# Broke and  no idea how to fix it!



## sinead (19 Sep 2007)

Age: 
31
Spouse’s/Partner's age: 
32


Annual gross income from employment or profession: 
€30,000
Annual gross income spouse:
€25,000


Type of employment: e.g. Civil Servant, self-employed 
Me – Self employed, husband Employee




Expenditure pattern: In general are you spending more than you earn or are you saving? 
Yes, every month


Rough estimate of value of home
€230,000
Mortgage on home
€157,000
Mortgage provider:
GE Capital
Type of mortgage: Tracker, interest only, fixed rate
Fixed
Interest rate
9.60%


Other borrowings – car loans/personal loans etc


Personal Loan - Me (€23000) - Blue Cube (interest 16.9)​
€771.64 - pm

Personal Loan - Me (€8,500) - Halifax​
€360




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


Credit card one​
1700

Credit card two​
500




Savings and investments:
None


Do you have a pension scheme?
No


Do you own any investment or other property?
No


Ages of children:
9 months


Life insurance:
Only for mortgage 


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

We recently bought a house that needed a lot of work done to it to make it habitable particularly considering we have a young child but felt we needed to buy something so we owned our home at some stage. GE were the only company who would offer us a mortgage as I wasn’t 3 years trading, hence the interest rate. So we used all our savings on a deposit (€25,000) and stamp etc so when it came to paying for the work we borrowed. I got a loan from Blue with a ridiculously high interest rate as we were desperate and no one else who look at me and then my husband got a loan from Halifax to finish off some things. 

Before we bought this house we had rent of €700 and about €2,000 a month to spend as we wished.

Now we have the mortgage, crèche fees and two personal loans we are left just over €700 a month for day to day spending / other household bills (such as oil, phone, esb, food etc) and finding it very difficult to make ends meet.

Also to make matters worse, I borrowed a €3k from my business which needs to be paid back asap as it was only a temp loan.

I need some direction as to how I’m going to get out of this mess………..

Thanks

Sinead

PS – I contacted Blue Loans about refinancing my personal loan with a better interest rate and they cannot do anything until the loan is 6 months old (next month)


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## Nige (19 Sep 2007)

Do you have a company or are you a sole trader?
How long have you been trading?
Can creche fees be reduced by getting an au pair/working less and paying for fewer days?
Can the Halifax loan (presuming the interest rate is well below the rate Blue is charging) be increased to reduce the Blue loan?
Do you have a car (or cars) that could be down graded to release some funds?
Is there any possibility of you or your spouse getting another income source (eg a few hours work at the weekend)?
Is this both you and your spouse's first home?
How long is your mortgage fixed for?


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## sinead (19 Sep 2007)

Do you have a company or are you a sole trader?
Limited company


How long have you been trading?
Since Nov 2004

Can creche fees be reduced by getting an au pair/working less and paying for fewer days? 
It’s a possibility I have looked at other places but none seem to have spaces for a child less than 1 year.  When went back to work after maternity leave I only intended to work 4 days but some staff left and I needed to be in the office 5 days a week.   This is something that I am working on at the moment.


Can the Halifax loan (presuming the interest rate is well below the rate Blue is charging) be increased to reduce the Blue loan?
The Halifax loan is well below the Blue rate but Halifax refused a refinance last week as did Bank of Ireland.


Do you have a car (or cars) that could be down graded to release some funds?
We both drive company cars, company also pays for petrol, insurance, tax and services.

Is there any possibility of you or your spouse getting another income source (eg a few hours work at the weekend)?
My husband works most weekends and takes a day off durning the week but its not constentent.  He is at the final stages of getting a new job but we are not sure if he should take it as the salary is a basic of €24,700 for 3 years with the possibility of €32,000 with overtime but he will lose his company car (petrol etc) and mobile phone which will mean more bills for us and not more money!


How long is your mortgage fixed for?
We fixed it for 2 years and will face a penalty is we move sooner but we can refinance with GE anytime from next month onwards but were hoping to wait and re mortgage and put a small extension on the house as it is only a small home.


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## truthseeker (19 Sep 2007)

what can you downgrade/do without?

eg: do you need NTL? if not get rid of it. 

Can you bring down other bills, do the grocery shopping in a cheaper place, keep a better eye on electricity/gas usage?

mobile phones/landlines - just have one or the other. get rid of the mobile altogether if possible or go to pay as you go.

can you or spouse get a second job (even on a temporary basis to get over a hump?).

Cut up the credit cards.

definitely get that Blue loan refinanced.


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## sinead (19 Sep 2007)

We have both really looked at our life style and how we spend our money over the last two months and we reckon we just kept spending as if we still had the €2k in our bank account.

I reckon what I should do and I suppose I thought posting it here would convince me it was the right thing to do is to re finance the Blue loan and reduce that repayment and then keep working on the rest while remembering we can’t spend like we used to - which is the hardest of them all!!!!!

Am I on the right track?


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## Nige (19 Sep 2007)

Well, the first thing is to see what you can do with your mortgage. In a couple of months you will have your 3 year history (get your accounts done ASAP) and will have a lot more leverage. 

Clearing the Blue loan has to be a priority. 

Don't even think about building an extension yet. You can't afford it now and as the baby is only 9 months old, they don't need that much extra space yet.

Can you downgrade your company car - it will save you on tax?
Can your company pay you more (it's not very tax efficient, but a 30k salary isn't great).


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## legend (19 Sep 2007)

sorry sinead...

if you're a limited company why have you earning s of only 30k....

what business are you in, can you branch out to get other clients.. or charge more....

are you claimimg all the expenses allowed under a LTd company structure???


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## sinead (19 Sep 2007)

Yeah your right the extension is not a priorty at the moment, I see if I can re finance that to clear the blue loan.

Will look into the company paying more as that would help a lot, car isn't costing that much in BIK (about €110 pm)

Thank you so much for your help


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## Nige (19 Sep 2007)

And get the company to pay you a bonus to cover the 3k you own the company (bear in mind that it will cost the company about 6k).


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## command (19 Sep 2007)

It would appear that your sundry spending is a lot more than it should be. I think everyone would agree that you need to refinance. Once this is done some of the pressure will come off. 

However you need to address your cash leakage. I am estimating that you probably have the guts of €4k coming into the house. 

The issues that you also need to consider is some form of income protection in case you get sick and some life cover or pension term insurance in case you die. 

If you do get your loans refinanced I would recomend tyring to get a rainy day account in place before you start tackling anything else. 

With a bit of luck you could be sorted before christmas.


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## F. Kruger (19 Sep 2007)

How much is your mortgage protection costing you? What term is the mortgage and are you smokers or non-smokers?


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## sinead (19 Sep 2007)

Not sure about the bonus from the company Nige but will look at the accounts to see if it’s possible.


Thanks Command for your comments, I am going to make arrangements for a pension and insurance in the next few weeks. Regarding the rainy day account we were doing great before the house purchase and managed to save over €26,000 in 5 years for the deposit now that money is going on the loans instead of into the saving account (which is now empty). I am really concerned about the “what if”, so this is a priority. Hopefully your right about Christmas!


Going to sit down with my husband in few minutes and get a game plan together regarding the re financing the loans, have to say never thought of re mortgaging to clear the other loans but will seriously consider it.


Our mortgage protection policy is €41.31 a month for 30 years, I’m not a smoker husband is and I had some medical problems 6 years ago so the policy is loaded for me only.


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## Kendr (19 Sep 2007)

You asked earlier if you were on the right track. If, as you say, you're sitting down with hubby to make a gameplan - then the answer is yes.  The biggest mistake most people make is running away from it and hiding in the sand. Well done.

Think about the company car issue.  I've had them in the past and the allure of free petrol, insurance etc needs to be examined carefully.  Sometimes the tax you pay writes these off and if the company decides to let you go or something - you've nothing to show for all that tax you paid.

Couple of things on the mortgage front - obviously to need to switch as soon as you can and yes, refinance to cover the blue loan - both are crippling you.

Lending criteria have become a little stricter of late - but at the moment there is little or no business taking place in the world of mortgages. They're desperate for new business. I would be very surprised if you find it difficult to refinance.

Best of luck.


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## Kendr (19 Sep 2007)

Sorry Sinead, double posting a bit.

Is it correct that the 'company cars' are from your own company?

If so, your own company is making the monthly payments on them?

Then you're adding BIK on top of the monthly payments?

Myself and OH have a business and looked at doing this for about 5 minutes. That's your potential increased income you are paying on those cars, with BIK added on. If insurance, servicing, petrol etc is coming from your company - you're saving nothing - that's your money. You're adding €110 bik pm for no benefit to you.

Maybe I'm reading it wrong. Apols if I am.


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## SarahMc (20 Sep 2007)

My first thought are change the bluecube loan to a credit union loan (the loan to savings ratio can be scrapped if you go through MABS).

Apply for a GP visit card, as the mortgage and childcare is taken to account.

Change childcare to a Childminder.


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## sinead (25 Sep 2007)

Well since my post last week lots has happened.

I sat down with my husband and we talked through where we are at the moment financially and we decided to apply for a new mortgage for €210,000 to pay off our current mortgage in full, both personal loans, credit cards and finish all the work to the house.  Our new mortgage repayment is €1,100 with interest rate of 5.3%.

This means we are now better off by €1,000 a month and can start saving again.

I have made an appointment for tomorrow evening for a pension guy to visit us to arrange pensions for us both.

Thanks for all the help. I would never have thought of re mortgaging without your comments.

Sinead


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## Nige (25 Sep 2007)

That's great news Sinead, well done.


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## MortgageBrkr (25 Sep 2007)

_I sat down with my husband and we talked through where we are at the moment financially and we decided to apply for a new mortgage for €210,000 to pay off our current mortgage in full, both personal loans, credit cards and finish all the work to the house. Our new mortgage repayment is €1,100 with interest rate of 5.3%._

Hi Sinead, 
Just read your post and I dont think its possible to come down from 9.6 to 5.3 within this time frame.  Let me know how you get on with this!


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## Kendr (25 Sep 2007)

Sounds great Sinead.

There's always a way out of the financial nightmare we find ourselves in.


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## sinead (25 Sep 2007)

MortgageBrkr the reason we were paying 9.6% in the first place was due to bad credit ratings/arrears and we had only one option to go with GE Capital and they screwed us with the interest.

Now we are with the "normal lenders" and delighted with the extra we will have in our pocket each month regardless of the % we are paying. (have to say sometimes its all mumble jumble to me!!)

Why do you think it wouldn't be possible to decrease the interest rate?


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## 3CC (4 Oct 2007)

Sinead,

Well done on sorting out your situation. Be careful with setting up pensions. They need careful consideration also. Plenty of advice here on that as well. I just think that a pensions advisor who is tied to any particular company will not often give you the best deal.

D


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## Sherman (4 Oct 2007)

Sinead, given that you're self-employed with a baby it might make sense to delay the pension for a while and build up a decent emergency fund - as one partner is self-employed it might be worth having an emergency fund of 6-12 months' worth of living expenses - you don't want to get into the situation of having to borrow again if things get quiet/tough with your business.

Also, do you have adequate insurance e.g. life, income protection etc?


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## sinead (8 Oct 2007)

Thanks for your comments Sherman.  We have just set up a separate account for the emergency fund and have 3 months living expenses in it, we are hoping to build it to 6 months as soon as possible.

We do have all the insurances - life, income protection, house etc.  We are lucky to have a broker who is a family member and he speaking to us about the pensions also.


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