# Family of 5, 60k net salary, debt/savings advice needed



## Dewdropdeb (24 Mar 2015)

*Age*: 34
*Spouse’s/Partner's age*: 34

*Annual gross income from employment or profession*:
91,200

*Monthly take-home pay*: 5000

*Type of employment*: private company, secure job, tight month to month.

*Housing*: Rent 1k

*Other borrowings* – credit card debt of 1800.

*Do you pay off your full credit card balance each month? *
No, we pay 300 towards it each month plus any extra left at the end of the month, so should be paid off in 6 months time or less.

*Savings and investments:* none

*Do you have a pension scheme?* Husband does, but he doesn't pay into it, just his company, I know he can do so and make some tax savings, but worried how that would affect take home pay. Would love some advice here.

*Do you own any investment or other property?* No, two run down cars, one of which will need to be replaced soon.

*Ages of children*: 11,9,3

*Life insurance*: yes, 250k each


*What specific question do you have or what issues are of concern to you?
*
On paper the above looks comfortable but it's taken a long time to get there. We have just recently paid off all our debt (save the credit card) and have a horrible credit history.

We have been budgeting carefully since November and have an idea of our outgoings and how we can cut spending, but it seems like things just keep coming up. We had a vet bill of 700 euro this month (yes, she was insured, but Petinsure are not cooperating with paying up) last month one of the cars crashed out, the month before that there were hospital bills, but there is an end in sight.

Once the credit card debt is paid off we are hoping to start saving a rainy day fund, so the things listed above won't be such an issue. My husband also has elderly parents in the USA, so very conscious he could need to go at a moments notice and the expenses that would incur.

Our credit history is lousy, but we are making progress there and hope to possibly apply for a mortgage in 5-7 years, when it should be clean again - at least that's my understanding? Things remain on there for 5 years?

We will need to purchase a car at some stage in the next year and I'm returning to university as a mature student, so will have school fees, childcare costs and commuting costs to take into account.

I am wondering if there's any advice on options with car loans/PCP given our bad credit history.  Also curious as to advice on savings when credit card is paid off... is a credit union our best bet so that it would help with the car loan?

I feel like we've made a lot of progress having had over 50k debt at one point, but also feel a bit lost as to where to go from here.  Any advice much appreciated.

TIA!


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## vandriver (24 Mar 2015)

I'm sure you have an answer,but how on earth are you struggling on a grand a week *after *rent?


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## Dewdropdeb (24 Mar 2015)

Childcare, education costs, two bangers of cars that guzzle petrol like no other and always need something repaired, not to mention the 200/quarter motor tax on each, a longterm illness and the related expenses that go with it (travelling 2 hours for hospital visits, prescription costs, accommodation etc - not covered by health insurance due to waiting periods). As I've said, we have a budget and have stuck to it tightly since November, our outgoings are reasonable, we don't have television, we don't smoke, we don't go on holidays, we shop at Lidl, I cook everything from scratch, hell I haven't had my hair cut for two years.* I am not asking for an analysis of our spending*, which I feel is_ very much_ under control given the life circumstances we find ourselves in and the fact that we've paid down all our debt without any handouts/help over the last few years.  I am asking about going forward and our options with furthering things for our family. Longterm like.  But thanks for the smug response, nothing like being judged by a stranger on the internet.


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## vandriver (24 Mar 2015)

I'm certainly not judging you,and my intention was not to be smug.
Have you got a recent ICB report,to see if your credit history is as bad as you think it is?
Also,I've heard that pcps are easier to get with a dodgy credit history as the car remains the property of the financial institution.
You will need a deposit ,though .


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## mtk (24 Mar 2015)

Hi debs 
Is the salary quoted allowing for your return to education ie is it going to go down ?
Mtk


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## daymoh (24 Mar 2015)

Dewdropdeb said:


> I feel like we've made a lot of progress having had over 50k debt at one point, but also feel a bit lost as to where to go from here.  Any advice much appreciated.
> TIA!



Congrats on paying off 50K debt!

It sounds like a lot of your money issues are temporary. After you complete your course you'll be able to get a job and household income will improve.


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## trasneoir (24 Mar 2015)

vandriver said:


> Also,I've heard that pcps are easier to get with a dodgy credit history as the car remains the property of the financial institution.


OP is struggling to make ends meet. Renting a new car is hardly the solution.

In 12 months time, plan to pay 3-5k cash for something reliable and fairly economical. It's the cheapest way to run a car. Don't be tempted to borrow for better fuel economy - interest and depreciation on a more expensive car inevitabley cost you more than the fuel you'd save.

Stick with the budgeting. I swear by youneedabudget.com and their "4 rules". Imagine how sweet it'll be in a couple of years when a big bill (the vet, the car tax, christmas) comes along, and it doesn't even cause a ripple in your cash flow.


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## so-crates (24 Mar 2015)

I think one thing you need to prioritise is building an emergency fund. One that can be accessed for unexpected hiccoughs like the vet bill. I would not wait until the credit card bill is paid off - the sooner you start the better, even if you start with a small amount (maybe €20 pw) and then increase it once you have cleared the CC. Emergency fund should be saved in a very accessible savings account (jam jars and mattresses are too tempting  ), one that allows you to access the money easily. This money needs to be clearly flagged in your budget and saved up front so you are not struggling to put it aside after you've bought the basics. As a rule, I pay rent, utility bills and savings first, that way I know what my residual income is. I never plan on the basis of my take-home pay, only on the basis of my residual income. It is always something of a education to see what resources you actually have available to you!

Debts remain on your credit history for 5 years after the debt has been cleared. I would suggest you need to consider paying down the CC debt sooner. At your income level €300pm is frankly quite low and as it probably continues to accrue interest it is costing you to pay it off slowly, it would be better to make a determined effort to clear it sooner if possible.

After that you need to start strategising. What savings goals do you have and what timeframe are they in. Retirement is an obvious one. Clearly house purchase is also one. Probably education planning also needs to come into it.


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## Dewdropdeb (24 Mar 2015)

vandriver said:


> I'm certainly not judging you,and my intention was not to be smug.
> Have you got a recent ICB report,to see if your credit history is as bad as you think it is?
> Also,I've heard that pcps are easier to get with a dodgy credit history as the car remains the property of the financial institution.
> You will need a deposit ,though .



Ok, sorry, just came across that way.  Yes, will get a credit report next month, last debt was just paid off today so want to make sure that posts before doing so.



mtk said:


> Hi debs
> Is the salary quoted allowing for your return to education ie is it going to go down ?
> Mtk



It will go down. Student fees are about 2.5k plus books, uniforms (midwifery course) travel etc.



trasneoir said:


> OP is struggling to make ends meet. Renting a new car is hardly the solution.
> 
> In 12 months time, plan to pay 3-5k cash for something reliable and fairly economical. It's the cheapest way to run a car. Don't be tempted to borrow for better fuel economy - interest and depreciation on a more expensive car inevitabley cost you more than the fuel you'd save.
> 
> Stick with the budgeting. I swear by youneedabudget.com and their "4 rules". Imagine how sweet it'll be in a couple of years when a big bill (the vet, the car tax, christmas) comes along, and it doesn't even cause a ripple in your cash flow.



Great advice on the car, makes sense. Himself was thinking of looking at a Nissan Leaf PCP given the low running costs, but I too would be worried about depreciation etc. 

Yep, we will stick with it, it's very revealing. We didn't like YNAB, found it over complicated, but are having great success with Neobudget, both have the apps on our phone and pop in expenses as we go. We've been trying various programs for years, but the simplicity of this one has meant we've stuck to it. 



so-crates said:


> I think one thing you need to prioritise is building an emergency fund. One that can be accessed for unexpected hiccoughs like the vet bill. I would not wait until the credit card bill is paid off - the sooner you start the better, even if you start with a small amount (maybe €20 pw) and then increase it once you have cleared the CC. Emergency fund should be saved in a very accessible savings account (jam jars and mattresses are too tempting  ), one that allows you to access the money easily. This money needs to be clearly flagged in your budget and saved up front so you are not struggling to put it aside after you've bought the basics. As a rule, I pay rent, utility bills and savings first, that way I know what my residual income is. I never plan on the basis of my take-home pay, only on the basis of my residual income. It is always something of a education to see what resources you actually have available to you!
> 
> Debts remain on your credit history for 5 years after the debt has been cleared. I would suggest you need to consider paying down the CC debt sooner. At your income level €300pm is frankly quite low and as it probably continues to accrue interest it is costing you to pay it off slowly, it would be better to make a determined effort to clear it sooner if possible.
> 
> After that you need to start strategising. What savings goals do you have and what timeframe are they in. Retirement is an obvious one. Clearly house purchase is also one. Probably education planning also needs to come into it.



Good advice with starting with the smaller amounts for the emergency fund, I know it makes sense to pay the credit card off ASAP especially as interest rates are going up again in May. I have some part time work coming up and will be putting all the earnings towards that. 

And yes, retirement is a concern of course... his company makes contributions for him for now, but I know we need to top that up at some point. Hopefully once the credit card is paid off, we can put some of the excess towards this and some towards the emergency fund.

Ultimately we need to save for a downpayment too.

When you said accessible... I was thinking the credit union, because it's accessible in that I can go down there and withdraw if need be, but it's rather a pain in the ass to do so, so it wouldn't be overly tempting. I noticed KBC have a decent rate too, but am wary of banks at the moment. 

Thanks for all the advice, much appreciated.


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## so-crates (24 Mar 2015)

With an emergency fund, in my opinion anyway, it shouldn't be solely or primarily about rate of return. This isn't quite savings, this is cushioning. You can of course consider an account that will give you a rate but I would prioritise accessibility over rate for emergency funds. Like you are thinking of, I do keep an emergency fund in my CU - it is just awkward enough to make me think twice 

When you are comfortable with contributing to that then you can start planning more long term and start thinking about proper savings, pensions etc.

As I said, retirement is strategic thinking. Absolutely you need to consider it but lay it out as a personal strategy for the two of you. It will reduce your tax bill since pension contributions are not subject to income tax but you will still have a reduction in income so you need to feel comfortable with it. I would suggest doing some research in advance of how you will proceed, perhaps start here, Pensions Authority.

Start small but definitely start, you have a very comfortable income so with time and patience you should be able to get yourself to a much healthier financial position. Clearly it has not been comfortable enough, but you don't have to live in your past. Everyone does something wrong sometimes but you have the opportunity and capacity to change that. Make a plan this week, today even, to start an emergency fund. That is your first step. Then start mapping out the next steps and put them in a plan for yourselves and follow it. One key point, prioritise savings, treat them as if they are a bill and take them out of the equation before you can start spending them, set them up to be deducted as soon as you are paid. Once you start saving, you'll start wondering how you never managed it before!


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## Dewdropdeb (24 Mar 2015)

Thank you so-crates, makes lots of sense, will get started right away!


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## Dewdropdeb (24 Mar 2015)

One other question, I was doing some online banking there and saw PTSB do a balance transfer for credit cards, 6 months interest free, which would mean we could pay it off quicker without wasting money towards interest. Do ye think there's a hope in heaven they would approve an application with our lousy credit rating?


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## so-crates (24 Mar 2015)

I couldn't answer that, it might be worth trying it to see - the worst they can do is say "No". However if you do this, you will need to be very disciplined and not use the card at all. If you read the infamous "fine print" you will find that there is usually an order of priority for how the CC debt is paid down. Although you see a single lump €1800, your CC provider does not. That amount is divided into dicrete pots marked purchases, cash withdrawls, interest, cash advance fees, etc. Basically certain parts of the €1800 are paid down preferentially,  if you transfer the balance that becomes the lowest priority part of the debt so will be paid after any new purchases which will be paid after the interest the purchase accrues.


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## Dewdropdeb (25 Mar 2015)

Might call in and talk to them. And we have no intention of EVER using a credit card again lol.


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## vandriver (25 Mar 2015)

If you are just managing,how are you budgeting for a loss of 1 income plus the huge cost of childcare?
Two afterschool and one full time could be over a thousand a month.


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## Dewdropdeb (25 Mar 2015)

There will be no loss of income, but yes childcare is a concern. If I get my place I will likely defer for a year until the youngest is in school and then look at an au pair for the hour or two in the morning we will need help with. Creche/etc is not an option at the moment unfortunately.


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## thedaddyman (25 Mar 2015)

Given there is a history of illness, have you done a full review of your tax situation over the last number of years. Have you claimed for everything you are entitled to claim for? Are your tax credits being fully claimed? You never know, you might be entitled to a rebate.


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## BoscoTalking (15 Apr 2015)

Have you looked into the tax relief on travelling 2 hours to and from appointments? Carers allowance and also medical precriptions should all be paid for. sometimes you have to fight for some meds to be put on that yellow book but they should be paid for. have you applied for part carers allowance and GP card? defiantly look into the carers while you are off for the year.
Best of luck!

Also have you factored in children allowance into the income?


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