the DH - All our finances are seperate) I look after investment - he looks after PPR)

*What specific question do you have or what issues are of concern to you? *
*I know I am not in a desperate position now but **I am just worried that with DH being out of work long term - that am I managing our finances correctly. I dont want to end up eating up all my savings just to live, especially if the government introduce new taxes etc. I dont want to have to penny pinch so want to help myself before this happens.*

*We have electricity bills of approx 150 per month and also phone of 60 per month and mobile of 80 per month between the two of us. *

*I know that my Investment property is not making me any money but really dont want to sell it as its in a nice development of only a few houses and in a nice area.*
*Also where is the best place to invest my 50K its just sitting in my current account.*
*Have my LO in creche for 800 a month - I would prefer to keep her here but think that this is mad with DH been out of work. *
*Anything else I can do to manage things better please.*
*Am I right in assuming that we wont be entitled to any SW when JSB is finished for DH?*

*Thanks all for the advise.*


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## niceoneted (11 Aug 2009)

I would get your husband to clear his car loan with the savings that he has.
Can you go interest only on the investment property until he is back in some form of employment. 
I assume it's 800 euro not 800,000 euro for the creche. If there is a likelihood that your husband will not find work in his area and he is unwilling to move area of work I would save on the 800 creche fees, as basically what he receives in JSB is paying for this. He could mind the little one. 
Your bills seem excessive - I mean 150 for 1 month ESB, I don't even pay this in 2 months. Phone bills also high. Look at these.


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## Guest116 (11 Aug 2009)

You are also loosing out on about 1,125 in interest per year (after DIRT) that your 50k would make in a 3% savings account. That would pay one of your mortgage payments each year alone.


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## Guest116 (11 Aug 2009)

I think you should consider selling your investment property. Assuming you are paying tax on the rent you are loosing a good chunk of money on that every month (around 500?).

With the mobiles have a look at the new plans from 02, for 20 euro per month you can get unlimited landline and 02 mobile calls.


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## DinkDong (11 Aug 2009)

Thanks for the responses so far. I guess DH doesnt want to pay of the car in case he needs the cash for something else. I will discuss once again with him.
With regard to Electricity this includes our heating etc so its the only utility we have to pay. I dont think its bad - It works out at about 1000 per year.
Will definately look into the 02 plan for the unlimited calls. 
Have not paid tax yet on property but will have to at end of year. I work it out to be around 200 per month but will do the figures again.
Who is best to invest money with at moment to get the 3% as suggested?


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## Guest116 (11 Aug 2009)

Off hand I know that NIB and Anglo have 3% and 3.1% accounts available... (limit of 50k on the NIB one plus few other conditions about withdrawls).


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## DinkDong (12 Aug 2009)

Thanks aristotle. I will look into that today.
Also spoke to DH and the loan is only 17K @ €400 per month and fixed so he cant pay that off. At least not as bad as I thought.


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## Mr DT (13 Aug 2009)

You didn't mention how much debt you have outstanding on yr "investment" property


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## DinkDong (13 Aug 2009)

House purchased at 365K 5 years ago less 10% deposit which we had saved - so 298K left on mortgage I am afraid...


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## Mr DT (13 Aug 2009)

DinkDong said:


> House purchased at 365K 5 years ago less 10% deposit which we had saved - so 298K left on mortgage I am afraid...


 
So yr in debt on property to 550k on a salary of 74= over 7 x income. Not Good.

I'd sell yr "investment" property, why keep hold of it? It deprecating, its not even covering its self and you'll be 63 before you pay it off. Lifes to short.

The fact that its in a nice estate and a nice area are not a logic for keeping it!!! Are u frighten to sell it because you know what a mistake you made buying it in the first place? Are you being optimistic about its value? 

You have savings that could be used to get you out of negative equity if that should be the case. Then you could get back to living a less debt free life and escape being a amatuer landlord.


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## DinkDong (13 Aug 2009)

Thanks Mr DT for the advise.  I am not afraid of selling it because I know I made a mistake. I bought it as my PPR because we didnt think we would get planning which we eventually did after 5 years of trying. I dont think that I am being optimistic about its value. I know I paid over the odds at the time because of the location etc .  At the boom it was "valued" at 500K so its dropped accordingly. My worry is god for bid that if I or the DP needed a house in the future that this would be ideal because of its location, the house and the small no. of dwellings etc. I dont want to end up in a huge development. I know that is in the future but thats why I think I should keep it but the head and my practical hat does tell me differently. I also think that the longer term could generate a better return than now on a property like this and a little bit of me feels that I have invested over 100k (deposit, mortgage + interest) into the propery so far with no return..

I guess we need to discuss this further - it would give we an extra 500 per month to play with or save..


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## Mr DT (13 Aug 2009)

DinkDong said:


> Thanks Mr DT for the advise. I am not afraid of selling it because I know I made a mistake. I bought it as my PPR because we didnt think we would get planning which we eventually did after 5 years of trying. I dont think that I am being optimistic about its value. I know I paid over the odds at the time because of the location etc . At the boom it was "valued" at 500K so its dropped accordingly.


 
This is good news, so in theory you are not in negative equity.



> My worry is god for bid that if I or the DP needed a house in the future that this would be ideal because of its location, the house and the small no. of dwellings etc. I dont want to end up in a huge development. I know that is in the future but thats why I think I should keep it but the head and my practical hat does tell me differently.


 
fine thats more logical than its a nice estate and a nice area.



> I also think that the longer term could generate a better return than now on a property like this and a little bit of me feels that I have invested over 100k (deposit, mortgage + interest) into the propery so far with no return..


 
You are not generating a return so you are right, anything would be better. OK, how long are you prepared to wait? Is it realistically going to happen in this time frame? I guess you can keep it and in the long term(20 years) hope it works out or sell it and not have the uncertainty.

The fact that you took out a loan to buy a car when you had saving that could have been used tells me that you don't seem to be too concerned about debt and paying it back. You do have a lot of debt to service on €74k but at least you are in the public sector and therefore have more job security and better benefits than most. 

I hope what ever you decide to do that it works out for you.


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