# Severe personal financial debt



## TomThumb1 (11 Sep 2006)

*Moderator note:* see below for reposted details.


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## TomThumb1 (11 Sep 2006)

Hi,
I am in severe finacial difficulty and I have decided to post up my problem here to see what advice people can offer.

I was travelling for a year or so and then when I came home I didn't cut my cloth to measure and I have being living beyond my means for the last two to three years......

This is the situation I am in and I have accepted that so I would appreciate if people didn't lecture me about getting in the situation...spilt milk and all that....I want to work on getting out of the situation......

Debts.....
Bank Of ireland 11,186.82
Bank Of ireland 7,386.23
Visa BOI 4,308
Visa MBNA 8,106
Credit Union 11,000
Total 41,987.12

Money Saved....
Credit Union: 6,000
SSAI(MAturing next May/June) 15,000

Monthly Outgoing
Loan 1 Bank Of Ireland 187.82
Loan 2 Bank Of Ireland 396.37
Credit Union 250
Rent 400
SSAI 254
VISAS9min Payment) 250 
TV 35
Phone And Internet(needed for job) 65
ESB 35
OIL 50
PETROL 250
GYM 58
Misc 24 
Sum 2255.19 
Monthly Income

Income 2500 (In to hand after pension and VHI taken out)
Partime Job(Varies but on average about 1000 in to hand) 

I don't have a house or morgage. I asked BOI last Thurs for a all in consolidated loan for about 38,000 and they said they wouldn't support my MBNA CC or credit union loan. 

I would like to get a consolidated loan at low interest rates over 5 to 7 years.....Pay 10,000 of my ssai in to it next year. Try and save money at the same time and lump it in off the loan if I can as I go along.

Any feedback would be greatly apreciated. I understand that I have to stop living beyond my means and get my act together.
Thanks in advance,
TomThumb1


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## ClubMan (11 Sep 2006)

*Re: Severe financial debt*

Have you read some of the other threads about dealing with debts, budgeting and living within/below your means? There are some useful debt/budgeting resources linked in the key topics at the top of this forum too.


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## TomThumb1 (11 Sep 2006)

*Re: Severe financial debt*

Launched thread again with information split better.
Adminsitrator can you delete this one.
Thanks


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## ClubMan (11 Sep 2006)

I've merged the two threads. Please don't duplicate posts as per the posting guidelines. If you want to change a post you can edit the original yourself.


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## Howitzer (11 Sep 2006)

Err, why the credit union savings when you're getting nailed with credit card debt? Use one to pay off the other and possibly give up the oul gym. You still seem to have E1250 in hand at the end of the month.


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## kramer2006 (11 Sep 2006)

TT,

It doesn't make sense to have 6K in savings, with over 12K of credit card debt on which you're probably paying a very high rate of interest. Use your savings and clear the card with the highest interest rate first.

Sell your car, use public transport, save on petrol.

Cancel your gym membership. Surely at this level of debt, gym becomes a luxury, not a necessity?


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## nacho_libre (11 Sep 2006)

Here's a suggestion. Maybe not ideal or not even possible but a suggestion 
nonetheless. 

Go to the Credit Union and try your best to borrow enough to get rid of the 
Credit Card debts. I know it seems like a long shot, but explain to them that 
you'll up your payments and that the interest on these is crippling you at the 
moment (it probably is?)

If you can get a low interest consolidation loan from the Bank to tidy these two 
loans into one then do it. 

Basically, get rid of your high interest loans ASAP whatever way you can do it. 
Otherwise you'll have these debts forever. 

Also, do the lotto once a week.....you never know?


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## nacho_libre (11 Sep 2006)

kramer2006 said:


> Sell your car, use public transport, save on petrol.
> 
> Cancel your gym membership. Surely at this level of debt, gym becomes a luxury, not a necessity?



That's an excellent point. Sell your car and trash your gym membership. 
Walk or cycle to work so you get your exercise and save a small fortune, 
and it's better for the environment. 

Sounds extreme, but desperate circumstances call for desperate measures!


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## ClubMan (11 Sep 2006)

nacho_libre said:


> Also, do the lotto once a week.....you never know?


I strongly disagree - even if it's only €2 it's a waste of money. If you insist on playing lotteries buy some _Prize Bonds _instead. At least that way you get your nominal sum back. 

€250 p.m. on health insurance is a bit much as well when you have such significant debts. If you are generally in good health and not likely to claim on private health insurance perhaps think about ditching it for a while and taking it out again when you can afford it. Obviously there are implications for waiting/qualification periods on rejoining and you should apprise yourself of these before making any decisions.


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## liteweight (11 Sep 2006)

Firstly I'd just like to say...........  If I were in your position, I would look to transfer at least some of the credit card debt to a 0% interest card so that I'd have some breathing space. Check out the hidden flaws in doing this (another thread on AAM).

Ask BOI to consolidate the loans at a better interest rate. Try at any rate. I presume the credit union are holding onto your money because you still have an outstanding loan??? If they will allow you to withdraw your cash, take 5K and pay it off the cc with the highest interest rate. This will at least make you feel like you are getting somewhere. Keep 1k for emergencies (dire only). Do not renew your gym membership.

Even if you have managed to pay 5k of cc card debt and transferred the rest to 0% , continue to pay the same amount until debt is cleared. Once cc card debt is cleared check out which loan rate is higher, BOI or Credit Union. Start making extra payments into this account. Hopefully you will lower your debt substantially. When SSIA comes in, pay it off the highest interest loan. Then take the 254 you were saving a month and use it to reduce your debt further.

At the moment, you are a few quid away from being unable to service your debts. Better do something and fast. Good Luck


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## kramer2006 (11 Sep 2006)

ClubMan said:


> €250 p.m. on health insurance is a bit much as well when you have such significant debts.


 
ClubMan, I think VISAS refers to both of his Visa credit cards, not "Vivas"!  I made the same mistake on looking at this post. That would be some health plan: VHI Plan Z.

K.


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## TomThumb1 (11 Sep 2006)

Thanks for the advice so far....
A few points to make to clarify my position.....
The CU savings are tied in to the loan I have with them.
Selling a car is not an option.  I live and work in the country and there is no public transport option.  The car is only worth a 1000 euro at a push.....
The gym is what keeps me sain when I don't drink etc....due to having no money..........my health is my only wealth at the moment......
I think I will take up bank of Ireland on there consolidation offer and take a different loan possible with Bank of Scotland to pay off the credit union and credit card.  
I noticed that the sickness/redundancy loan protection is very expensive.  Is there insurance companies that specialise in insuring this instead of using the banks own one?  
Thanks again for the advice, much appreciated.....
Tom


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## kramer2006 (11 Sep 2006)

TT, when do you get the proceeds from your SSIA? When get it, don't hesitate to put the entire balance on your debts. Ditto the 6K CU savings. At the risk of repeating myself, there's no point in having savings when you're losing so much money just servicing debt.


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## z107 (11 Sep 2006)

Did you buy stuff with all that money?
Maybe you could sell some of your stuff. Use car boot sales & ebay. Proceeds could be used to pay off debt.


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## Flick (11 Sep 2006)

TT,

Although no substitute for this great website, have a look at www.fool.co.uk its a great website for advise in getting out of debt and all things financial. granted it is uk based but nontheless alot of it does apply!! as previous posts have mentioned, there is great advise on snnowballing debt etc. 

Keep your chin up and make sure your ssia goes directly to service credit cards etc

good luck


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## ClubMan (11 Sep 2006)

kramer2006 said:


> ClubMan, I think VISAS refers to both of his Visa credit cards, not "Vivas"!  I made the same mistake on looking at this post. That would be some health plan: VHI Plan Z.
> 
> K.


Sorry - my mistake.


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## ClubMan (11 Sep 2006)

TomThumb1 said:


> Thanks for the advice so far....
> A few points to make to clarify my position.....
> The CU savings are tied in to the loan I have with them.
> Selling a car is not an option.  I live and work in the country and there is no public transport option.  The car is only worth a 1000 euro at a push.....
> The gym is what keeps me sain when I don't drink etc....due to having no money..........my health is my only wealth at the moment......


Well something's gotta give. You really need to identify areas where you can make savings and where you can either clear expensive debt or replace it with lower cost debt. There's no point in just saying that you cannot forego this, that or the other.


> I noticed that the sickness/redundancy loan protection is very expensive.


 Why take it out at all? It's usually very poor value for money due to premiums inflated with commissions/charges and the limited circumstances and timeframes in which it pays out.

Have you considered approaching _MABS _as per the debt/budgeting key topics that I mentioned pinned at the top of this forum?


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## liteweight (11 Sep 2006)

TomThumb1 said:


> Credit Union savings are tied in to the loan I have with them.



The staff in a credit union can be very understanding. Ask them if you can take out 5k to pay off the credit card with the highest interest. If not ask if you can take any amount out. Should they refuse, ask if you can pay the 5k off your existing loan with them. They don't like to do this but they will if you insist.



			
				Tom said:
			
		

> The gym is what keeps me sain when I don't drink etc....due to having no money..........my health is my only wealth at the moment.



I tend to agree with you and you do need some form of recreation to stave off depression.




			
				Tom said:
			
		

> I think I will take up bank of Ireland on there consolidation offer and take a different loan possible with Bank of Scotland to pay off the credit union and credit card.



Don't forget to negotiate a rate with BOI. Also if you go to BOS (assuming they'll give you a loan) make sure their rate is better than the credit union.



			
				Tom said:
			
		

> I noticed that the sickness/redundancy loan protection is very expensive.



Are they forcing you to take this out?

Try not to get too down.....remember at the moment you owe almost 42K but by May next year you will have 21K in savings so you have done something right. Now is the time to get smart and you may be in a much better position by May next year if you tackle the high interest issue now.


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## ClubMan (11 Sep 2006)

liteweight said:


> Try not to get too down.....remember at the moment you owe almost 42K but by May next year you will have 21K in savings so you have done something right. Now is the time to get smart and you may be in a much better position by May next year if you tackle the high interest issue now.


I agree - don't get down about your debts; but do make sure to do something constructive about dealing with them and rectifying the spending/budgeting patterns that lead to this situation in the first place. Posting here is one first step but make sure to read the other budgeting/debt management links and maybe seek advice and assistance from _MABS_.


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## pernickety (11 Sep 2006)

I disagree about the gym membership, I see it as a huge luxury, if you want to stay fit you can do so cheaply or for free. Go jogging, walking etc.

is there anything you could do to earn a little bit extra cash,  car boot sales? or could you teach something (an instrument/grinds for schoolkids)?can you cut down on other spending (thrifty food shopping, no cds or renting dvds)?

Along with all the good advice about clearing debt with current savings I would put every spare penny into this until it's gone, and then go for my next drink.
good luck with getting to the end of the debt.


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## liteweight (11 Sep 2006)

pernickety said:


> I disagree about the gym membership, I see it as a huge luxury, if you want to stay fit you can do so cheaply or for free. Go jogging, walking etc.



This person spends 58 euro a month on gym membership and the rest (from his/her post) goes on bills and servicing the debt!! Endorphins are released while exercising which lifts the spirits. Yes the OP could go walking or jogging but these are often solitary occupations which give one plenty of time to think. The gym has a social aspect connected to it.


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## ClubMan (11 Sep 2006)

liteweight said:


> This person spends 58 euro a month on gym membership and the rest (from his/her post) goes on bills and servicing the debt!! Endorphins are released while exercising which lifts the spirits. Yes the OP could go walking or jogging but these are often solitary occupations which give one plenty of time to think. The gym has a social aspect connected to it.


Yes - but the point of the exercise here is to identify how best to clear or reduce expensive debts or replace it with lower cost debt and to identify budgeting/spending patterns conducive to achieving this goal. Making savings by cutting back on non essential spending is just one step in the right direction.


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## liteweight (12 Sep 2006)

ClubMan said:


> Yes - but the point of the exercise here is to identify how best to clear or reduce expensive debts or replace it with lower cost debt and to identify budgeting/spending patterns conducive to achieving this goal. Making savings by cutting back on non essential spending is just one step in the right direction.



I agree with you Clubman but I believe that if someone becomes too isolated and penny pinching with themselves, they can only hold out for so long before they have a blowout or spending spree! I see some form of socialising as conducive to achieving the goal. I've noticed that people who run up this kind of debt often do so because spending makes them feel good about themselves. I realise there are some who do so simply because they 'want it all now' but to go from that to 'I'll do nothing other than pay the debt', is IMO an unbalanced approach which might well lead to failure in the long term.


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## ClubMan (12 Sep 2006)

There are lots of ways to socialise that don't cost money.


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## Howitzer (12 Sep 2006)

From the OPs initial numbers he still has 1250 a month left over. Find out where that money is going and you shouldn't have to worry about the E58 for the gym.


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## liteweight (12 Sep 2006)

Howitzer said:


> From the OPs initial numbers he still has 1250 a month left over. Find out where that money is going and you shouldn't have to worry about the E58 for the gym.



No he has approx. 145 euro a month left over.


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## mortimer33 (12 Sep 2006)

Hi TomThumb1,Just a few suggestions in addition to what was posted before:Rent:Have you applied for rent relief? Don't know if you've already doing this, but you can claim tax relief on the rent you're paying. That would be worth 254euro to you. Also if you rented in the past (before you went on hols) you can get relief for that too. Think you can only apply for relief for the previous 5 years though!Gym:Also, some companies refund employees for membership of sports and social clubs.. Might be worth checking out if you can claim for that?Petrol:250 a month sounds a bit high to me..Any chance of taking public transport?Hope this helps!


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## Howitzer (12 Sep 2006)

liteweight said:


> No he has approx. 145 euro a month left over.


 
No, he also has a part time job which, on average, pulls in E1000 a month after tax.



TomThumb1 said:


> Monthly Outgoing
> 
> Sum 2255.19
> 
> ...


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## liteweight (12 Sep 2006)

Oops! Missed that! Sure that changes everything!!


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## momomo (12 Sep 2006)

Im lost, is there about 1200 euro floating around every month after all bills are paid???
I dont think alot of people would have close to that free every month after all their bills were paid

My advice consolidate 2 boi loans.
Cut up credit cards (goes without saying)
Pay of credit card with highest interest, you should really throw as much money as possible into clearing them.


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## HotdogsFolks (12 Sep 2006)

First thing I would say is not to panic! Your finances are not good, but with your SSIA and CU savings maturing soon, and your large (~€1200) excess funds a month, you can easily have this debt paid off in 12 - 18 months.

Also, I am sure you had 2 - 3 years of great fun, so it's not a total disaster.

How much do you spend on alcohol and eating out each month? Can you cut both out for a year or so? As you say yourself, your health is your wealth, well as I've discovered cutting out boozing dramatically helps your health and your wealth...


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## nelly (12 Sep 2006)

having been the pennypincher getting a house deposit together and a wedding in the same year i reckon that the OP needs to get to grips with just not spending and doing other stuff instead going drinkin or whatever. 18 months would fly and it does not need to be so isolated - have mates to your house to watch the match, dinner etc, go to free museums, for walks join work soccer/ rugby leagues, paint a room in your house to make you feel good about yourself!! a better spent €58 IMO.
The way i worked it was set up standing orders to savings accounts in credit unions that only opened in the mornings, chopped credit cards but kept the number so i could book stuff online but not go shopping, and started walking around the place and noticed free stuff to do, go for a jog in the park on a saturday instead of town! 
it can be done - i don't think you will be a hermit either, just plan your outgoings logically - do i need it, will i miss it, is it worth it etc.


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## laurajayne (12 Sep 2006)

you should consolidate your 3 BOI ireland loans including visa card and then rip it up seriously if you have to buy with your visa card even with 1000euro left over from your income then you dont really need what your buying ...one visa card is enough.. then when you get your ssia pay off the other visa card and the credit union loan with the remainder plus your savings thatll leave you with 1894euro to  save for an emergency..  Honest to god best thing is get rid of visa cards they are so lethal... once everything is consolidated visa cards gone ssia finished you will be loaded... I earn alot less then you and pay a mortgage and car loan etc and am doin alright


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## irishpancake (14 Sep 2006)

ClubMan said:


> Sorry - my mistake.



CM you weren't completely wrong about health insurance:



> Income 2500 (In to hand after pension and VHI taken out)



we just don't know the amount of the _VHI_ payment, but I'm sure it's not anything near the €250


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## TomThumb1 (15 Sep 2006)

Hi all,
Thanks again for your support.  Just a quick update.

I am getting a new bank of Ireland loan that is joining all the previous loans together including the Visa card for around 23000. 

I applied for a Bank Of Scotland Ireland loan to cover the rest and it was rejected.

I have applied for a Bank of Scotland Credit card and a Tesco Credit card. I am hoping one of them will transfer my MBNA balance for a interest free 6months credit.  I will then have my SSAI maturing 2months later and I will put it in against the credit union loan and take the 6000 in savings and put it off the credit card.  Hopefully at that stage I will be left with the one loan which I will try and pay off as early as possible.

I will know about the credit card transfers in about a week or so....so I will update the forum when I know more.....

Thanks again and fingers crossed it will work out.
Tom


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## TomThumb1 (3 Oct 2006)

Hi all,
Just a quick update on my situation. Mixed news really....
I got the bank of Ireland loan for around 23,000 with no insurance(would have cost 5000 approxover 5years, which was actually more than the interest) I cut up one credit card and reduced the limit to the other to 2000.  I need that limit for work etc....

I have applied for a credit card and loan from Bank of scotland but they refused to give me a loan and a credit card.  I applied for another credit card with tesco but they also refused.  I want to transfer my balance across to an interest free credit card that will tie me over till the ssai comes out in April/May.  I have 15000 due then approx which I am going to use to pay off my credit union card loan 12,000 and then use the balance to pay and 4000 gran of my savings in the CU to pay off the other credit card.  I would hope to put the money I was saving in the SSAI and paying the credit union off the Bank of Ireland debt.

Would it be worth to try another company for an interest free credit transfer credit card to tie me over for till the SSAI comes out?

thanks again for the support.  I might be able to pull myself out of this situation yet!!!
Tom


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## paddyodoors (3 Oct 2006)

Hi TomThumb

Good start with the initial consolidated loan. How much of a CC transfer are you trying for - is it the full 8k mbna?

I don't think that will ever be taken by another provider at that level.

I would recommend to immediately use the 6k credit union savings to pay down the mbna card - you are being creamed on those charges at the moment.

You should be able to get a 0% transfer then at the lower level.

Failing that you could pay 2k of your salary straight in, which would clear the remaining 2k - stop the remaining monthly charges and then you can use the card to pay for all your monthly bills as normal - (as you would have from your current account). You need to be very disciplined for this and gradually reduce the amount you pay on it each month.


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## Satanta (3 Oct 2006)

paddyodoors said:


> I would recommend to immediately use the 6k credit union savings to pay down the mbna card - you are being creamed on those charges at the moment.


Not an option as the 6k savings (or at least part of this sum) is part of the CU loan agreement.

No harm in keeping up the trying for a 0% transfer. The worst they can do is say no. AIB offer 0% transfers too, apply to them all if you have too (and keep paying down what you can from the total so a transfer would be easier). 

You should already be starting to see some more light at the end of the tunnel so hopefully this is helping keep up your motivation!


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## lff12 (6 Oct 2006)

TomThumb1 said:


> Would it be worth to try another company for an interest free credit transfer credit card to tie me over for till the SSAI comes out?


 
Sure you mean an SSIA?


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