# Young couple + kids < income



## Sony (16 Sep 2010)

Age: 33
Spouse’s/Partner's age: 36

Annual gross income from employment or profession: €25,513 (€1828 pm)
Annual gross income of spouse: ~€50,000 plus approx €6000 expenses (€2872 + 500 expenses pm)

Type of employment: e.g. Civil Servant, self-employed 
I'm HSE employee
He is self employed retailer

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

Rough estimate of value of home €350,000 - €400,000
Amount outstanding on your mortgage: €360,000 

*What interest rate are you paying? *
ECB + 0.75% 
Home is capital + interest = €1478 pm


Other borrowings – car loans/personal loans etc
Personal Loan 1 = €23,000 remaining, €648 pm, 3yrs left (BOI)
Personal Loan 2 = €20,000 remaining, €550 pm, 3yrs left (Credit Union)

Do you pay off your full credit card balance each month? No
If not, what is the balance on your credit card? 
MBNA 1 €2355 outstanding, interest rate is 10%
MBNA 2 €8500 outstanding, just started 10mth interest free period

Savings and investments:
€1500 in Credit Union
€3000 on Elan shares when €21, now worth €3.75 a share today

Do you have a pension scheme? 
Yes, HSE
Husband: fund currently at €32,000, pays about €200 pm

Do you own any investment or other property? 

"Investment" property bought for €250,000
Rough estimate of value €150,000
Mortgage of €212,000 interest only, fixed until Sept 2011, repayments €375
There is €52,500 cross-secured on our family home which we pay interest only (this amount is included in our home mortgage figure of €360,000).
Property is interest only = €375 pm
Rent is €640 pm
Management fee is €1500.

Ages of children: 3 and 5. Childcare is minimised as I work part time and husband takes a day off during the week so childcare costs €240 pm, Montessori costs € 360 pm

Life insurance: 
Decreasing term protection policy €37 pm (home only, no cover for 2nd property)


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

We are struggling every month to meet our financial committments. Husband has reduced his salary by about €2000 pm to ease pressure on business, my salary has also reduced by about €300. We never had credit card debt to this extent but had been using them to plug the gap each month. 
We recently got a 2nd credit card with 10mths interest free, €8500 was the max we could get so working on getting rid of the other balance now.
Have claimed everything possible back from Revenue.
I try to save €450 pm but I take it out as fast to put it off the CC so no real savings really.
Husband is considering cashing in his pension to pay off some of our unsecured debt. I am reluctant to do that (if it's even possible?) as this time next year we won't have the Montessori cost, two years later the personal loans will be gone.
We would like to have another baby (or 2!) however with with our current lack of financial stability I am reluctant to do so, I think we would be stretched to breaking point. Maybe we should be content with the fabulous smallies we have and do our best for them?
Investment property is due to finish it's 5yr interest only period this time next year. What are the chances of being able to negotiate another one and when should I approach the bank? Am very worried about that.
I am trying to get on top of things as they stand right now, can anyone point out any improvements we could make or give me reassurance that we are on the right path?

Sorry for the long post, thank you for reading this far.


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## Complainer (16 Sep 2010)

What's your monthly mortgage repayment on your main house?


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## PaddyW (17 Sep 2010)

Complainer, €1478 as she has above under what interest rate do you pay.


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## PaddyW (17 Sep 2010)

I wouldn't get rid of the pension, just maybe stop the payments into it for now and use the money towards paying down the credit card instead.


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## Marietta (17 Sep 2010)

You may not be able to cash in the pensions, see this thread

Can you really afford the added cost of Montesorri, would you consider a more cost effective playgroup for your child. 

Consider clearing the balance on the high interest credit card asap then cut up the card.

Examine closely your household expenditure and shop around for cheaper electricity, broadband deals etc.


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## Complainer (17 Sep 2010)

Duplicate post


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## Complainer (17 Sep 2010)

PaddyW said:


> Complainer, €1478 as she has above under what interest rate do you pay.


Thanks - missed that one. I do have a few other queries to clarify the situation.


Sony said:


> Annual gross income of spouse: ~€50,000 plus approx €6000 expenses (€2872 + 500 expenses pm)


Are these expenses real extra income? Or is this a refund of out of pocket expenses?


PaddyW said:


> "Investment" property bought for €250,000
> Rough estimate of value €150,000
> Mortgage of €212,000 interest only, fixed until Sept 2011, repayments €375
> There is €52,500 cross-secured on our family home which we pay interest only (this amount is included in our home mortgage figure of €360,000).
> ...


Is their a time limit on the interest-only deal? When does this expire? Are you putting something by to cover your tax liability on your rental income? And your NPPR €200 fee?

First thoughts would be that you'll have to cut the €200 pm pension payment asap. You just can't afford this at the moment.


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## Mpsox (17 Sep 2010)

Including Childrens allowance and rent, you've a monthly income of approx €5600. Your debt repayments (allowing for €150pm on each credit card), + child minding comes to approx €4k. Therefore you have approx €1600 per month to live on

You have a short term issue for 3 years to pay off the loans and credit cards.

To me, whilst it is very tight, and given that you will at some stage have to increase your payments on the rental property to start repaying capital, it is doable.

Do a full review of your tax affairs and see if you are getting the right tax credits and that you have claimed for every thing you can claim for

You need to do a more detailed review of your day to day spending to see where the money is going.

As for kids, I'd wait 3 years til the debts were paid off


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## Sony (17 Sep 2010)

Marietta: Montessori is linked to our childcare arrangement so she must attend for 2-3 days per week but with her brother at school now I just couldn't bring myself to cut it out as she loves being with the other children. Before she started Mont. she used to cry all morning looking for her brother. It also gives me a chance to get the house cleaned, shopping done, some exercise etc. We are working hard at clearing the balance on CC 1 at the moment and then will work on the second one.

Complainer: Yes, the expenses are mostly extra income, varies per month but is usually in or around €500. The interest only deal will expire about this time next year. When should I approach the bank about re-negotiating it? We are unlikely to have any tax liability this year as we have made a fair loss on it up until the ECB reduced so much. The accountant said we'd be safe enough for another while. We have paid the NPPR fee, all up to date on that.

Mpsox: The €1600 doesn't seem to last very long! I really want the CC's gone by this time next year so we will free up some money for the repayments on the 2nd property if that has to become interest + capital. At that stage the personal loans will have reduced by about 12k and we might be able to figure out a better way of managing them, perhaps by amalgamating them or getting a better interest rate elsewhere. Am pretty sure we are good with the tax affairs, we are lucky to have a good and very approachable accountant and am very interested in this area myself so have always claimed for bin tags, uniforms, etc.

Yes, 2 more kids might be pushing it. In 3 years our children will be 6 and 8, maybe we should just concentrate on them and enjoy them, we are very blessed to have them.

Thank you all for taking the time to reply.


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## Complainer (17 Sep 2010)

Sony said:


> Complainer: Yes, the expenses are mostly extra income, varies per month but is usually in or around €500.


Watch out for any tax liability here. It is hard to see how he can get extra income through expenses without incurring a tax liability.



Sony said:


> The interest only deal will expire  about this time next year. When should I approach the bank about  re-negotiating it? We are unlikely to have any tax liability this year  as we have made a fair loss on it up until the ECB reduced so much. The  accountant said we'd be safe enough for another while. We have paid the  NPPR fee, all up to date on that.


Good to hear you have an accountant involved. But based on the figures you've given €640 pm rent and €375 interest only mortgage, there could well be a liability.


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