# Money Makeover



## JJ343 (27 May 2008)

Age: *30*
Spouse’s/Partner's age: *27*

Annual gross income from employment or profession: *45,000*
Annual gross income of spouse: *34,000*

Type of employment: e.g. *Private Sector / Partner - Civil Sector*

Rough estimate of value of home *€300K*
Amount outstanding on your mortgage: *€295K* 
What interest rate are you paying?* 1505 per month with 4.7% fixed until next year and then variable*

Other borrowings – car loans/personal loans etc
Me: Car loan - 20, 000 / 12,000 outstanding - *400 per month repayments*
Spouse: CU loan - 4,500 + Bank - 5,000 / 9,500 outstanding - *400 per month repayments*

Do you pay off your full credit card balance each month? *Yes*
If not, what is the balance on your credit card? *0*

Savings and investments: 
Bank: 10,000
C.U: 4,500

Do you have a pension scheme? *Yes*

Do you own any investment or other property? *No*

Life insurance: 
Me: *40 per month (expensive due to a previous illness)*
Partner: *26 per month* 

*What **specific question do you have or what issues are of concern to you? *
*While on paper our money is quite healthy and we are doing ok. *I did up a budget recently and what I did was work out everything required over a year i.e. tv licence, weekly petrol, food etc and I broke it down into monthly and then weekly expenditure. From mortgage to petrol to car etc we are spending approximately 1100 a week! I have given us each a weekly spend of 120 Euro each for lunches socialising, clothes, etc, I also allowed for 200 Euro a month savings.

We have approximately 14,000 in our savings which we are using towards our wedding. 

Should we not save the 200 a month and maybe put this money into the loans? Or save the 200 for year (to keep for help if / when the mortgage repayments go up) and then look at a consolidating our personal loans between us which would allow us to drop the monthly repayments?

We are comfortable enough but I am very nervous that once we are out of the fixed rate term next April we could find ourselves in hot water as the repayments will most definitely go up. I am not sure that a mortgage move is possible next year either as I have had 2 bad illnesses and I don't know if we'd get insured because of them. 

Also we are planning to have a baby once we are married and I just don't know where to get the money from. Any help or comments would be appreciated.


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## Jonathan.OB (27 May 2008)

Is having a baby so soon really necessary? If I was stretched on my borrowings like you are, having a child immediately, would not be an option.


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## pc7 (27 May 2008)

First thing both do a spending diary to see exactly what you are spending, bring in your lunch, don't buy new clothes, cut back on socialising, shop in likes of Aldi/Lidl (use shopping list only buy what you need), get rid of extra tv packages if you have them, monitor mobile usage.  Use savings to clear your loans and once cleared then start saving for your wedding.  There is no point paying interest on loans while saving.


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## Diziet (27 May 2008)

You are spending almost 1000 per month in discretionary spending between the two of you (you allowed 120 per week each). This can easily be halved. Then you can put the 500 plus the 200 you save each month into paying off your personal loans.

Once your personal loans are paid off, you will have more disposable income so the mortgage interest will hurt less.

I think it is mad to view consolidation as a way forward. You are paying interest all the way - money which is not giving you any benefit. You have the income to clear these debts so do it as a priority. Once you have  child the cost of childcare (which is the single biggest expense) or the alternative loss of a salary will be pretty scary if you are carrying personal debt.

A spending diary is a great help - do it for a couple of months and examine where your money goes. You'll be amazed!


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## JJ343 (27 May 2008)

Hey Guys,

Thanks for the input. We do already bring lunches so I guess the 120 can most definitely be halved. We are definitely coping at the moment but I think its a case of my being very nervous being a new house owner etc. Hopefully it will even itself out once we can clear those blasted loans. When I see young people taking out big car loans at the moment I think to myself 'just wait until you have a mortgage and then you'll be sorry'. 

cheers again!


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## Mr DT (27 May 2008)

First of all well done on buying a home that hasn't broke the bank!! Your outstanding Mortgage looks good compare to your joint incomes, nothing too risky.

The savings you have are going on the wedding, again well done at least you haven't borrowed for ya big day!

The budget makes sense and I would say that if you want to become more finacially secure before you start a family you really need to focus on getting your loans down as soon as possible.

That would free up money you will NEED when you have a family. Any money you save each month....take it off the loan. Any pay rise you get..... pay it off the loan etc. (this assumes you have no charges for doing this) If you can maintain your life style and make a dent in the loan then all the better.

If you feel that coming off your fixed rate next year will cause you problems you need to look at this now and adjust you life style accordingly. Calculate what your payments will be next year and start living like you have this expense now, then you won't have as much of a shock next year.

With family your lifestyle will change anyway so don't let money stop you having a family, you will just have to adjust.


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## ClubMan (27 May 2008)

JJ343 said:


> Other borrowings – car loans/personal loans etc
> Me: Car loan - 20, 000 / 12,000 outstanding - *400 per month repayments*
> Spouse: CU loan - 4,500 + Bank - 5,000 / 9,500 outstanding - *400 per month repayments*
> 
> ...



You have unsecured loans while maintaining not insignificant savings - this makes little sense. Use the savings to reduce/clear your unsecured loans starting with the most expensive and then use the erstwhile repayment amounts "saved" towards new regular savings/investments.


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## Mr DT (27 May 2008)

Clubman suggests you cancel your wedding.


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## Mpsox (27 May 2008)

Weddings??? Did not the great Eddie Hobbs advise a couple on his TV show a while back that they should double the number of people they were asking to the wedding and ask for cash gifts only


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## ClubMan (27 May 2008)

Mr DT said:


> Clubman suggests you cancel your wedding.


Where did I say that?


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## michaelm (27 May 2008)

JJ343 said:


> We have approximately 14,000 in our savings which we are using towards our wedding.





ClubMan said:


> Use the savings to reduce/clear your unsecured loans


Not quite 'cancel your wedding', but getting there.


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## ClubMan (27 May 2008)

OK - I missed that point. However the net effect is that as things stand the original poster and his partner are effectively incurring unsecured debt to pay for their wedding which is not necessarily a "good thing". I don't think that the wedding needs to be cancelled but I would imagine that it and the cost could easily be scaled back and kept within the original poster's means?


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## Captin Sobel (27 May 2008)

ClubMan said:


> OK - I missed that point. However the net effect is that as things stand the original poster and his partner are effectively incurring unsecured debt to pay for their wedding which is not necessarily a "good thing". I don't think that the wedding needs to be cancelled but I would imagine that it and the cost could easily be scaled back and kept within the original poster's means?



I/we were in similar financial situation 2 years ago, took loan ( repayments 600pm for 2 years ) and I've two repayments left now and we are doing fine, its tight but sure it was worth it, it would have been terrible for us personally to have but it off. We did manage to do the whole wedding for around 20k(8k saving/12k loan) though ( and not in Ireland )- which I guess is a lot lower than many people budget these days.

So I think its doable - but prepare to tighten your belts and remember the Wedding day in the years to come..!


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## Bronte (28 May 2008)

OP I'd pay off the loans with your savings and then start to save for the wedding, with the payments of 800 you are now making on your loans you can save quite a bit, plus you will save all the interest.  What is your wedding budget?  14K is a lot of money.  Would it be better to do a very small wedding so as to reduce the costs.


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## Vanilla (28 May 2008)

Why not allocate say 4000 for a holiday in California next year, and get a quicky marriage in Las Vegas. Put the entire 14500 against the car loans right now as the interest on that is the highest. You will have debts of circa 7000 outstanding but will have freed up 800 plus savings of 200 per month. Overpay into the loans until they are clear. This will take 7 months- then save like made for the California holiday. This will take another 4 months or so. Eh voila, no loans, start wedded life with a bang.


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## CN624 (28 May 2008)

Did you get a 100% mortgage to buy your home?


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## Jimbobp (28 May 2008)

I think one of your biggest concerns is the rate of your mortgage after your fixed rate ends. Don't let your health problems put you off from shopping around for a better rate. As long as you don't consolidate any loans, your existing life policy should be ok for the new lender. Don't fall in to the trap of allowing your mortgage to drift on to a variable rate.


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## JJ343 (29 May 2008)

Hey Guys, 

Wedding is booked and the dress is bought etc so there's not a prayer of us cancelling it. We already had to cancel our first wedding that was booked due to ill health. Thanks for all of your comments, I have certainly taken them onboard and I will be working to use at least four grand of the savings to pay off one loan. We have also started a spending diary and are really tightening our belts to put every spare penny away and put towards loans. Also we're hoping that the gifts we get for the wedding (cash hopefully!) will be enough to pay over another bit. 

Cheers
JJ


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## Captin Sobel (29 May 2008)

Wedding planning can be a stressful thing, but mark my words come the day none of the hassels in the lead up will matter.

Best of luck with it,


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## annR (29 May 2008)

Good luck JJ.  Weddings don't have to be as expensive as they're made out to be.  You didn't say when your wedding is so it's hard to know whether you would be able to save up for it again if you used your savings now to pay off the loans.  

I've become a Jeacle convert.  If you're worried about coming off the fixed rate you can use the mortgage calculator at www.jeacle.ie to estimate what your repayments will be on higher rates of interest which will give you something to work with and help your planning.


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