# Struggling day to day...



## Cornie (17 Jul 2008)

Age: 37
Spouse’s/Partner's age: 37

Annual gross income from employment or profession: €38000
Annual gross income of spouse: €25000

Type of employment: e.g. Civil Servant, self-employed: Civil Servant

In general are you spending more than you earn or are you saving? Just about breaking even, €20 p/w into CU, but generally use this as an emergency fund. Lately seem to be calling for a little withdrawal more frequently. 

Rough estimate of value of home: €240000
Amount outstanding on your mortgage: Split between 2 loans
Loan 1 Original Amt 130000 for 20yrs, just completed 2 years c125000 outstanding (I think)
Loan 2 Original Amt 44000 for 5yrs, just completed 2 years c€28000 outstanding

*What interest rate are you paying? *Tracker Mortgage ECB+1.5, Think it's currently around 6%

Other borrowings – car loans/personal loans etc Husband has CU loan €40p/w c€2000 outstanding
0% finance deal for furniture €25 p/m final payment of €300 in March 09

Do you pay off your full credit card balance each month? NO!!!
If not, what is the balance on your credit card? €5000 on both my CC and Hubbies CC Int 10.5% on mine, c14% on his

Savings and investments: I have around €800 in CU at the moment

Do you have a pension scheme? Yes as in Civil Service, no worries there. Hubby has no pension, was in CWPS but lost job last year and new job is not in construction

Do you own any investment or other property? No

Ages of children: 3 and 1

Life insurance: Hibernian, €202 per year. Basic policy to cover mortgage.
Additional income 332 pm child benefit and 1100 pyear Early Childcare payment


*What specific question do you have or what issues are of concern to you? 
*We just seem to be constantly struggling week to week. I've economised everywhere I seem to be able, Our ESB is on equilizer €64 per month for a 4 bed house, washing machine seems to be used constantly and now the dryer more and more because of 2 small kids and constant rain. Our landline is c. 45 per month. I've just switched mobile to prepay as I don't use it v often. Hubby's mobile is used a lot more day to day, he is on Billpay, c 120 per month. Childcare €220 per week, Grocery's (Lidl & Dunnes) c. 120 per week, Diesel 30 per week Sky (basic package) 30p/m. I don't really go out very often, maybe once every 4 or 5 weeks for a few pints with hubby, babysitters cost too much! He generally goes out for a few pints on a Sat night to the local, nothing major. And we get the odd chinese takeaway and bottle of wine for a treat, but I defo would not say we live the high life!!
I've just applied for 0% interest CC's for myself and himself, and I just paid off my overdraft from CU savings. Changing my current accout to a fee free one to get Child benefit and Early childcare payment paid into, getting a visa debit card instead of cc with this account. Think I will opt out of overdraft this time.
I really want to get rid of the 2 CC's as we're paying nearly 100 per month interest... That would fill the oil tank for the winter!
I know its something that should be seriously thought about, but I was just wondering about doing something with the smaller mortgage loan. This was originally a consolidation loan and at the time I didn't want to go long term with it. We got it at the mortgage rate. At the time hubby was earning a lot more money and the 1600 pm repayments were OK, (both loans are c. 800 each). We are still meeting the repayments, I would avoid grocery shopping for the week if I thought I'd miss the mortgage! But this is why the CC have creaped up so high, we had to put the car insurance and tax on the CC last month cos we didn't have the money to pay.
Would it be worth going interest only on this loan for a year and clearing the CC's? What happens at the end, would we need to make 3 years repayments in 2 years or does it start again for a 3 year period? 
Any advice would be greatfully accepted...


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## Brendan Burgess (17 Jul 2008)

Hi Cornie

In two years, you have paid €16k off your mortgage while allowing your Credit Cards to rise. The mortgage has a much lower interest rate. 

You are at a particularly expensive stage in life. Recently bought house and two young kids. 

See if you can switch both mortgages to interest only for a period. That will leave you with a lot more cash with which to pay off the expensive loans. 

You do have to make sure that when you get the extra cash, you do actually pay off your loans and credit cards with it and that you don't just allow your expenditure to rise. But from the sound of things, you do manage money well. 

Brendan


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## CrazyGirl (17 Jul 2008)

look at halifax credit card at the moment 6 month free apr transfer you existing credit card bills over and it will help you to stop the interest going on to it. BOI also have one.


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## dem_syhp (17 Jul 2008)

Would you consider extending the term of the loan on the second mortgage - over five years might be a bit ambitious - just looks like you're putting yourself under too much pressure.  

I'm sure that you've seen this on other posts, but just incase not, it Karl Jeacle's Mortgage calculator - have a look at it for the impact on the mortgage.


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## irishlinks (17 Jul 2008)

Have you thought about switching your mortgage to  another lender and at the same time combine the two loans into one over 20 years or  maybe more? You owe about 60 to 65% of the value of the house. You could get a tracker  as low as ecb plus 0.7 % (currently 4.95%)  from NIB. Or Halifax and AIB at ECb plus 1%. Halifax still offering to pay legal fees - the other two will cost you maybe 1k or so in legal fees.
The lower rate and the longer term for the smaller mortgage would reduce your monthly payments drastically. You may even want to get a few thousand more on the mortgage to pay off the credit cards?


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## rmelly (17 Jul 2008)

irishlinks said:


> Have you thought about switching your mortgage to another lender and at the same time combine the two loans into one over 20 years or maybe more? You owe about 60 to 65% of the value of the house. You could get a tracker as low as ecb plus 0.7 % (currently 4.95%) from NIB. Or Halifax and AIB at ECb plus 1%. Halifax still offering to pay legal fees - the other two will cost you maybe 1k or so in legal fees.
> The lower rate and the longer term for the smaller mortgage would reduce your monthly payments drastically. You may even want to get a few thousand more on the mortgage to pay off the credit cards?


 
OP, as with everything, be aware of the long term implications of this - increased interest payments. Try the figures in the mortgage calculator and see how much extra interest you end up paying for the 'few thousand', over 30 or 35 years.

However if you were to do this then overpay or make lump sum repayments you can reduce the impact...


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## irishlinks (18 Jul 2008)

Their main aim is to cut the interest they are paying on the credit cards - putting it on the mortgage is the cheapest option.


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## Flax (18 Jul 2008)

Cornie said:


> I don't really go out very often, maybe once every 4 or 5 weeks for a few pints with hubby, babysitters cost too much!



€120 x 1



Cornie said:


> He generally goes out for a few pints on a Sat night to the local



€40 x 4



Cornie said:


> we get the odd chinese takeaway and bottle of wine for a treat



€30 x 2

My figures are rough obviously, but €120 + €160 + €60 is €340 per month.

If you cut out these items for a year you'll have one of your credit cards paid off and you'll be on the way to clearing the second one.

I understand they are your treats, but in my opinion it's better to take a bit of short term pain to clear your debt rather than dragging the stress with you for years.

I don't think you're doing too badly by the way. You just have to ride this rough patch for a year or two.


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## daymoh (19 Jul 2008)

Hi Cornie

The 2 main outgoings for you are the mortgage repayments. 

If I was in your scenario then I would consolidate the mortgage repayments into 1 mortgage for 174K over 25 years, then you'd be looking at roughly 1000-1100euro a month. This will give you 500 a month to start clearing:
1. Credit Cards
2. Loans

In addition:

- 120euro a month mobile bill sounds too high. I'd analyze the phone bill, see how many calls are to landlines, O2, Vodafone are made and would choose the appropriate price plan e.g. If you're hubby is making a lot of calls to landlines then the O2 Unlimited calls to o2 and landlines might be appropriate (e25/month). 
- I think you're doing great with Groceries/Diesel/Cable.
- I'd be reluctant to cut down on the odd treats too much. You only live once.
- Look for cheaper credit cards
- Your hubby should look into a pension
- One last thing.. I'm with Hibernian Insurance too and I know that if you have more than 1 policy(i.e. car/life/house) with them they knock something like 15% off the total cost..Small beans but just thought I'd say it.

Best of luck !


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## rmelly (19 Jul 2008)

irishlinks said:


> Their main aim is to cut the interest they are paying on the credit cards - putting it on the mortgage is the cheapest option.


 
If they leave the money on the mortgage for full term, €5k could cost them €10k or more over the term of the mortgage depending on rate & duration. This is hardly the cheapest option.


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## paddyd (19 Jul 2008)

daymoh said:


> If I was in your scenario then I would consolidate the mortgage repayments into 1 mortgage for 174K over 25 years, then you'd be looking at roughly 1000-1100euro a month. This will give you 500 a month to start clearing:
> 1. Credit Cards
> 2. Loans




On the face of it, this is good advice in my opinion also, however I'm unsure if both loans are actually mortgages, the €44k loan over 5 years looks more like a short-term (ala car-loan) to me, so perhaps they have 2 loans (1 mortgage, 1 loan), from 2 seperate banks and cannot combine them? Cornie?


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## Brendan Burgess (19 Jul 2008)

rmelly said:


> If they leave the money on the mortgage for full term, €5k could cost them €10k or more over the term of the mortgage depending on rate & duration. This is hardly the cheapest option.




This is very false reasoning which is frequently propagated. Even the Consumer Credit Act and the Consumer Protection Codes promote this. 

It ignores completely the time value of money. Adding repayments in 2008 to repayments in 2028 is adding apples and oranges. They are completely different things. 

The OP is renting money and so pays interest. This is perfectly acceptable and the Loan to Value is quite low. The primary concern now is to get this rent as low as possible. So look for the cheapest rate. While you are going through a very expensive period in your life, don't make capital repayments. 

Too many people scrimp and save to pay off their mortgage and end up dying rich. 

Brendan


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## Cornie (21 Jul 2008)

Thanks for all your replies... the two loans are with the one bank. We remortgaged 2 yrs ago, but I didn't want to repay the consolidation part of the mortgage i.e. €44k over 20 years, it was made up in part of home improvement loan, car loan and an old loan my hubby was carrying. At the time I opted for 5 years for that cos I felt that we could manage it OK. I'm not really sure about going down the remortgage route again as I felt it took ages the last time, mind you it was a bit more complicated then as I was getting my husbands name added to the deeds. Maybe the switcher service would cover the transaction this time and it might be easier. I feel that interest rates are due to come down as most banks are offering fixed rates at equal or even less than the variable rates so I think maybe I should just ride out the storm... Switching even one of the mortgage loans to interest only for a while would prob give me the breathing space I need. 'll have a look at that mortgage calc website and see if I learn anything. I'm just not sure of the implications of taking breaks etc..

I have applied for the 0% cc, just haven't heard anything back yet...

I don't save any of my child benefit at the moment because I always thought that when I had the short term loan paid off I would use the extra money to invest in a high interest account for the kids education, and that this would be enough.

As for not going out or getting takeaways for the next year, I can't really see that happening! Our lives have changed so much since we've had the children (not in a bad way, its just life is very different when you are parents of young children... We would have been out together all the time before.) I just don't think it would be healthy for our relationship to cut out all the fun, I'd rather be poor and have a happy family than have plenty of money and end up depressed!


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## Flax (21 Jul 2008)

Cornie said:


> As for not going out or getting takeaways for the next year, I can't really see that happening! Our lives have changed so much since we've had the children (not in a bad way, its just life is very different when you are parents of young children... We would have been out together all the time before.) I just don't think it would be healthy for our relationship to cut out all the fun, I'd rather be poor and have a happy family than have plenty of money and end up depressed!



Well, since I gave up booze and started eating really well (i.e. no takeaways) I've found I've become the opposite of depressed! Definitely alcohol and bad food do bad things to your moods. 

Anyway, it's up to you.


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