# how best to deal with 40k personal debt



## patm2007 (8 Jul 2018)

hi

My wife and I have accumulated nearly 40k in debt.
20k credit union approx 4 yr term - €455 per month
9.5k car loan AIB 4.5 yr term 200 per month
7.7k credit card debt (3 cards) AIB & BOI minimum paid each month
1.3k overdrafts

We have a mortgage of 101k on a property valued at approx 200k. 30 yr term 435 per month

Both of us work and have a combined salary of approx 55k with potential for another 7-10k in commission per year.

Currently approved with pepper mortgages to wrap up debt into new mortgage. It’d save us approx 600 per month in the short term. I get long term I’ll pay significantly more back.

My issue is that I need to reduce payments each month now, it’s all well and good saying I could look back in 5 years time and regret this decision as my main loans would’ve been cleared by now. To date we haven’t missed any payments but have been using a new cc and o/d to pay bills for last few months.

I would appreciate your thoughts on the above and if there are any other ideas


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## vandriver (8 Jul 2018)

You have on average near four and a half grand in after-tax income per month,and a tiny mortgage.
Do you have any major necessary outgoings that have caused you to run up these ridiculous debts?


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## patm2007 (8 Jul 2018)

No other major outgoings. Debt has primarily been racked up through poor management of money. Salary took a dip for 18 months and an unexpected vet bill but that only accounted for a minor slice of the debt. I’m the main cause of the debt and fully realise I shouldn’t have ended up in this position. Better management of our finances will obviously be key going forward


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## PaddyBloggit (8 Jul 2018)

patm2007 said:


> I would appreciate your thoughts on the above and if there are any other ideas



Are you addressing why/how you got into so much debt? Not much point in consolidating it with Pepper if you don't mend your ways.

Would you consider filling in a Money Makeover template and posting the information here? It would give people more of idea where you're coming from.

https://www.askaboutmoney.com/threads/basic-information-required-for-the-money-makeover-forum.61289/


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## patm2007 (8 Jul 2018)

Yes we have spent time reviewing our spending habits. I know this needs to change before we take the pepper option or we will be back here in a few years again.

We don’t gamble, smoke or drink, neither of us have expensive clothes or a flashy car. We rarely eat out in restaurants. We do spend on our nieces and nephews and our dogs want for nothing! We don’t go on holidays every year. IMO it comes down to very poor management of our finances, not planning our spending and most importantly.. ignoring the debt as it built up.

I’ll look at the template and fill it out


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## vandriver (8 Jul 2018)

The money is going somewhere!


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## RedOnion (8 Jul 2018)

patm2007 said:


> I’ll look at the template and fill it out


Include details of the interest rates on all of your debt, and any savings balance in the credit union.
And what rate are Pepper offering you, over what term?


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## Purple (31 Jul 2018)

Your outgoings are still manageable.
You need to clear your Credit card debt. That's the most expensive one.  
Even with your current repayments you still have around €3000 a month to live on. With no kids your groceries should be well under €100 a week. There should be at least an extra €1000 a month to go towards paying off debts.


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## Bronte (31 Jul 2018)

patm2007 said:


> I’m the main cause of the debt and fully realise I shouldn’t have ended up in this position. Better management of our finances will obviously be key going forward



Then you know the cause of the debt. And the fact you've been clever enough to now get a new cc is not a good sign. I don't recommend consolidation for someone who so far does not appear to be willing to face up to the reason for the debt. You'll only end up in a far worse predicement and likely to lose the house if you carry on.  Best thing for you is the money makeover so we can try and help you back on track.


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## Steven Barrett (28 Aug 2018)

patm2007 said:


> Yes we have spent time reviewing our spending habits. I know this needs to change before we take the pepper option or we will be back here in a few years again.
> 
> *We don’t gamble, smoke or drink, neither of us have expensive clothes or a flashy car. We rarely eat out in restaurants. We do spend on our nieces and nephews and our dogs want for nothing!* We don’t go on holidays every year. IMO it comes down to very poor management of our finances, not planning our spending and most importantly.. ignoring the debt as it built up.
> 
> I’ll look at the template and fill it out



What do you spend your money on then?

Your nieces and nephews aren't your children, so you have no obligation to spend money on them. Birthday and Christmas present will suffice and no need to go mad. 

Dogs are dogs. Feed them, walk them and give them shelter and a few toys. They don't need anything else. 



Print off all of your bank and credit card statements. 
Categorise what you spend all your money on
Draw up a budget on what you can actually afford to spend money on
Review it on a monthly basis
Consolidating your debt and repaying it over a longer period may be the only way to give yourself some breathing space but if you don't manage your money, your problems will just come back. 


Steven
www.bluewaterfp.ie


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## Laughahalla (5 Sep 2018)

Hi, It's great that you have acknowledged you are the main source of spending. This is an important milestone.

1st) You need plastic surgery - i.e Cut up the credit cards.
2nd) Stop spending - Just stop. No gifts unless you make them yourself , people normally just buy for the sake of buying. If you can give the gift of babysitting or looking after a family members pet while they are away it will be much more beneficial to them. You need to live like a miser for a couple of years. Yes, people will think you are odd but if you feel like it explain that you are trying to get down debt.
3) Taking on more debt is rarely the answer ( Tempting as it may be to consolidate, you run the risk of hiding the problem)
4) When the pets go to pet heaven do not replace them. They can be costly on food and vets bills as you probably know already.
5) Pay the minimum on your debts until you have the smallest debt paid first. google the snowball method. You will feel better as soon as one debt is paid off and will feel energised to pay off the next smallest debt and so on.
6) Cook at home, bring lunches and teas/coffees to work. Shop in German discount stores.
7) No eating out, no canteen food at work. bring your own
8) Grocery Shopping list - Stick to it and only buy eneough to last you the week.
9) Pay in cash - everybody hates handing over cash. you will stop spending as much if you use cash instead of card.
10) If you have subscription tv cancel it. You can use free to air satellite to get 90% of the channels for free instead of paying for them.
11) Can you sell the car and buy a cheaper car. looks like the loan was taken out recently so this may not be an option
12) sell stuff - One mans rubbish is another mans gold. I guarantee you have plenty of stuff that you can sell . There is some online sites you can use to sell your stuff. you might think there is no value in something because you  don't use it anymore but somebody out there is looking for it and will pay good money for it.
13) make a monthly budget and stick to it. no deviations.
14) if you want to buy something have a 72 hour rule. It will still be there in 72 hours but the initial impulse to buy it will have faded.
15) you need to get the wife on board with this as your lifestyle will take a hit for about two years.
16) Do not borrow again- seriously - do not borrow again.


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