# Divorced with mortgage, loans. Plan for kids college and clear down debt.



## dubdub123 (1 Apr 2022)

So many people here seem to have huge pensions pots, salaries etc that I cant relate to.
Im looking for guidance in order to best support my family, and try reduce risk for myself in years to come.

Age: 49
Dependents: 2 children secondary school age
Marital status: Divorced
Salary: 60K 
Pension contributions: 5%, employer matching 5%.
Employer type:  Private industry
Monthly net salary: approx 3,500
Child Benefit: 280 pm
Bonus: None
Maintenance towards children: zero 
Childcare costs: finally at zero! 

Mortgage: Approx 200k 
House Value: approx 400k
Mortgage loan: Rate: 2.1 % Fixed for 10 years, duration of mortgage is 19 years. 1130pm
Car loan: 8400 at 5.1% over 5 years 160pm
Other loan: 25,000 at 5.7% over 10 years , 273pm
Savings: 2k 
Pensions: Across an old occupational pension, PRSA and existing pension approx 80k (I know this is way lower than it needs to be) 

After years of effort, we recently moved from rural Ireland to Dublin, in order to have family support, access to infrastructure, further education for my teens while living at home etc! 

Ive put everything into this move as house prices leapt up last year, but fortunately immediate things are in place in the house so no major expenditure planned.

Im looking for advise on what way to tackle debt over next 2 to 3 years initially, then put in place a longer term plan. 

Mortgage is fixed for 10 years and overpayments allowed, but i think i should tackle other debt first, and try build up a safety net.

I also need to factor in college fees and related costs. One child planned to start in 3 years. Second child planned to start in around 5 or 6 years. Will not need to cover accommodation as they will live at home. 
I think we may be above grant amount, but not sure whats taken into account. 

My son may be autistic and awaiting diagnosis, and going forward Im not sure how this will impact him regarding working in the future, even for part time summer job, so for now im assuming no additional income stream. 

Any guidance on where to focus and pros and cons / risks of different approaches.


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## Brendan Burgess (4 Apr 2022)

dubdub123 said:


> Mortgage loan: Rate: 2.1 % Fixed for 10 years, duration of mortgage is 19 years. 1130pm
> Car loan: 8400 at 5.1% over 5 years 160pm
> Other loan: 25,000 at 5.7% over 10 years , 273pm



The right approach is to pay off the most expensive loan early.  

You save far more money by paying off a loan at 5.7% than one at 2.1% ! 

Brendan


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## Brendan Burgess (4 Apr 2022)

dubdub123 said:


> I also need to factor in college fees and related costs. One child planned to start in 3 years. Second child planned to start in around 5 or 6 years.



You are not in a position to do anything about these at the moment. 

The best thing you can do is to clear the expensive loans if you can. 

When you have them cleared, I think you should save the cash rather than repay your mortgage at 2.1%.   OK, it will be costing your 2.1% to  put money on deposit at 0%, but you will have flexibility.  The alternative would be to pay down your mortgage at 2.1% and find yourself borrowing from a Credit Union or somewhere else at 12%.

Having said that, if you do not already have a Credit Union account you should open one.   If you need to borrow to fund third level fees, then they might be needed if you can't get a cheaper loan from a mainstream bank.

Brendan


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## Brendan Burgess (4 Apr 2022)

dubdub123 said:


> Car loan: 8400 at 5.1% over 5 years 160pm
> Other loan: 25,000 at 5.7% over 10 years , 273pm



I wonder would it be worth asking your mortgage lender if they would refinance these loans? 
€33k @2.1% would be €700 a year interest. At the moment, you are paying about €1,800 a year interest. 

You can still pay off the loans over 5 years and 10 years, but it's just that you would get a lower rate. 

Brendan


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## Baby boomer (4 Apr 2022)

Brendan Burgess said:


> I wonder would it be worth asking your mortgage lender if they would refinance these loans?
> €33k @2.1% would be €700 a year interest. At the moment, you are paying about €1,800 a year interest.
> 
> You can still pay off the loans over 5 years and 10 years, but it's just that you would get a lower rate.
> ...


Or alternatively, would the mortgage lender be prepared to give OP an interest only arrangement on the mortgage for a year or two?  Interest only payment on the mortgage is €360pm, freeing up about €770 per month.  Put that towards the five year loan and it'll clear it in less than 12 months.  At that point, you could put €1200pm towards the ten year loan which would clear it off in under two years.  
OP will then have a slightly higher monthly repayment when you resume full capital and interest payments.  But that should be manageable.


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## luckystar (4 Apr 2022)

Such a shame no maintenance for the kids. No way of revisiting this? Do you have the extra tax credit as you’re parenting alone? Can’t think of the technical name of the tax credit!

I would try put €500 aside monthly and initially pay off the car loan as quickly as possible. Then I’d probably save half this figure (€660 once car loan paid off) and use the other half to start paying down the larger loan. College fees (currently) aren’t exorbitant and luckily kids can stay at home then that’s one less headache on the horizon. 

You’re doing great, it’s really hard on your own to raise 2 kids and all the household expenses!


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## Brendan Burgess (4 Apr 2022)

Baby boomer said:


> Or alternatively, would the mortgage lender be prepared to give OP an interest only arrangement on the mortgage for a year or two?



Agree with this good idea, but make sure it does not impact credit rating. 

Brendan


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## vandriver (4 Apr 2022)

College doesn't have to be expensive.
3k for fees,and a part time job for the student.Thats how I manage it.


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## Peanuts20 (5 Apr 2022)

Start with some basics first, a full tax review to ensure you are paying tax in the most efficient manner possible and also to see if there is anything historically you can claim back on. If you don't feel capable of doing it yourself then it could be worth talking to an accountant or there are firms who will do it for you for a cut (be careful, the amount they take will vary depending on who does it)

Ensure you have an up to date will, sorry, I know it's morbid but it's important. 

Not sure from your post if it is the eldest child who potential has autism. If not then next, time to encourage the eldest kid to look for a part time job, it's good for them and they can start saving for college. Being able to live at home is a great advantage but you are still looking at around €5k pa which includes the contribution fee, books and other assorted add ons. The Children's Allowance will also be gone for that child at that stage. 

Another poster here mentioned the non-contribution of the other parent. There may well be a reason behind all of that and there is more to life then money but it is something worth exploring if not done already. Remember you may be able to apply for a maintenance order so they may not want to pay but that gives them no choice.

Don't rule out the grant but that is 2-3 years away.


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## michaelm (5 Apr 2022)

dubdub123 said:


> I think we may be above grant amount, but not sure whats taken into account.


You should do your homework in relation to that.  Though I expect that divorce may complicate the application.  Ultimately, no need to be 'just over' the SUSI threshold as taxable income can be tweaked (via pension contributions, AVC, bike-to-work, unpaid leave etc.).


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## dubdub123 (21 Apr 2022)

Hi thank you so much for the feedback, I have spent some time going through these suggestions. My main takeaways 

1. Tax review to see if anything further can be claimed
2. VHI review to see if I missed any claims 
3. Continue to pay off loans particularly higher interest loan 
4. Maintenance. Years back when we went to court I was on FIS and it seemed that could be impacted by maintenance order. Knowing full well that my ex would not pay, and already under extreme stress, we didnt look for maintenance. I have not been in receipt of FIS (Now WFP) For years, so might be worth checking on this. 
5. My son is pending ASD assessment and suffering with anxiety, self harming so I dont see him coping with work and college simultaneously. Older child worked pretty much full time to put herself through college, but cant see my son going that path. Once he has diagnosis, I will get him to apply for Disability Allowance . If he got that it would help pay for services that he will need going forward. Ive no idea if he will get that and it could take a long time.
6. Good point about the grant as I may be able to up pension contributions to bring us under amount even to get the fees paid. I think they would look at 2023 year for income  for starting college in 2025.
7. Open up credit union accounts for kids so they can start putting small amount away 
8. Refinance of larger loan would be great but ive only recently obtained the mortgage and salary has not increased since, so i dont think its likely. I went for 10 year loan instead which isnt ideal. 
9. Interest only may be an option but for now I will keep that at the back of my mind

One other thing is that Im going to apply for GP card as I dont have one. This has been.a huge oversight on my behalf as I think we are eligible. 

Thank you so much. If any additional feedback, i would be glad to hear. Thanks


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## Brendan Burgess (21 Apr 2022)

dubdub123 said:


> 9. Interest only may be an option but for now I will keep that at the back of my mind



Which lender are you with? 

Some allow borrowers to take two payment breaks during the term of the loan. 

Having said that, I probably wouldn't use up one of them to get breathing space to pay off  a slightly more expensive loan as you might need it more later.

Brendan


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## dubdub123 (21 Apr 2022)

Brendan Burgess said:


> Which lender are you with?
> 
> Some allow borrowers to take two payment breaks during the term of the loan.
> 
> ...



Im with Avant on a fixed rate. I might check that out just to know for the future though


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## Thirsty (21 Apr 2022)

You should definitely seek child maintenance.  It's their money and they are entitled to be supported by both parents.  

Should the child with additional needs be unable to support themselves as an adult, that financial support will be very important; so you need to be their advocate and make sure you get it for them.

You don't need a solicitor; you can bring the case to District Court and you'll find the clerks very helpful, though of course they can't give legal advice.

The maximum that can be ordered per child per week in District Court is  €150 (which figure has not been increased in 15 years).

You might as well request the max and let the court settle on the amount based on parents income and expenditure.    You can also request an attachment of earnings order if you have grounds to believe the maintenance won't be paid on foot of the Court order.


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## Cavanbhoy (22 Apr 2022)

If your child is starting college in 2025 it will be your income for 2024 they assess you on.
It is also possible to get assessed on current year eg if starting in 2025 assessed on year's 2025 income if more beneficial to you.


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## dubdub123 (22 Apr 2022)

Thirsty said:


> You should definitely seek child maintenance.  It's their money and they are entitled to be supported by both parents.
> 
> Should the child with additional needs be unable to support themselves as an adult, that financial support will be very important; so you need to be their advocate and make sure you get it for them.
> 
> ...


Thank you appreciate that feedback. The situation has definitely changed a lot recently and Im a lot more concerned about supporting them into the future.
My ex is on social welfare payment and i believe he's claiming 96 euro pw for the children, but he has no other earnings. 
Could the court possibly put an order against the social welfare payment? 
Is it even likely that maintenance would be awarded? I had a very stressful few years in and out of court and apprehensive about going this road, but my son in particular may need support and a regular payment would help.


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## Thirsty (22 Apr 2022)

dubdub123 said:


> Could the court possibly put an order against the social welfare payment?
> Is it even likely that maintenance would be awarded?


Yes to both questions.


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## Baby boomer (22 Apr 2022)

Thirsty said:


> Yes to both questions.


+1


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## dubdub123 (21 Aug 2022)

dubdub123 said:


> 1. Tax review to see if anything further can be claimed
> 2. VHI review to see if I missed any claims
> 3. Continue to pay off loans particularly higher interest loan
> 4. Maintenance. Years back when we went to court I was on FIS and it seemed that could be impacted by maintenance order. Knowing full well that my ex would not pay, and already under extreme stress, we didnt look for maintenance. I have not been in receipt of FIS (Now WFP) For years, so might be worth checking on this.
> ...



Just an update on this. First, son received official diagnosis of autism and also has been attending Pieta for support re other concerns. Updates: 

1. I've submitted ICC2 for for 2022, so awaiting update.i will look at previous years. Sone time back i got a company to submit 2016, which was fine  but without contacting me they submitted 2017/2018/2019 so I need to figure that out along with 2020 as I was on TWSS.
2. Submitted old VHI claims and promptly submitting new ones. Added both children to policy.
3. Even though home renovation loan is higher rate, its fixed, so I reckon Ill tackle  car loan first. Its a CU loan so my (very paltry) shares are not accessible til its paid off.
4. Ex has agreed to pay half of ASD assessment cost and towards school costs. No long term maintenance in place, but this is progress.
5. Have just posted the Disability Allowance form.  Epecting refusal as seems to be standard. Will start preparing to resubmit or appeal. Could take months for answer.
6. @cavanbGood advice about which year for grant and submitting AVCs etc
7. Not started. Will be speaking to solicitor some time next month. Msy need to consider setting up trust for son. Will msinly depend on whether he gets DA.
8. Havent looked into this for now.
9. Haven't looked into this for now but might be an option later.

Also, ive completed medical/GP card application and will mail this coming week. 

Any other guidance appreciated


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## dubdub123 (15 Oct 2022)

So I have made significant progress and looking for guidance on next steps

Salary: 68k pa 
Potential bonus: approx 0 to 10% but will be prorated this year)

Monthly salary: this should be approx 4,300 . (Have moved jobs and was emergency taxed and waitingfor this to settle)

Other income
Child Benefit: 280 pm
Sons contribution: 50 euro pw from his Disability Allowance (pretty much used to pay for his stuff like credit, lunches etc) 
And also 35pm towards gas bill. 

Mortgage: approx 200k 18 years remaining. Fixed for 10 years at 2.1%  (1130 pm) 

Other loan: approx 24K fixed, just under 10 years left fixed at 5.9%  (273 pm)

Car loan: approx 7.5K at 5.45% around 4+ years left (160 pm)

accessible savings 10k
Other savings: approx 1500 in CU

Regular savings: Aiming to save approx 1k per month, will have more clarity in coming months



What should I look at next? 
Considering upgrading car within next year, but can hold off on that. I want to keep emergency fund of approx 10k.

1. Successfully claimed ICC which resulted in refunds and tax liability from 2020 paid also. This has made a massive difference.
2. VHI - no pending claims. New employer covers children, so bit of a saving.
3. Paying loans- should I tackle higher interest loan or pay off car loan, to make savings accessible??  
4. Ex has pretty much paid for half of ASD assessment. No plans to follow up for maintenance.
5. Son has been approved for Disability Allowance. We plan to 1) give him 25 euro pw spending 2) contribute 50 pw to household 3) Save the remainder

Would appreciate some guidance on this, as this is the first time in years that I feel I will be able to get ahead of the loans at some stage.


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## dubdub123 (18 Oct 2022)

Any pointers on best approach moving forward? 
What shpuld i tackle first? Car loan (which unlocks CU savings) or the bigger loan with higher interest rate? 
Ok to hold off with AVCs for now til i bring debt under control? 

Any pointers on refinancing the 10 year 25k loan ? Was the best rate that i could get at the time and i havent spotted anything better.

Any guidance appreciated, thanks


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## luckystar (18 Oct 2022)

Pretty sure you can use savings against credit union loans at any stage. Brendan had a excellent pinned post - I’ll try find it. I would def chip away at the car loan and while you have €10k in savings (do you need that much?) it’s worth putting all extra savings against that loan. With rising interest rates the 10 year one looks quite attractive. While there’s some that would say to prioritise AVC’s I think reducing debt should be highest priority


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## luckystar (18 Oct 2022)

Yep here it is






						Key Post - How to set your Credit Union shares against your loan
					

Moderator's note:  This important issue has been copied from another thread.   The Problem   Credit Union Loan| €12,000|interest rate 9% Credit Union Shares|€6,000|interest rate 0% Net borrowing|€6,000|  Annual interest: €1,080  if the shares were set off against the loan, the reduced loan would...



					www.askaboutmoney.com


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## EvenStevens (18 Oct 2022)

Just in relation to college in the future. The capitation fee has been reduced from 3k to 2k this year in the budget and there is some talk it might come down again. Also, when your child is applying for college be sure to check information with GC around the Access(includes financial support) and Dare schemes. There is also a thing called SAF funding in colleges that students in financial hardship can apply for. No guarantees but just to be aware, it can go quickly.


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## dubdub123 (18 Oct 2022)

luckystar said:


> Pretty sure you can use savings against credit union loans at any stage. Brendan had a excellent pinned post - I’ll try find it. I would def chip away at the car loan and while you have €10k in savings (do you need that much?) it’s worth putting all extra savings against that loan. With rising interest rates the 10 year one looks quite attractive. While there’s some that would say to prioritise AVC’s I think reducing debt should be highest priority



10k savings is the highest ive had in years and majority is due to recent tax returns.
I know theres a few bits of work to be done in the house (plumbing work) and im keen to keep some buffer but this may be a little high alright. 

The car loan is variable and while lower rate than long term loan right now that could change. 

I might pay a lump sum off of car loan but for now i'm sitting tight til i think it through so any further input really appreciated. 
I do have access to majority of that money as i took car loan out before i got refund.


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## dubdub123 (18 Oct 2022)

I could pay off car loan now and have smaller amount of savings available (say around 4k in few weeks)  but not sure im fully st ease with this. 
I will be getting a sign on bonus of couple of thousand soon and small bonus, so might be worth paying off a lump sum and try get rid of car loan, then tackle the bigger loan


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## Horatio (20 Oct 2022)

@dubdub123 , delighted to see your progress since your posts earlier this year.   
You've put in hard yards to get into a stronger position & now the decisions you need to make are good ones. Good for you.


I'd be looking at getting those high interest loans paid down as fast as I can while maintaining a *sufficent* emergency fund.
You have changed jobs to a higher salary - can you consider revisiting the loan consolidation question with your Mortgaging bank?
What about the value of your house has that risen? Are you in a lower Loan to Value bracket now, perhaps with equity that can be used as leverage on yout high interest loans?
Maybe consider taking another look at the maintenance question - I read that it's a head melt for you to think about it but you've done well this year & this would really make a difference to your & your childrens situation if you can make it work. You have a good head of steam built up this year  - give it a shot. What's the worst that could happen?


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## dubdub123 (21 Oct 2022)

Horatio said:


> @dubdub123 , delighted to see your progress since your posts earlier this year.
> You've put in hard yards to get into a stronger position & now the decisions you need to make are good ones. Good for you.
> 
> 
> ...


Great thank you, its nice to hear positive feedback! 
1. Im going to think more about this maybe pay 4k off of the higher interest 10 year loan and keep 6k emergency fund. It might make better sense as would cut a chunk of interest off the loan. I just need to get the balance right here, struggling with this being honest.. Maybe them make a smaller regular overpayment. Would be great to get handle on this loan..
2. Im still in probation but might be worth getting some info on this. Mortgage and 10 year loan are both with Avant
3. Not sure if its risen but even if not,  its already in the less than 60% bracket. Around 50 to 55% LTV at minute
4. Yes i might revisit this but right now i dont have the appetite to go to court as its very stressful, but might see how he can support on regular basis. 

Any other feedback really appreciated


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## dubdub123 (2 Nov 2022)

Does the following seem to be a good strategy? At least til large 10 year loan paid off. 

1. Keep 8k emergency fund accessible
Note that theres an additional <2k in shares in CU, so 10k total

2. Pay off lump sums from 10 year loan (its at about 22k now) when I can. 

3. Do not overpay car loan 
4. Do not make AVCs
5. Do not make lump sums against mortgage
6. Do not upgrade car

I need to look at my regular and irregular outgoings more closely, but does the above sound ok as overall strategy?


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## dubdub123 (6 Nov 2022)

Any input on this appreciated if Im going about this the right way. Im going to keep accessible emergency fund at around 5k to 6k. 

Priority is to overpay the 10 year loan where possible. I should be getting small xmas bonus this year and plan to direct this off loan.

My aim is to pay this off by end of 2023 hopefully with regular overpayments.


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