# Should we stay... or should we move?



## 1150gs (21 Mar 2011)

Age: 40
Spouse’s/Partner's age: 39 ish

Annual gross income from employment or profession: 70000
Annual gross income of spouse:42000

Type of employment: both with private companies 

In general are you:
We are spenders.

Rough estimate of value of home €390,000
Amount outstanding on your mortgage: €289,000 
*What interest rate are you paying? *
*Tracker with EBS 0.95% +ECB 18years remaining*

Other borrowings – car loans/personal loans etc
Top Up Loan €42,000
Car €6,000
Credit Union €10,000

Do you pay off your full credit card balance each month? No
If not, what is the balance on your credit card? €1,100 and at the limit...

Savings and investments: €5,000 credit union shares (but untouchable because of loans outstanding)

Do you have a pension scheme? €300 and €200/month

Do you own any investment or other property? No
Ages of children: None and no intensions.. 2 mutts though.

Life insurance: yes


*What specific question do you have or what issues are of concern to you?*
*Wow!! we had a great boom time!! But its pay back time now.*
*We have a large detached 4 bed house. Had it valued at 390k. *
*Question; should we sell our home to clear all debts? Then rent for 12 months, with a view to buying a home then and reducing the mortgage by half, and knocking 10 years off the term...but we'd loose our good tracker rate..?  *
Any help or advise would be great thanks...


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## Guest105 (21 Mar 2011)

Why on earth would you sell your home when you have a combined annual salary of €112,000. You are in negative equity but as long as you can maintain the payments there shouldn't be any great pressure on you with that salary level.

Maybe if you post a full list of all your outgoings and expenses, posters here may be able to give you a better idea on what areas you need to cut back on.

Even with the €56,000 or so you have in personal loans you should be able to draw up an adequate plan to get back on an even keel.

PS I admire your honesty when you say you lived it up in the good times, but in reality you are still in the good times compared to the many thousands of unemployed who are struggling to find the money to pay for similiar sized mortgages.


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## 1150gs (21 Mar 2011)

*we are lucky*

I know we are some of the lucky few, but thats not due to good financial managment. 
Its just down to luck and buying our house when, and where we did.

Thanks for the reply though.
Is there any formulas on the site, that show idealy what % should be spent on mortgage, loans, bills etc...


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## Guest105 (21 Mar 2011)

I dont't think there is a formula per say but your overall debt including the mortgage is circa €400,000, that's about 4 times your annual income so it should be easily doable for you.  

There are plenty of tips on the money make over section for saving money,i.e pricing around for insurances, shopping in discount stores such as Aldi/Lidl, walking instead of the gym etc. 

Keep a spending diary for a month and see exactly where all your money is going, you will probably be somewhat surprised at the amount of all the wasteful discretionary spending.


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## 1150gs (22 Mar 2011)

Ok, good idea. Sounds like common sense, but I rarely find sense common though.
Thanks.
Why don't they teach this stuff in school? Maybe "they" don't want the majority to know it.


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## Bronte (22 Mar 2011)

What exactly is the problem.  Why do you want to sell the house.  You can afford all your debt so what is the issue.  

Don't see how the issue of your 'good' tracker comes into it.  If you are focusing in on the current mantra of don't lose your good tracker, it doesn't apply to you.  You don't keep debt just because you have a good rate unless in the context of everything else it makes sense.

As in a tracker of 2% on a 400K loan is not the same as 5% on a 50K loan. 

We are not allowed to discuss house prices on here.  In any case no one can predict the prices in 12 months.  

Are you wishing for the boom, looking back on it with rose tinted glasses maybe?  Far away hills and all that.


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## goingforgold (22 Mar 2011)

cashier said:


> Why on earth would you sell your home when you have a combined annual salary of €112,000. You are in negative equity but as long as you can maintain the payments there shouldn't be any great pressure on you with that salary level.


 
No he is not in negative equity. His loan is 289K and house value is 390K. Therefore 100K equity.


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## goingforgold (22 Mar 2011)

cashier said:


> I dont't think there is a formula per say but your overall debt including the mortgage is circa €400,000, that's about 4 times your annual income so it should be easily doable for you.


 
His debt including mortgage is 343K (Net of savings). Am I missing some figures here?


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## michaelm (22 Mar 2011)

1150gs said:


> *Question; should we sell our home to clear all debts?*


If I were in you position I'd probably sell up and simplify my financial position.  I'd only do this if this wasn't my dream house, I was sure I wouldn't have kids and I was confident I wouldn't blow the cash surplus and run up new debts.  Don't get hung up on the notion that the Tracker is to good to give up.


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## Guest105 (22 Mar 2011)

goingforgold said:


> His debt including mortgage is 343K (Net of savings). Am I missing some figures here?


 

apologies I think I had one eye on the telly at the time

either way the OP is not in dire financial straits, in fact the above figures would suggest he is well within his means to pay his debts.


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## 1150gs (22 Mar 2011)

michaelm said:


> If I were in you position I'd probably sell up and simplify my financial position. I'd only do this if this wasn't my dream house, I was sure I wouldn't have kids and I was confident I wouldn't blow the cash surplus and run up new debts. Don't get hung up on the notion that the Tracker is to good to give up.


 

I think michaelm has the idea....
Its not that we're up sh*t street, but is it worth selling and simplfying our finances? 
we have a nice house, but never seem to have spare cash....
im probably answering the question as i write this....
Strange when you write things down, they can give, as the drunk said...
"a moment of clarity..."


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## niceoneted (22 Mar 2011)

I think you have the ability to stay in your home if you want to. 
You say it is a nice house but never spare cash?
Can you list what the net take home pay is, and what your payments are on the mortgage and loans. Then list all expenses. 
Start a spending diary and see where you can cut back. 
I would imagine that with hard graft you could clear the car and CU loan by the end of the year. You need to look at where your money is going. You have decent earnings.


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## merille (22 Mar 2011)

guys u didnt get it!!!

hes a spender. he wants to spend, not to spare money (aldi/lidls and other advices are not good then). but he cant spend that much so he tought to sell the house (morgage gone, more cash). thats how i got it.


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## Mrs Vimes (22 Mar 2011)

You could indeed sell up and buy a smaller house with a smaller mortgage on a higher interest rate. Have you worked out whether the repayments would actually be lower?

You could use all the equity to pay off your unsecured debt, and have some over for a new car or a holiday or whatever you want.  It would be great to have spending money again.

Then, in three years time, you could do it again.


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## Guest105 (22 Mar 2011)

Mrs Vimes said:


> Then, in three years time, you could do it again.


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## 1150gs (23 Mar 2011)

*A little harsh...*

I wouldn't have borrowed as much as I did, if my crystal ball wasn't so fogged up!? 
I know we are in a lot better position than a lot of people. I'm just trying to stay out of trouble. 
Both of us are in private sector, our jobs are relatively secure, but who knows what's around the corner.. One of us gets the boot now, and we're in diffs. But if we sell, I've checked with the lender, and we'd be paying the same amount per month, but knocking nearly 10 years off the term. If one of us got the boot then we would have room for negotiation. 
That's borrowing 150k on 10 year fix ?
Nuts? Maybe. Scared? A little 
...... Ok let me havit !


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## Ceist Beag (23 Mar 2011)

Sorry I'm confused! If you sell why would you still be paying a mortgage? Where does this 150K on a 10 year loan come from? Surely if you sell the first thing you would do is to clear all debts? Personally I think you'd be mad to sell but I do think you should target clearing all other loans ASAP. And quite why, on a combined salary of €112K you cannot fully pay off your credit card each month is beyond me. Obviously merille and Mrs Vimes are on the mark with regards to you being a spender - that should be your first thing to tackle!


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## Mrs Vimes (23 Mar 2011)

Hi there,

Harsh, I know, just trying to make the point that if you don't learn to live within your means then you will never be out of debt, no matter what assets you sell, no matter what you income is.

You should do a spending diary counting every cent you spend for at least a month.

You have credit card debt which is presumably costing you about 16%pa or more.

Every thing you buy, even lunch or newspapers, you should ask yourself whether it is worth taking a loan at 16% and paying for it for a very long time.

Doing without things that seem essential now (eg meals out, new clothes) is certainly worth it to not be in the position you are now in.

Adjusting your budget is a wrench at the time but you will get used to it in no time and soon be wondering how you spent so much.

With income like yours you should have enough left in the bank every month to actually feel very well off and not be considering whether to sell your house to pay for the parties you had.

Again, sorry if you thought I was too harsh, but really, you will *never* get out of debt without seriously addressing your spending habits, and they clearly haven't changed enough from the boom-times.

Sybil


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## selfassessed (23 Mar 2011)

Your problem is your lifestyle not your mortgage.  With a tracker on that amount you can't be paying more than a few hundred a month in interest.  You just need to cut back and clear your credit card debt first, then credit union, then car loan and pay off the mortgage last.

Once you have cut back for a few months and got on top of things you will actually have more disposable income because you won't be giving CC company 20+% interest!


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## 1150gs (25 Mar 2011)

*spend diary it is then...*

OK, we will do a pending diary for this month and see where we go from there. I'll get back in a month let all of you know how the divorce went!

We're not totally thick, just thick with money!
Anyway, Just like to say a big THANKS to all who gave us advice.

And a day in park is free, and on a day like today, it's not all bad..


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## Mrs Vimes (25 Mar 2011)

Best of luck, you've taken the first step so!

Enjoy the park!


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## Lamorna (25 Apr 2011)

Regarding your % question, in my family/social background, we have the following golden rules:
* never spend more than 1/3 of your net income on rent/mortgage repayment 
* save and/or invest at least 1/3 of your net income every month
* don't borrow money except when buying a house. i.e. you want to buy a car, or a sailing ship, or you want to go on holiday to the States, you save for it and then you pay cash.
* always have an emergency pot worth 3 months of salary or high enough to meet your outgoings for 6 months - whichever is the highest.

That was in France where our income tax is not taken off our gross salary every month - we have to pay for it every tax year. For someone on a low income, count 10% of your annual net income. On a higher income... the bill can be pretty heavy, especially if you own investments in shares and/or real estate. Some years, my father and uncles ended up paying 50% of their total income in tax, which was maddening!

I was unable to live by those rules until I was 25, as I was not earning enough. From the age of 25 onwards, I did as above, and succeeded in saving the equivalent of 1 year's salary in just 6 years (and buying an expensive laptop and an expensive pair of binoculars, and going on foreign holidays and sailing holidays).
I then lost my job and after several months of fruitless jobhunting in France, I moved to the UK, where the jobmarket/housing market/mortgage availibility were all rosy rosy.
The recession hit the UK less than 1 year afterwards. I have managed to remain employed throughout the turmoil, but I'm still earning less than I was earning in France 5 years ago, and I'm spending a lot more on accommodation. My savings pot is also much diminished, due to frequent housemoves (deposits...), course fees, medical fees... 
I'm now applying to better paid jobs and if I get the salary I want, I should be able to start saving nearly 1/3 of my salary again.


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## Mrs Vimes (13 May 2011)

1150gs said:


> OK, we will do a pending diary for this month and see where we go from there. I'll get back in a month let all of you know how the divorce went!



Well OP, a month (or so) later, how are you getting on?


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## PJM (23 May 2011)

Stay!

I bet you regret that top up loan now?  Otherwise, you'd be in perfectly good shape to ride out the storm.


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