# Need step by step instructions on how to sort out my current financial mess



## jakearmitage (24 Jan 2009)

I am 29 years old single and earn 30k a year

I owe the bank 13k including interest over 5 years which equates to 315 euro a month I also pay rent plus bills of 300 a month and I pay ntl 26 euro a month of internet services. I also have maxed out on my credit card which had a limit of 2500 euro and I am in a deficet of -1000 euro in my current account as I have an overdraft which is also at its limit 
Now there are a couple of things I what

1. Buy a car
2.do a course starting feb which costs 2000 euro
3.go on a months hols to australia in the summer(I will only need to pay for ticket and spending money as im staying with my brother)
4.eventually buy a house worth 200k

What should my first steps be?

I think I can manage to save 400euro a month after my current outgoings I mentioned


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## ajapale (24 Jan 2009)

Ive moved this from the Jobs/Careers forum to the Money Makeover forum.

aj
mod


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## webtax (24 Jan 2009)

Can I ask what the bank loan was for if you don't have a house or car yet?

If you can save €400 a month the first step should be to clear the credit card, which carries the highest interest charge (switch to the lowest rate card offer available). Reduce your overdraft to make sure you don't go over the limit and incur penalties. I would forget about the car for a while.

Examine where you have been spending your monthly income and make cuts to fund your course. What sort of coure is it & will it improve your employment opportunities significantly?

(I'm assuming your list of things you want is not a wind-up!)


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## so-crates (24 Jan 2009)

You earn €30k gross.
You owe €13k + €2.5k + €1k = €16.5k more than half your gross income and by the fact that it is not a mortgage and you are looking to buy a car it is hard to see what you have for your debt.

I am not saying you are living beyond your means but I do think you need to look carefully at your spending habits in general!

Two short term aims:
You want to do a course in February (next month) which will cost €2k - which I am going to guess you don't have tucked away anywhere. How are you planning to pay for it? Are you intending taking another loan to cover it?

It will cost probably at least €1.5k to travel to Australia (excluding spending money while there btw - including that I would up that to over €2k - despite the accommodation on offer, I doubt you plan to stay in every night, only visit free attractions, drink water and walk everywhere while there )

One medium term aim:
Buy a car - you have given no timeline or budget on this.

One long term aim:
Buy a house ~€200k, for which you will need a minimum of a €20k deposit plus money with which to furnish it probably.

Honestly if I was you (and willing to carry the debt you seem to be comfortable with) I would pick between either the course or the holiday and postpone the other for a year. I would plump for the holiday as you are unlikely to manage to save enough money in time to pay for the course and may not be able to access the finance to pay for it.

You have a lifestyle spend issue - your income is stretched (as evidenced by your credit card maxed out and your overdraft at €1k - think about it, between the two of them that is more than 10% of your GROSS income!). I am going to be generous and guess that that is partially a hang over from Christmas and not a constant habit.

I'd agree with webtax - whatever you decide - now is the time to tighten your belt and learn to achieve your aims by paying forward for them rather than back.

1) Draw up a budget - and be honest if you want to save 400pm, write out all your outgoings, don't forget to provide for expenses that occur at a longer interval than the interval you budget for (so if you budget for a week, divide monthly expenses over the weeks in the month). And don't forget to budget for things like presents for family and the unexpected (doctors 'n' dentists cost)

2) Stick to it. 
Tell your friends that you are planning a big holiday so you can't head out on the town 
Shop smart - turn up with a list, only list what you need, stick to it, compare prices, check out the cheaper discount shops.
Keep all your receipts - and use them to tally your costs - keep a spending diary.

3) REDUCE your credit card debt and tackle your overdraft. These are very expensive debts. They cost you a fortune every month and even worse over time. Besides - if you do head down under you want to be confident that you can use your card - you get the best exchange rate and it is very useful in emergencies.

On the other two aims...
In terms of saving for a house, if you were to redirect your putative €400pm into saving for a deposit it will take you 50 months to save it. That is just over 4 years. A 25 year mortgage for €180k will probably cost you around €1k per month - which is more than the sum of your proposed savings and your rent. In order to get a mortgage you would also not get anywhere if you have the debt load that you currently carry.

In terms of buying a car - always remember a loan on a car is doubly expensive as you are paying interest on a depreciating asset - you can never recover the cost of your original investment if you try to sell the car. It is better if you can buy it with your own money - for €10k it will take you two years to save that. Then you have the cost of running the car on top of that.

What I am trying to say is that while €400pm is a good start assuming you can actually manage that - if you are planning to save for a house and a car you would need to be saving much more. Which goes back to my original point - you need to seriously reconsider the cost of your lifestyle, you have hard choices to make.


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## jakearmitage (24 Jan 2009)

Basically what I need to do is get a job that pays more the loan was a big mistake I went back to college which I dropped out of 
Half of the loan payed for the accomodation the rest on living expenses the loan was for 10k but I owe 14k now over 5 years including interest 
with a year or 2 more experience I believe I can get a job thats pays 35 to 40k and I could get 20 to 33% shift on top of that aswell as far as the course is concerned I could wait till sep to do it as it runs twice a year most of the credit card went on paying for a new computer


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## PubMan (24 Jan 2009)

jakearmitage said:


> I what
> 1. Buy a car
> 2.do a course starting feb which costs 2000 euro
> 3.go on a months hols to australia in the summer(I will only need to pay for ticket and spending money as im staying with my brother)
> ...


Probably not what you want to hear but in my opinion your first step is to realise that you can't afford a car and a holiday while your finances are in their current state.


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## so-crates (24 Jan 2009)

Getting a job that pays more is of course one way of making your money go further  but unless that is an immediate option you are better tackling the problem in front of you.

September is a better option for the course. At €400pm you will need 5 months to save for it. I'd still say pick one or the other though.


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## Bronte (26 Jan 2009)

Step by step

1. You cannot afford any of the items you listed
2. You need to pay back your credit card debt first and ideally get rid of it after switching to a 0% provider and if you really have to keep it reduce the limit to say 500 Euro. 
3. You then payback your overdraft and once paid back you cancel this facility.
4. You then save for your course.  (that will get you a better paid job)
5. Save for a car or skip this step and don't get a car (more debt and expense) and save a deposit for a house.
6. When you have the house save for a holiday.  

This is an old fashioned concept of learning to live within your means.


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## Flax (26 Jan 2009)

jakearmitage said:


> 1. Buy a car
> 2.do a course starting feb which costs 2000 euro
> 3.go on a months hols to australia in the summer(I will only need to pay for ticket and spending money as im staying with my brother)
> 4.eventually buy a house worth 200k


 
You can't afford to do any of that. 

Pay off your debt and then you can consider expensive holidays, cars, courses, etc.


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## tink (26 Jan 2009)

I agree with posts above also note that you want a car you want to do a course and a holiday in oz - however you do not need any of it! Sometimes life is just tough my friend! Try and see if your work will pay for a course you are only going to add to your substantial debt if you do. You need to stop thinking of loans as the answer you need to save for the things you want it's not easy but worth the peace of mind. however I would plough that 400 a month into clearing your debt you could be debt free in about 3 years or so..good luck!


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## Ghodadaba (27 Jan 2009)

jakearmitage said:


> I am 29 years old single and earn 30k a year
> 
> I owe the bank 13k including interest over 5 years which equates to 315 euro a month I also pay rent plus bills of 300 a month and I pay ntl 26 euro a month of internet services. I also have maxed out on my credit card which had a limit of 2500 euro and I am in a deficet of -1000 euro in my current account as I have an overdraft which is also at its limit
> Now there are a couple of things I what
> ...


 
I think this sounds like a complete wind up......


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## infinity (27 Jan 2009)

Ghodadaba said:


> I think this sounds like a complete wind up......



I don't think it is - an awful lot of people in the last few years have "failed to cut their coat according to their cloth" - so to speak.

Jakearmitage - you need to concentrate on reducing your debt first and foremost, instead of taking on more debt to fund your lifestyle. If you can't afford it then you simply can't afford it - there is no shame in that!


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## Rigoletto (27 Jan 2009)

infinity said:


> I don't think it is - an awful lot of people in the last few years have "failed to cut their coat according to their cloth" - so to speak.
> 
> Jakearmitage - you need to concentrate on reducing your debt first and foremost, instead of taking on more debt to fund your lifestyle. If you can't afford it then you simply can't afford it - there is no shame in that!


 
i think infinity is right here. not having a go at the OP, but he simply cant afford any of the things on his wish list (yet) and if he realises this he may save himself another post in x months time complaining of huge debt.


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## BoscoTalking (27 Jan 2009)

IF the course is something that will definately enhance your income at work (not the i'ed love to do photography or web design type) then do it but plan to do it next year. pay off the card and OD ASAP. and keep on your payments up on the other bill. 
set up a DD to your CU for 25e per week for your flight and holls to Oz in a years or maybe two years time considering its a nights drinks then just get out a video and stay in for that one night instead. 
the car i would advise against for as long as possible - you will always be paying something as a car owner - tax, insurance, servicing, car loan, parking, petrol etc.


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