# family first from the EBS



## flash (16 Jan 2003)

Is this unfair pressure to be putting on parents ???

I believe is encouraging children to request that the family home be mortgaged to provide a deposit/help for children to buy their own homes


am i right anyone ?


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## Liam D Ferguson (16 Jan 2003)

Relevant link is [broken link removed].

I'm inclined to agree with flash.  If, as a parent you are in a financial position _and_ of a mind to help your children get on the property ladder, that of course is up to you.  But if you're not, on either count, I don't think there should be any pressure brought to bear on you.

Still, if you've resisted "pester power" until this point, you should be well-versed in the lines "NO darling - just because your best friend's parents gave him/her a Barbie Doll / Action Man / Playstation 2 / deposit for a house, doesn't mean to say we're going to" :lol 

Liam D Ferguson
www.ferga.com


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## Paulina Poriskova (16 Jan 2003)

*Family First*

Of course, sometimes it better to do something for your kids while you are still living as opposed to passing on assets while permanently in the arms of Morpheus. 

Think of the satisfaction you could derive from the former.


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## Liam D Ferguson (16 Jan 2003)

*Re: Family First*

I couldn't agree more, but it must remain your choice to do so, not made under pressure from your kids or a clevermarketing campaign.


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## ClubMan (16 Jan 2003)

*Re: Family First*

Heard the ad on the radio the other day and then saw the TV version and thought that they were awful. However having it debated on national radio (e.g. Marian Finucane) was a bit OTT in my opinion. It amazes me how some people seem to feel so threatened by/vulnerable to advertising messages that they don't like....!


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## Tintagel (16 Jan 2003)

*Has the Central Bank a view on this?*

This is about making money for the EBS. The Central Bank is keeping a close eye on the Financial institutions. They are not allowed to overlend to their customers. In addition to quoting the normal rate of interest on homeloans they are also obliged to quote up to 2 percentage points to see if this is affordable to the borrowers.  Most borrowers will argue that they can well afford to borrow well over the 2.5 times income threshold.  So what the EBS is doing is really encouraging the parents to borrow the extra that they are not allowed to lend to the son/daughter. The parents then enter into an arrangement wherby the son/daughter repays the parent and the parent repays the EBS. This is simply a mechanisim to lend more money to the borrower through the back door and circumvent Central Bank borrowing guidelines. It is nothing about the warm family mutual type concept.


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## Tommy (16 Jan 2003)

*Re: Family First*

The scheme is a recipe for disaster. We hear every day that pensions are underfunded and that people will get nasty financial surprises when they retire. Now they are being encouraged to *borrow* to support their children in buying property of their own - presumably the kids will be mortgaged to the hilt themselves as well. Most of the people in this situation will be over 55. Doesn't add up, when one takes into account actuarial rates of unanticipated incapacity to earn, illness and, sadly, unexpected death in this age group.


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## flash (16 Jan 2003)

*EBS family first*

What if you need the certainty of the equity in the family home to support your future medical or nursing home costs - a big worry for lot of couple?

Many children are not able through financial, work(2 working through necessity) , actual room , commitments or other reasons to take in ailing parent or parents, especially one parent families?

In many cases the equity in their family home is all they have and the end.

Its not a matter of just saying NO! and having the children again blame the parents for something(them not having  house of theirt own) it goes far beyond that.

I believe it does put pressure on parents who can't.

FF


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## Tintagel (16 Jan 2003)

*"Ah Da I'll pay you back next month"*

Everyone is assuming that the parent is making a gift of their new borrowings to their child. Supposing the parent is not making a gift but lending the money to their child, that has to be repaid. 

We now have a situation where the child has borrowed the maximum amount from the EBS or other financial institution. This has to be repaid. Including mortgage protection, fire insurance, serious illness cover etc etc
The EBS thinks it suitable that the child has borrowed enough and his/her borrowings are within Central Bank guidelines.

But it is not enough there is a shortfall. In steps the EBS
"Sure don't we have this new product"

The parents arrive in to the branch. They borrow against their own home, maybe take out new mortgage protection, refresh their fire insurance, all EBS products.

They LEND this money to their child. Now the child has to repay both the EBS or other lending institution and their parents. The EBS were happy not to lend the child anymore money but seem happy enough that the parent will lend the money to the child. Why did they not give the child the extra money themselves in the first place?

I bet you when a monthly repayment is missed by the child it will not be the EBS that will lose out. "Ah Da I'll make it up to you next month" 

Does the parent sign a declaration for the EBS that this money will only be gifted to the child and not given by way of a loan?

Are there tax implications in gifting money to children?


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## ClubMan (17 Jan 2003)

*Re: "Ah Da I'll pay you back next month"*

*Are there tax implications in gifting money to children?*

Maybe - but there are generous allowances/exemptions for [broken link removed].

I hate the EBS ads with a vengeance but I don't understand people getting so worked up about it and can't see what the problem is with parents saying no to such a proposal from the children if it doesn't suit them. We are dealing with adults (parents and children) here after all.

From some of the reaction to this ad (including Marian Finucane taking the EBS representative to task over it) one would think that people lost all of their decision making faculties in the face of such a ferocious advertising onslaught! :rolleyes


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## US (17 Jan 2003)

*Family First*

Yes, there are tax implications in gifting money to children,but you'd have to gift an awful lot - about €450,000, if I recall - before you'd have to worry about them.

The ESB doesn't care if the parents lend the money to the children.  Why should it?  If the children cannot pay both loans, the ESB is protected - it has security over the children's house but the parent will have none.  So, yes, the parent will be at a loss.


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## ClubMan (17 Jan 2003)

*Re: Family First*

Looks like the  seems to have extended to US now! :lol


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## Brendan Burgess (21 Jan 2003)

*Re: Family First*

I haven't seen or heard the ad, so I can't comment on it. The ad in today's Irish Times is unacceptable to me. It says that parents can borrow at no cost for the first three years, or words to that effect. This is grossly misleading. Just because they are not making repayments doesn't mean that the interest bill isn't ticking up. 

Apart from the bad ads, I see very little wrong with this product. 

If my parents have €30k in the bank and they give it or lend it to me to buy my first house, is there anything wrong with that?  I don't think that there is.

If my parents have a €500k house and they borrow €30k on the strength of it, is there anything wrong with that? I don't think that there is. Particularly if I give them back the money with interest after 3 years or after 10 years. 

A first time buyer would probably get more benefit from €30k now than from €300k in twenty years time when the parents die. 

Most of us go through a financial life cycle:
Financial dependence on our parents until finished studying.
Our first job when there is a fair bit of surplus cash.
Scrimping and saving to buy a house and/or get married and/or have kids. 
Getting the mortgage under some control.
Getting the kids under some financial control.
Accumulating cash before retirement.
Retiring in a mortgage free home.
Dying rich.

As long as helping the child with the mortgage doesn't endanger the parents' long term financial security, I see nothing wrong with it.

Brendan


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## Brendan Burgess (21 Jan 2003)

*Re: Family First*



> They borrow against their own home, maybe take out new mortgage protection, refresh their fire insurance, all EBS products.



Maybe they will, but they are unlikely to be under any obligation to do so.

They should have adequate fire insurance in the first place and if the EBS offers a better quote,then they will save money.

If they are over 50, they are under no obligation to take out a mortgage protection policy. 

Brendan


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## rainyday (21 Jan 2003)

*Nursing Home*



> Most of us go through a financial life cycle:



Hi Brendan - You omitted the all too common stage of

'Spend my final 3-5 years in a very expensive nursing home costing me (or my kids, if I was nice to them) €500 per week & upwards, draining away my assets & my dignity'.


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## Tommy (21 Jan 2003)

*Re: Nursing Home*

Also, if parents find it necessary to borrow say €30K at age 55 or 60 to fund their children's house, it is not a great sign of their long-term financial security, if they want to remain living in their own home.

 All it takes is for the breadwinner parent to suffer a stroke or some other debilitating illness and the remaining parent may be forced against their will to sell the family home to pay off the bank, at possibly the most stressful and vulnerable time of their life.


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## flash (22 Jan 2003)

*EBS family first*

Brendan,
ur wired 2 the moon 

I hope to die and leave the home + to my children, at that stage I will no longer need it(if I outlive my wife)

But, up to then, lifes a gamble and I may need a large amount next week, next month, next year for who knows what emergency.

Some people may be put in a very difficult at a difficult time over this.

It should carry a health warning.

Mr EBS said that their "advisors" cover everything.

They just want to sell a product and earn commission

Remember the Pension scandals in the UK?

F


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## Brendan Burgess (22 Jan 2003)

*Re: EBS family first*

I am obviously not getting my point across. As I said in the post, _As long as helping the child with the mortgage doesn't endanger the parents' long term financial security, I see nothing wrong with it._

I am not suggesting taking out a mortgage for 92% of the value of the home. I think in most cases the amount borrowed would be quite small - maybe 10% of the value of the property? This is unlikely to endanger the financial security of the parents. In most cases, the child will repay this loan after a few years and everyone will be better off. If the child defaults *and*if the parents get hit with a sudden big bill*and*if they cannot remortgage their home any further, the parents will be at a loss. 

If the kids are not reliable or if the parents are close to nursing home stage or if they are likely to need the money in the near future, then they should not lend the money to their kids. The parents should only be lending the money to their children if the children will have the capacity to repay it in the future. 

Brendan


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## MOB (22 Jan 2003)

*Property values*

I have no strong views on the family first product.  If I were a parent I certainly wouldn't use it myself, but I can see that it might be useful.  However, I do want to make a small point about the "parental security" issue.   It is a fact that in real terms property values have jumped ahead in the past ten years.  For most people, a substantial part of their wealth is tied up in their home.  So the property market has - indirectly- brought about a significant redistribution of wealth, because those in larger, better houses - i.e. our parents generation - have benefited disproportionately from the rise in property values.  In other words, many parents now have substantially more wealth than they expected or planned for.  This doesn't place any moral obligation on parents (in my view) but where you have a parent who has benefited from the strong property market and a child who has suffered because of it, there is certainly nothing wrong with both parties redressing the imbalance, and the EBS mortgage offers a way to do it.


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## rainyday (22 Jan 2003)

*EBS*

I'm a bit concerned by the fact that the TV ads display 'No Legal Fees' but when you read the small print (see below), you will find that this only applies in certain restrictive circumstances, i.e.



> You may wish to use your own solicitor and EBS will
> contribute up to € 900 towards the legal costs. Your solicitor will invoice your local EBS office directly. The loan amount being refinanced must be at least € 40,000 to be eligible for this legal fee contribution. In addition to refinancing your existing mortgage to EBS, you must also obtain additional finance to help towards the cost of the first time buyer’s property. This product is seen as an entire package designed to help parents contribute towards their childs’ first home.
> 2. The second circumstance is where the parent is an existing customer of EBS who avails of a top up loan in order to contribute to the deposit of their child’s home. The first time buyer must also take out a new mortgage with EBS. EBS will pay the legal charges associated with registering the additional top up loan proportion only. This applies only if the EBS choose to register the legal charge over the loan. This is only available provided the first time buyer also takes out a new loan with EBS. Any other legal fees associated with this product are the responsibility of the customer.
> You may wish to use your own solicitor and EBS will contribute up to € 900 towards the legal costs. Your solicitor will invoice your local EBS office directly. The loan amount being refinanced must be at least € 40,000 to be eligible for this legal fee contribution. In addition to refinancing your existing mortgage to EBS, you must also obtain additional finance to help towards the cost of the first time buyer’s property. This product is seen as an entire package designed to help parents contribute towards their childs’ first home.
> ...


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## tyoung (22 Jan 2003)

*parental aid*

This is slightly off topic. But surely this whole discussion is evidence of the gross overvaluation in the residential market. Why should parents have to burrow to help their offspring buy a house?  Of course parental involvement adds to demand further pushing up prices.
  Falling interest rates will continue to support the market this year. But eventually the cycle turns. 
  Furthermore there is a retirement crisis brewing all over the developed world. The problem is not as severe in Ireland as in Japan and continental Europe but basically people are living longer, healthcare is more expensive(including nursing home care) and return on investments will be much lower than the optimistic projections of insurance Co.
 For those outside the public sector on private pensions and those with defined contibution plans, hold on to your money.


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## flash (23 Jan 2003)

*EBS family first*

Brendan,

u r still wired 2 the moon 

"or if the parents are close to nursing home stage "

who can estimate this?

Rgds, F


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## Liam D Ferguson (23 Jan 2003)

*Re: EBS family first*

I agree with tyoung.  

Last year I was asked to comment on the new higher multiples of salary being offered by lenders.  I said that selfishly I was delighted because it was good for business for me, but I also believed that it would contribute further to house price inflation.  If houses are reaching a level where many FTB's can't get on the ladder, offering bigger mortgages is a very short-term solution to that problem.  (And yes I know the bigger mortgages were a result of lower interest rates and therefore greater affordability, but the effect they had on house prices was the same).  

Now the EBS product.  If it's successful (and judging by the amount of publicity and free discussion it has generated, it probably will be), other lenders will follow suit and it will become even more commonplace for parents to borrow to help their FTB kids.  And so the cycle will continue upwards.  

But if lenders didn't offer these deals, wouldn't that mean that eventually demand would dry up and prices would level out?  Don't get me wrong, I'm not blaming lenders for dreaming up products that will sell - that's what they're in business for.


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## endowed (23 Jan 2003)

*EBS advert*

Just going slightly off-topic for a moment, in relation to the EBS advert, it was interesting to read an Advertising Standards Authority for Ireland spokesperson being quoted in last Sunday’s [broken link removed] that _"there is nothing in the ad that obviously breaches the (advertising)code, but we will keep an open mind, it seems to be upsetting people, and there is a provision in our code that says ads should not cause widespread offence."_

Up to last weekend, the ASAI said it had only received two formal complaints. :\


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## Tintagel (23 Jan 2003)

*No kids?  Use your EBS mortgage account to your advantage.*

For those of you who have an EBS mortgage, some savings and no children may I offer the following advice.

Rather than keep your savings in a deposit account that is paying a miserly amount of interest and DIRT why not do the following.

Transfer your savings in to your mortgage account, not to pay off the capital, but to sit there as a credit in your account. If you have a variable interest rate on your mortgage account you can do this. So instead of getting a lowly 1% on your savings you end up saving 4%+ in interest on your mortgage on the amount lodged. You won't get a better savings rate than this.  

Most financial institutions will let you do this and if you need to withdraw a lump sum simply ask for the amount back from your credit balance. In other words your mortgage account becomes your savings account.

You don't get interest but you save paying interest.


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## Marion (23 Jan 2003)

Hi All

I think there are a number of issues here. 

Firstly, the Ad itself annoys me. I note there is only one parent in the Ad - the dad - and the child looking for a mortgage is also male! 

Secondly, parents who have been able to give money to their children have probably always done so. It's a fact of life - some parents are well off or reasonably well off and have been able to give a "leg up" to their children. I'm not aware of any studies which highlight the effect this may have had on house prices!

Thirdly, the emphasis has now shifted to the parents borrowing money to help out the children. So, one presumes that they are not well-off and that this opportunity only arises because of the increased equity in their homes.

A friend of mine mentioned recently that when she and her husband took out their mortgage 12 years ago on a £30,000 loan that they were paying 3/4 of her salary in repayments. People have *always* found it difficult to pay mortgages.

I think that we are a nation which desires instant gratification - we want it all now. The EBS ads are playing to this notion and has correctly identified parents as a soft touch!

Every person can weigh up the advantages of providing for their children now or later - if ever - why should children _expect_ to inherit something from their parents? I presume that the parents will have given their children a good life when they are growing up 

I don't know why parents are getting upset about this Ad, or indeed, feeling guilty about it. If it suits parents to do this - they should. If not, then they should not and they should not be pressurised by their children to do so. People in their 20s don't "need" to own their own home.

Marion :hat


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## ClubMan (23 Jan 2003)

I hate the ad too. However I strongly disagree with the insinuation by many people/commentators that the ad somehow pressurises people into doing something that they don't want to do. It's like arguing that Guinness ads force us to drink pints and cigarette ads (if they exist any more?) force us to smoke fags! Whatever happened to personal responsibility and free will?! :rolleyes


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## Dogbert (23 Jan 2003)

*Family First*

I hate the ad too. In fact, I think they should fire their ad agency.

Imagine how much more effective (and less troublesome media-wise) it would have been if they'd gone at it the other way round .... instead of the gloomy atmosphere, pressure-laden tones, head-shaking male-only participants, etc they could have had offspring and spouse chatting over dinner about the wonderful new house they've seen but can't quite afford, concerned parents asking how much they need and suggesting that they know a way in which they can, and would love to, help out, etc (without going to the lengths, obviously, of the laughing hyena approach that PermanentTSB took for their equity release product - I hated those ads too.)

They'd probably have got grief then for being too happy-clappy about a serious social problem, but it would have been a much more effective ad campaign imho.


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## ClubMan (23 Jan 2003)

*Re: Family First*

Yeah - most ads are crap. Some are very irritating. A few (usually those that use humour well in my opinion) are enjoyable. However I still can't see why EBS are being pilloried for this particular attempt. I mean it (and I mean the ad itself as opposed to the related pertinent issue of house prices etc.) has been discussed on _The Late Late Show_, _The Marian Fnucane Show_, various Sunday talk shows, AAM, the papers etc. usually with the EBS cast as the villain of the piece! :rolleyes


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## z (23 Jan 2003)

*How you tell it*

I think _Doggie_ has hit the nail on the head.  Nothing wrong with the product but presentation all wrong.

Instead of suggesting that the son is entitled to this money making any parent not so providing feel like a right heel, it would be much more acceptable if it had been presented as an extremely generous gesture on the part of the Da - so that one should not feel any guilt if in your particular case you cannot rise to these levels of altruism. :rolleyes


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## flash (23 Jan 2003)

*ebs*

"I think that we are a nation which desires instant gratification - we want it all now. The EBS ads are playing to this notion and has correctly identified parents as a soft touch!"   Marion


this it exactly,
20-30, great "life", new car, new house, fully carpeted & furnished, holidays x 2 and 
we want it all now(mum & dad !)

F


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## rainyday (23 Jan 2003)

*House Prices*

Hi Marion



> A friend of mine mentioned recently that when she and her husband took out their mortgage 12 years ago on a £30,000 loan that they were paying 3/4 of her salary in repayments. People have always found it difficult to pay mortgages.



I do think that it is substantially more difficult today for young people/couples to get their first step onto the property ladder. To quote the latest BOI Quarterly Irish Property Review;



> Indeed, the move to a much lower rate environment has resulted in a steep shift upward in the price of Irish assets relative to income - the average house in 2002 costs around six times average disposable income per worker, up from around three in the mid-1990's.


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## Liam D Ferguson (24 Jan 2003)

*Re: Advertising*

Quoth ClubMan...

*...has been discussed on The Late Late Show, The Marian Fnucane Show, various Sunday talk shows, AAM, the papers etc. usually with the EBS cast as the villain of the piece!*

Maybe the EBS ad agency is cleverer than we give them credit for.  With all the controversy it has generated (see above), loads of people have heard about the product.  And isn't that what advertising is all about?  Even if you are listening to a radio show lambasting the product, if the product described seems to suit your needs, you'll make a note of it.


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## Tommy (24 Jan 2003)

*Re: Advertising*

Well whatever about that, I have stoutly defended the EBS and its raison d'etre in these pages and elsewhere in the past, and I must say that the disgraceful so-called  "Family First" promotion has certainly damaged my own opinion of the EBS and the motives of its management.


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## flash (24 Jan 2003)

*ebs*

ah converted at last !

I use the EBS a lot (mortgage, sdavings, ssia, summit)

However, their not the most efficient org in the business

they need the KITA motivational technique applied readily to their senior mgt

lucky they don't have shareholders, the mgt might have to account for themselves.

maybe mutuals should treat their members as shareholders, issue divs and explain their mgt

F


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## Tommy (24 Jan 2003)

*Re: ebs*

Hi Flash

Just because the run a crappy ad campaign for a crappy product doesn't mean they should automatically demutualise.

Anyway, I doubt if it would be legal for a mutual to pay a dividend to members??? Can anyone advise???

T.


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## Contango10 (25 Jan 2003)

*Possible EBS dividend?*

Don't credit unions pay dividends to their members?

Contango10


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## flash (25 Jan 2003)

*EBS family first*

credit unions do


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## IsleofMan (26 Jan 2003)

*YES, YES, YES.*

Mutuals are supposed to pay dividends to their customers in the form of lower mortgage rates and higher savings rates. Unfortunately this mutual is doing neither. 

Maybe they have spent our dividends on their new head office on Burlington Road, large pensions and golden handshakes to retiring directors, and big cars for their senior management.

:hat


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## Tommy (27 Jan 2003)

*Re: YES, YES, YES.*



> Maybe they have spent our dividends on their new head office on Burlington Road, large pensions and golden handshakes to retiring directors, and big cars for their senior management.



Ahhh...reminds me of the old guff that used to spew out from the likes of pre-ceasefires Sinn Féin, the Militant wings of the Labour Party (both sides of the Irish Sea) and Tomas McGiolla's Workers Party around 1983. Those were indeed the days... 

You would swear that no other financial institution in Ireland ever provided itself with new offices and nice remuneration packages for its managers.


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## flash (27 Jan 2003)

*ebs*

a mutual should be run for the mutual benefit of the members......oops


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## Tommy (27 Jan 2003)

*Re: ebs*

If EBS were to fail to attract decent management and staff by cutting corners on executive remuneration, its detractors would complain (correctly) that their members interests were being damaged by such myopia.


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## Sludge (4 Feb 2003)

*I'm not even sure if I like my children anymore.....*

Joking apart, with three sons in the twentysomething age bracket I find as I pass the 50 age mark that I am beginning to slow down, falter, lose the bottle, feel the long winters, tired of being a taxi driver to my children, tired of having helpful advice thrown back in my face, cleaning up after them, not being appreciated etc etc.

One of my sons has moved from his home where he had an en suite bathroom, T.V., Video recorder, DVD recorder, P.C.  He is now paying rent instead of living at home free of charge, his mobile phone bill is about 200 Euro a month yet he still manages to clock up calls on my landline.  My other son blows money. Buys CD's and doesn't even play them.  Wouldn't dream of buying a cake or treat for his for his mother. Drinks in the expensive superpubs. Buys expensive clothes and doesn't even wear them. Never has the correct change for the bus, so we have all these bus tickets thrown about the place with 30 or 40 cents refund on them. Couldn't be bothered to collect his refund...and so on

Yeah I love them warts and all but I find that love takes energy that I don't seem to have any more (no advice or remedies please).  Australia for our winters is looking good, I saw where you could buy a 4 bedroomed house close to Brisbane for about Euro 170k.. anyone done any research into this?


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## XXXAnother PersonXXX (4 Feb 2003)

*.*

They certainly must have good jobs!


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## ClubMan (4 Feb 2003)

*Re: .*

*Joking apart, with three sons in the twentysomething age bracket I find as I pass the 50 age mark that I am beginning to slow down, falter, lose the bottle, feel the long winters, tired of being a taxi driver to my children, tired of having helpful advice thrown back in my face, cleaning up after them, not being appreciated etc etc.*

Sounds a bit like About Schmidt! :|


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## rainyday (25 Feb 2003)

I see the [broken link removed] complaints against the ads for this product.


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## Tintagel (26 Feb 2003)

*But what about the grandchildren.*

The children qualify for a 90% loan. The parents top this loan up for them. Three years time the baby comes along, one of the childs parents has to give up their job to mind junior or employ a childminder. Maybe because their new house is in the outer areas they have also had to buy a second car etc. They are now worse off than they were financially three years previously.

Fat chance Mammy and Daddy has of getting their bridging loan back.


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