# Single Parent - GET ME OUT OF DEBT!



## frances byrne (21 Mar 2005)

Single mum - 2 school going children - no maintenance (or hope thereof)

House valued at €400,000 

Remaining mortgage €81,000 over next 14 years

MBNA Card - up to its limit of €4,000

CU - €7,000 loan - Childrens Allowance being paid directly to CU to clear this by end 2006 

Car Loan - €145 a month over the next 3 years

Personal Loan - €1,700 - finished next year

Take home pay is €2,445 per month 

Total outgoings amount to €1700 - leaving me 745 to live on for the month but I only seem to get 3 weeks food and clothes and spending for the kids out of this

Any advice  would be most welcome  - really starting to feel like I will never get ahead or on top of this 

Please please help.


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## Noor77 (21 Mar 2005)

Hi Frances

Sorry to hear of your money problems

Have you considered downsizing your property?? Maybe buying something in the region of €260 - €300,000 so you could at least free up some of the money tied up in your present home.

You mentioned that you have €4k on your MBNA card - do you try and limit your card use or do you find yourself using it for day to day expenditure???


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## Murt10 (21 Mar 2005)

Not something I'd particularly fancy myself but would the rent a room scheme be worth considering at least until you have the debts cleared.




I also contacted MBNA a short time ago and they cut the rate that they were charging me on my card to 10.9%, still expensive but cheaper than they were charging nevertheless.

Murt


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## Gar123 (21 Mar 2005)

hello Frances
that credit card debt is the hardest one,you are probably paying 18% interest on that while the cu are charging you about 10%

can you extend the loan form the cu to cover the credit card debt, means you are paying less interest for a start?


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## ClubMan (21 Mar 2005)

and others that it links to might be of interest to you.

*no maintenance (or hope thereof)*

Why not?


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## sysman (21 Mar 2005)

Have you considered remortgage to pay off debts and get the clean start you want. But you would need to insure that the debts don't accumulate again.


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## ClubMan (21 Mar 2005)

And you might be well advised to schedule the repayment of the top-up over a few years rather than the remainder of the whole mortgage term.


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## Tonka (21 Mar 2005)

and there is no point in even starting until you get rid of the Credit Card first.


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## Noor77 (22 Mar 2005)

Have you identified the reasons that your expenditure exceeds your income?

Have you identified areas where you can cut down, reduce or totally stop expenditure?

I would definitely look in to getting maintenance payments if I were you.

I would also seriously consider the 'rent-a-room' scheme - it works for me


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## sinead76 (22 Mar 2005)

*cu loan*

I'm not judging you but are you sure paying your loan from children's allowance works better than paying it out of your salary?  I try and make the CB stretch to everything my daughter needs, as a sort of budget in itself.  Doesn't always work, playschool and art class at €31 pw is €124 a month so that leaves €7.60 for clothes and shoes so I rely on the weeks when playschool are on holidays or have a short week! I usually buy her clothes in penneys or dunnes when they have a sale.  Much as I hate owing money on my own credit card, I wouldn't be without it and its very tempting to use it when I want something (or just need food or petrol!)  Someone suggested once putting the card in a glass of water and freezing it but I'd say that might damage the chip?
If you don't want to refinance your mortgage, would it be possible to consolidate the credit card, credit union loan and other loans?  The credit union are usually good at that sort of thing, but their rates are expensive so a mortgage top-up would be at a better rate and you can get it at a shorter term than your mortgage.  Best of luck


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## ClubMan (22 Mar 2005)

*Re: cu loan*

*Someone suggested once putting the card in a glass of water and freezing it but I'd say that might damage the chip?*

In cases where credit card usage is resulting in unmanageable debt this might not be such a bad thing!


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## moneyhoney (22 Mar 2005)

*Stop giving the woman a hard time*

I really despair of some on the nannyish comments that appear on this site from time to time. This woman is looking for some constructive advice on how to get out of a very tough situation. I imagine she knows that she needs to get rid of her cc.

MABS might be best people to turn to. Though you have sizeable equity in your home, which you can turn to your advantage through a remortgage. Also, you have good income, so lenders should look favourably.


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## ClubMan (22 Mar 2005)

*Re: Stop giving the woman a hard time*

*I really despair of some on the nannyish comments that appear on this site from time to time. This woman is looking for some constructive advice on how to get out of a very tough situation. I imagine she knows that she needs to get rid of her cc.*

What seems "nannyish" to one person may well be constructive advice that they never thought of to another. Please don't dismiss even seemingly obvious suggestions out of hand or assume that people will necessarily know of them a priori. At worst such suggestions are obvious, irrelevant and can be safely ignored but at best they may actually help. Ultimately it's for the original poster to decide which advice she feels is useful and which can help her out. 

In any case the first link that I posted as a reference also links to _MABS_ and a wealth of other constructive resources and advice. 

:rolleyes


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## Ocras (22 Mar 2005)

*Re: Stop giving the woman a hard time*

Don't mean to sound simplistic, but when you write down all your outgoings, (and I mean all), you can spot many areas for savings.

For example, a litre of orange or cranberry normally retails at between €1.80 and €2.50. Would your family of 3 go through 4 of these a week? If so, that's €8 per week.

Every now and again we see "specials" in supermarkets letting them go at "2 for 1" or even 50c each. If you buy for the month (you have a car), that's €8 for the month, and hence a saving of €16.

Where many tend to get caught, is spending the "saving" in the very supemarket that gave it to us.

I know it's simplistic, but when the attitude is taken to all products, the savings can be substantial.

It does take home-management though, as "munchies" can set in when the larder is full!


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## moneyhoney (22 Mar 2005)

*Some sums*

Assuming a little room for error/early repayments, you're looking at €100k debt: 

A 15 year tracker mortgage would cost per month:

AIB 693.00       
IIB HomeLoans 3695.00       
Bank Of Ireland 695.00       
Permanent tsb 695.00       
First Active 697.80       
Ulster Bank 697.80       
Bank Of Scotland 702.70       
EBS 703.00       
National Irish Bank 703.00    
ICS Building Society  705.00  

I am not suggesting this is your only option, but with 2 kids, I imagine that you need as much of your income as possible and they only get more expensive the older they get. I also know that remortgaging short term debt over 15 years is more expensive in the long run BUT it can be a good solution for some people. Having some more disposable cash will  allow you to start saving some money too, which I am sure you'll need over coming years & it's always good to have a cushion. 

PLUS - you'd still only be borrowing 25% of the value or your home. 

BUT cut up the credit card. Or get one with a REALLY low limit.


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## ClubMan (22 Mar 2005)

*Re: Some sums*

*I also know that remortgaging short term debt over 15 years is more expensive in the long run BUT it can be a good solution for some people.*

Anybody contemplating this course of action should sit down, crunch the numbers (e.g. here) and see exactly what the cost of scheduling otherwise short term debt over a longer rather than a shorter term is before making a decision. In my opinion the situations in which doing this would be prudent are very, very rare.

*BUT cut up the credit card.*

All right nanny? :lol 

*Or get one with a REALLY low limit.*

See the best buys list for some 0% balance transfer deals which might give you some breathing space in relation to the credit card debts. Please note that if you use such a balance transfer approach then you should not use the card for further purchases/transactions since they will generally incur interest charges immediately as long as the transferred balance has not been cleared completely.


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## Sherib (22 Mar 2005)

*Re: Single Parent - YOU CAN GET YOURSELF OUT OF DEBT!*

Hello there Frances - I'm inclined to agree with the advice from moneyhoney and sysman and I'd even go further.  Will probably be cruxified for what I'm going to say.

First your assets:  A house worth €400,000 and rising.
                          Employment with a net €2,445/month?
Current outgoings: €1,700.

Frankly I don't know *how* you've managed which is probably why you have accumulated all these high interest loans.

We all hate paying interest but mortgage rates were never as low.  If you deduct inflation rate, the real interest rate is quite low.  So, if you consolidate all those loans into a remortgage of €100,000 you could clear all of them and have enough left to live comfortably on and *save*.  The cost of servicing those four loans, after your mortgage, is a huge waste of money so that would be an immediate saving.  

This is the bit no one here will like!  I'd go so far as to say remortgage over *20 years*.  Yes, you'd pay considerably more interest, but the *opportunity cost* is the benefit and peace of mind.  In other words, you'll have a very manageable mortgage and be debt free.  This will allow you to *save* so you won't end up in this situation again.  

Just make sure your remortgage allows you make additional early payments so you could finish sooner than 20 years and therefore reduce interest.  Don't think that can be done with fixed rate mortgages but you can check that out. 

Of course it goes without saying that you make out a budget from then on and scrap the credit card.  It can't be easy supporting three on your own but you have more assets than you seem to realise.  Good luck.  

8)


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## Noor77 (22 Mar 2005)

*Re: Single Parent - YOU CAN GET YOURSELF OUT OF DEBT!*

Sherib -

I have to say I think that it is the most constructive thing that has been said on this thread so far. Good job! Having the mortgage over 20 years will do a great deal to ease the financial burden.

Noor


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## frances byrne (22 Mar 2005)

*Single Mum Replies!*

Thank you all for your advice

Don't feel half so desperate now

Will opt for going for the remortgage with existing mortgage people

Credit card was cut up last night - feeling a bit uneasy but I am sure I will get over that

Will keep you informed. 

Thanks again


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## Tonka (22 Mar 2005)

*Assuming you have not missed any payments on anything .....*

With your salary being 40k or more  you will get a 0% balance transfer cc off MBNA or Tesco. Take it, when the 6 month 0% period is running out then transfer it again.   Cut the new card up too  

In time, less than a year, you could start using the card again but for now forget it. Maxed out cards are too stress inducing while budgeting./remortgaging and stuff need sorting out. 

My INSTINCT is that budgeting could be all thats needed in your case, it looks a bit wonky but is not a disaster by any means. 

By cutting up the CC you made the decision to stop digging the hole .....Good Stuff. 

Noor77 s thread , while a bit long and rambling , has lots of great budgeting ideas for you to work with


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## Noor77 (22 Mar 2005)

*Re: Single Mum replies*

Well done Frances! You have got the ball rolling ...and everything you do from now on is going to improve your situation.

re: Tonka's comments about the thread started by me: - long and rambling it may be, but, if it has helped at least one person then I'm happy.

And for the information of all of you - I am continuing to save. As well a the €300 in prize bonds, I now have €300 in regular bonds and have increased the SSIA again, from €80 to €154. (It was €20 initially) By a happy coincidence, my net monthly salary (from work, not including letting the room) has increased to €2,450


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## ClubMan (23 Mar 2005)

*Re: Single Mum replies*

*And for the information of all of you - I am continuing to save. As well a the €300 in prize bonds, I now have €300 in regular bonds and have increased the SSIA again, from €80 to €154. (It was €20 initially)*

You would be better off maximising your _SSIA_ contributions even if this means cashing in the _Prize Bonds_ and possibly other savings/investments.

*By a happy coincidence, my net monthly salary (from work, not including letting the room) has increased to €2,450*

So you're  on c. Eur38K gross p.a. from work or Eur3025 once your tax free parential mortgage subsidy and rent a room income are included which is the equivalent of c. Eur51K p.a. Nice.


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## Noor77 (23 Mar 2005)

*Re: actually*

Made another mistake...my income, including the rent a room is €2,450 a month!!! I was getting excited there for a minute   I found out that my gross work salary is €31,500.

My SSIA is actually maxed now ...but €100 a month of it belongs to someone else! So €154 is mine.


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## ClubMan (23 Mar 2005)

*Re: actually*

*but €100 a month of it belongs to someone else! So €154 is mine.*

What do you mean? You know that it's in breach of the _SSIA_ regulations for anybody other than the account holder to fund the account? When you open and close the account you complete a declaration stating that you are the sole funder and beneficiary and to make a false declaration is a serious offence. At best you will put your _SSIA_ in jeopardy and at worst there could be other penalties or implications.


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## Noor77 (23 Mar 2005)

*Re: actually*

Don't get excited Clubman,

I AM funding the other €100 a month, but I am not keeping it. I am going to use that €100 * 60 contributions to start a college fund for my brother... it will come to a total of approximately €7,250. He will be doing his leaving cert in 2007  

And before you suggest that I should be giving this to my parents - I mentioned to them that I would like to start reducing the €250 a month they put towards my mortgage...and they said they wouldn't hear of it for the next 2 years


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## ClubMan (23 Mar 2005)

*Re: actually*

*Don't get excited Clubman,

I AM funding the other €100 a month,*

Not getting excited - just pointing out that if the funds are not yours in the first place (as suggested by your original post) then you are in breach of the _SSIA_ rules. Having clarified that the funds are yours right now that does not apply after all.

*And before you suggest that I should be giving this to my parents - I mentioned to them that I would like to start reducing the €250 a month they put towards my mortgage...and they said they wouldn't hear of it for*

Why assume that I would suggest this? It's your business. I just know that if I personally did not need the money (and possibly even if I did) I would not tap my parents or family for it even if they were willing to subsidise me.


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## Noor77 (23 Mar 2005)

*Re: actually*

Clubman,

It is very clear that you seem to think that I am some sort of sponge or something. I NEVER "tap" for money ... I'm not even sure what exactly you mean by that. Money is not an issue in my family, and we love helping each other out - whether this be financially or in any other way. Five years ago my Grandmother left me IR£15,000. I gave it to my parents, because, although she also left them £15,000, I couldn't think of anything I would rather do with the money than give it to my parents. They used it to do a kitchen conversion in what was their then home. I love my parents to bits, and I am grateful to them for all the times they have helped me, fiscally and emotionally.

Anyway, this thread belongs to Frances - and Frances, please let us know how you get on with the remortgaging. Good luck!!!


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## ClubMan (23 Mar 2005)

*Re: actually*

Don't get so excited about my [broken link removed] especially when I applied it hypothetically to myself and not anybody else.


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## michaelm (31 Mar 2005)

frances: Firstly if you are using you real name you should probably consider adopting a username when posting personal details.  If you are new to AAM you should have a good read of the different forums to determine for yourself who's posts tend to be reliable and informed (e.g. Clubman) and who are the financial basket cases too eager to give advice.

Your income and debt levels look fine, you're just a bit disorganised financially.  According to your supplied figures you only owe 18K above your mortgage and if you are struggling to meet the various payments it should be easy to refinance.  An 18K loan at mortgage rates (3.5%) should cost around €330/€530 per month over 5/3 years respectively.  An 18K loan at normal rates (say 9%) should cost around €375/€575 per month over 5/3 years respectively.

You could also consider the route of complete re-mortgage (if this is open to you, depending on your private personal circumstances), as suggested by moneyhoney, over a maximum of 15 years - a 100K 15 year tracker with NIB (2.8%) should work out at around €680/month.  (€960/month over 10 years).

There are numerous permutations available to you to sort this out.  I'd tend to agree with Tonka here that you could probably park your CC debt at 0% for 6/12 months and budget your way out of this.

Whatever you do please DO NOT get a 20 year re-mortgage as suggested by some here as this is plainly insane.


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