# Looking for help before things get bad!!!



## Ron_Goulding (27 Jun 2009)

Age: *28
*
Annual gross income from employment or profession: *38,000*

Type of employment: *PAYE worker
*In general are you:
(a) spending more than you earn: *Will be from now!*
(b) saving: *No.*

Rough estimate of value of home: *290,000
*Amount outstanding on your mortgage: *247,000
*
Other borrowings – car loans/personal loans etc: *See Below*

Do you pay off your full credit card balance each month: *No
*
Savings and investments: *None*

Do you have a pension scheme: *None
*
Do you own any investment or other property: *No* 

Ages of children: *None*

Hello all,

I recently took a pay cut from my job and also my partner moved out of my house so I have lost her rental income. I have quite a big personal loan that i took out for further education.(hasnt paid off so far due economy) With the loss of rental income and loosing on average 500 a month from the pay cut, its leaving things very tight. I have a variable ECB tracker mortgage. My figures are listed out below:

9500 Credit union loan (4,000 in savings)
13,000 on 2 credit cards
48,000 personal loan
247,000 left on mortgage

With household bills and the above monthly payments and a small sum for food and petrol i work out that next month my income will be 2500 and my outgoings will be 2700. I have thought that the bank my remortgage me to clear the CC and CU loans but do i really want to loose my tracker mortgage.

Any advice would be helpful as I starting to get worried now and want to try do something before things get bad. I also only drive a car worth about 2,000 so i cant really downgrade that any more?


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## eirefinq (27 Jun 2009)

Short Term:

- Rent a room allowance to look after the extra needed since your partner left, its tax free up to a certain limit.

- Credit Card debt of 13k - apply to other cc companies offering balance transfer rates of 0%. Cut up your current credit card and only use in emergency situation.

- Ask your bank if you can go interest only for a period on the mortgage - if they say yes this will help you re-structure your short term debt issues. If they say no just thank your lucky stars that you have a tracker and that interest rates are so low at the moment and should continue to be at this level for the next year or so. Things could be worse you could be in a fixed rate/negative equity/both scenario.

- Re the 48000 personal loan - you dont mention the original term, how long is left or the monthly payment or the interest rate. I dont know how you managed to get a personal loan of 48k! its a big personal loan. Would you consider asking the CU to take it all on? Or perhaps ask the bank if you can re-negotiate the monthly repayment or extend the original term? The idea here is to reduce the monthly payment to help your current cash flow difficulties.

- Dont get rid of your car or downgrade - you have a car coz u need one.

Medium Term:

- If you can try to increase your shares with the credit union gradually. Perhaps consider investing in some shares also. You need to consider other forms of saving.

Long Term:

- You need to start saving for your retirement NOW. If your on 38000 now and are struggling - think forward to 40 years time when your retired and want to enjoy yourself! You simply wont be able to do that on the state retirement benefit which is currently approx 10k per annum! Ideally you should have your finances structure in a way that enables you to put aside 15% of your gross income into a pension NOW. Think about this. It is VERY important.

I hope that the above proves helpful!


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## Ron_Goulding (27 Jun 2009)

Thanks for that advice....

Re your questions

Im really trying to keep away from the renting a room situation because i only have 1 spare room in a fairly small house and id need to spend money on getting it ready to rent as no bed etc in there / It was a walk in wardrobe for herself so a lot of fitted wardrobes taking up space.

The Personal loan was for 50k over 10 years, Im paying back a total of 83,000 with interest so its a fairly hefty interest rate. Im 1.5 years into paying it!! I did try the CU if they would take it on some time ago as they had a better rate, but I was refused!!This brings me back to your long term plan. I dont hope to be earning 38k in the future, as im hoping my investment will eventually pay off and I can get a much better paid job in the future, so really what im looking at now is to survive in the meantime, until things pick up in my trained profession!


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## eirefinq (27 Jun 2009)

its good that you have prospects for more cash in the future as you progress in your chosen career - my point regarding the pension remains though - the sooner you start paying in 15% the better regardless of your potential earnings in the future! ps its great that your investing in YOU and YOUR future by getting further qualifications - aswell as that though you need to provide yourself with long term options - what if you want to retire early etc...

would you consider trying to sell your gaff and move into an apt or something cheaper? seeing as how your missus isnt on the scene any longer?


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## Ron_Goulding (27 Jun 2009)

Yes id sell tomorrow and rent a room if I could but alas there is a good few houses for sale in my area and they have been for some time?? Saying that tho, my CC bills are from investing in the house with new kitchens etc so that should stand to me...

Im sorry that i didnt sell it to fund the education when prices were at their peak but hindsight is a wonderful thing eh? Im going for a meeting with the bank next week to discuss options, so im hoping we can arrange something, but i may put the house on the market and try to get a decent price, but in the current economy, im not sure if it would sell!!


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## eirefinq (27 Jun 2009)

another option is to rent the gaff out entirely and then move somewhere else yourself - i.e. rent wit someone else - you could save yourself cash in the short term but not loose the house either??


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## Ron_Goulding (27 Jun 2009)

Yes another one worth considering alright ... Cheers eirefing for all the advice ... its really keeping me awake at night at the moment so hopefully i can come to some decent decions very soon!!

Another question someone may be able to answer ... roughly what is the costs of putting a house on the market and say it didnt sell for what you needed, and you take it off?? Would there be big fees to estate agents to take it off the market??


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## WaterSprite (27 Jun 2009)

When you put the house on the market, the only fees if it doesn't sell are usually just the advertising fees - about €300.  You may have extra costs for "sprucing up" the house to maximise your chances of selling.

I think you should delay the pension (IMO), although it is a good idea in general, your debts are such that they should be your priority.  When you get your head above water, then revisit.  

Another option, until your earnings go up, is to consider a part time job.  I know it's hard to think about working at the weekend if you have a 5-day a week job, but your personal loan is big so it may be that, until you get your head above water, it's something to consider.  The CC debt is the priority though as that's the highest interest rate.  So, if you can, as eirefinq suggests, move that to 0%, that's great - otherwise, try to pay that down asap as the interest rate would be crippling.

Best of luck with it
Sprite


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## Ron_Goulding (28 Jun 2009)

Cheers Watersprite...
House was spruced up when we done it up only a few months ago so thats all ready to go .. Im thinking maybe try to sell so and have a few debts paid off!!

Part time job is something i would love to do but i currently do shiftwork so I dont actually have the same days off every week and work irregular hours etc. but i am indeed looking for something that will let me work my own hours...


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## Snork Maiden (28 Jun 2009)

Have you spoken to your credit union regarding changing your repayment plan.  CU are usually more approachable than banks and if you go in and talk to the loan's officer regarding reducing your weekly/monthly repayments this may take some pressure off.  You could than try to use this freed up cash to pay off the credit card debt sooner...The fact that you have such savings in the CU and that they loaned you 9.5k to begin with must mean that you are a long term member and credit unions tend to take this into consideration.

I agree with watersprite, although investing in your pension and your retirement is important it shouldnt be at the detriment of your current situation and clearing down high interest rate debts is more important now.


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## eirefinq (28 Jun 2009)

i disagree with the comments about the pension - i was advocating having your finances structured in a way that allows you to make contributions to a pension now. you could wait 1,2 maybe 3 years but you will invariably find that something else will have come up at that stage which will make it even more difficult to put money aside for retirement. also now is a great time to be investing into a pension as fund prices are low. if you are doing an overhaul of your finances you cant just think of now - if you want to do it properly you must consider SHORT, MEDIUM AND LONG TERM goals!


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## Ron_Goulding (28 Jun 2009)

CU is already restructured, as i did that when I gave up work to study. I hear where your coming from about the pension eirefing, and its something that I will be doing as soon as I get the better paid job in the future but its just not on my priorty list right now. Right now I just need to survive through the short term and keep the head above water until I can get my break at my chosen career


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## so-crates (29 Jun 2009)

eirefinq I'd have to disagree with you on your vociferous advocacy of the pension contribution. The OP is simply not in a position to do what you suggest and the suggestion is of little value to the OP's current plight or future well-being, they have to deal with the elephant in the room first. While planning for the future is always laudable -I think in this case the pension has to go on the back-burner, it isn't worthwhile to pay into basically savings while carrying such high-interest debt. It would be more sensible to look at it as a LONG term goal and PLAN it over the next thirty years rather than thirty months. 

OP, I think from your original post you have already started to tackle your debt head on. The suggestion transferring the cc debt to a zero interest card is definitely worth chasing up but you would still be intending paying your credit card debt. Fundamentally what you are saying is that you can't afford to live and to repay your debt at your current income level.  2500 in less 2700 out means a continuing overspend of 200 pm. 

Your estimated outgoings of 2700, what proportion of that is debt-related? I am guessing your mortgage is the largest chunk? But it would seem to me that there is very likely 2000 of repayments there? 
The repayments on your credit card - are they minimum repayments or are you paying more than minimum in that amount? 
Your cost of living estimates, have you calculated a monthly equivalent for expenses that are not incurred on a monthly basis (car tax, insurance, etc).

You restructured your CU loan already because your circumstances had changed. They have changed again, there is no rule which says that you can only ever restructure once. You need to be upfront with each of your creditors and renegotiate each debt so it becomes affordable.

It may also be worth rethinking about taking in a tenant. Have a look at the rental market in your area and see if it is an option. As for furnishings, you could try looking on the freecycle websites (www.jumbletown.ie, Dublin Waste) for a base for a bed, then all you will need to do is source a mattress. Bedding could be available at your local Gorta shop or Rehab shop etc. There are options other than walking into a furniture shop and handing over cash. You should investigate them. Renting the house as a whole would probably require that room to be furnished anyway so either way it would have to be done.

Extending your mortgage to include some of your other debts (I think you were talking about including at least 18.5k [13k + 9.5k - 4k]) may not be easy. Based on your estimate above you have a LTV ratio of 85% at the moment. Including the 18.5k would push your LTV ratio to almost 92% - this may not be feasible in the current climate. I am not saying don't try, even though I wouldn't advocate rolling short-term debt over a very long-term mortgage - sometimes it is the most liveable option.


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## Complainer (29 Jun 2009)

Forget the pension stuff. It's just a long term savings plan, and it makes little sense to be ploughing money into long term savings while you are heavily in debt. The only real benefit is the tax relief, but this is countered by the fact that the money is completely tied up (no flexibility) until you retire.

You're going to need to make some major lifestyle adjustments. I'd suggest that you get a single bed off jumbletown.ie asap and move into that pokey box room. You can then let out the master bedroom to a couple to maximise your rental income.


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## dubrov (29 Jun 2009)

Some good comments there already. 

A €200 deficit isn't huge and it seems like you have made the first steps to deal with it. If you move the credit card loans as aleady suggested you should clear most of it up.

Here are a couple more ideas.

Have you considered looking around for another job which pays a bit more. I know it is a recession but there are still a few joos going.

Do you really need the car? Selling it could bring in some much needed short-term cash and you would also save on petrol/insurance/road tax/repairs etc.


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## so-crates (30 Jun 2009)

dubrov, I have to disagree with you too! €200 might not seem like a lot of money (I know people who can spend that in a night!) but as a percentage of the OP's net income it is a reasonably large amount (8%). Effectively it means he is paying back a proportion of his debt with debt. Logically what he needs to do is at least equalise his outgoings and incomings. Two ways to do this, reduce your outgoings or increase your incomings.
Moving the credit card loans to a zero interest balance (assuming he can) will not remove this deficit, it will allow him to tackle the balance more effectively but only if he continues to pay off his card at the same rate that he currently is. If he reduces his repayments, when the interest-free period is up he will just be in the same position again.

So he either identifies as new income stream (which I think he has some options on, especially if he takes the sensible suggestion of renting - I like Complainer's idea about renting the larger room to maximise income, the only cautious note I would sound is to make sure it is in compliance with the rent-a-room scheme so you don't fall foul of Revenue!) or he restructures his debt or he does a little of both. He has already said he is looking for extra work but because he works shifts it is difficult for him to get a job that fits with his current job so his best option to increase his income is probably the rental market. Selling his car might net him €2k but given the current depressed car market it may not sell terribly quickly or for that price and he would still have to get around - if he is working shifts, public transport may not always be an option. On the whole while it is worth giving consideration to I think that selling the car may not be feasible.


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## so-crates (30 Jun 2009)

Ah apologies dubrov, you meant get an entirely different job that pays more rather than an extra part-time job ...  sorry


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## dubrov (30 Jun 2009)

I didn't mean to belittle the €200 deficit but I do believe that there are quite a few possibilities of dealing with the debt unlike some other situations I've seen.

You should still have a talk to your bank anyway. You might be able to extend the mortgage by going interest-only for a while without losing the tracker rate.

I still think the cedit card interest needs to be sorted out quickly. Assuming your credit rating is still OK, you should be able to convert that €11,000 debt into free borrowing. Depending on your nterest rate, that could save about €1,500 a year in interest which goes a long to reducing your outgoings. Some offer 10 months intereest free which might buy you enough time to get your finances in order.

The key thing is damage limitationfor the moment. Realistically you will find it difficult to reduce your debt but you need to try to keep it level until a time in the future when you are in a better financial position. If you let the debt creep up it can quikly spiral out of control.


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## Joanne1 (2 Jul 2009)

I would definitely look into letting out that room.  Although you may not be keen on having a stranger moving into your home, the rental income would come in very useful.  And your household bills would be shared.

I'm sure you could easily find a cheap bed...And the rent you take in wouldn't be long covering the cost of it.


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## chlipps (3 Jul 2009)

good idea above by complainer about you moving into the box room.... Rent out the main bedroom asap and use some of the rent (& deposit) to buy a cheap bed. With tenant everything is shared so the 200 euro defecit will no longer exist and you should then have some spare cash to tackle the high interest loan first


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## David Bekham (22 Jul 2009)

A note for your lifestyle, why not think about voluntary work! This may sound made but for years it saved me a fotune. I volunteered in a youth club, Free of charge. My social life revolved around this therefore I met great people and had great crack all very inexpensively. I now don't do this any more and find life quit expensive everything seems to be a cost. My granny  was good with money and always asked the same question before she bought something "Do I really need it? " The answer is usually no. Best of luck with balancing the books if it's any consulation your in a better position than most of the developers and also Brian Lennihan! You wont have a strike if you make a decision not to spend the same amount of money this month.


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## Elphaba (23 Jul 2009)

Chiefpilot, the title of your post is telling...things are bad and you need to act now. Sorry but i think things will only get worse. Your credit card, which by no means is your largest debt, is your most expensive debt and in your current situation you are probably barely making the minimum payments.
Use at least 3k of your savings to reduce this, then switch to an interest free one. Its not easy to make changes, but renting out room is great idea, and will give you financial breathing space. I dont think Eirefinq read your post correctly, he thinks your loaded, get a pension, more shares in c.union??? You're young, you have youth on your side, save when you have spare cash. I speak from being in a similar situation, you can go into shock and it takes a long period of time to adjust and accept and deal with it.
I wish you courage and good luck.


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## Guest110 (23 Jul 2009)

hello Chiefpilot, 

I dont recommend renting out a room. I tried it for a few months and got 300 a month for my room. Although the person that moved in was lovely, I found that having to share my space with a stranger very hard. For me that 80 euro a week, was just not worth it. 


Here is my recommendations :
40 month - buy a satellite dish and disconect your TV Service 
50 month - disconnect broadband ? -seems to be standard now
100 month  switch you credit cards over to a 0% rate saving in interest 
50 - knock off the gas for the moment - no need for heating at the moment and maybe a kosengas bottle can heat your room, esp as you are the only person in the house and would probably mostly spend your time in one room. 
-------
240 savings


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