# Advice wanted for debt repayment plan



## MaidUpname (26 Aug 2008)

Age: 
Spouse’s/Partner's age: 

Annual gross income from employment or profession: 35,500
Annual gross income of spouse: 33,000

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

In general are you spending more than you earn or are you saving? small savings but more than half our take home pay being spent on debt repayment and mortgage

Rough estimate of value of home 350,000
Amount outstanding on your mortgage: 167,000 (21 yrs)
*What interest rate are you paying? 5.24% tracker*
*Repayment 1182.00 pm*

Other borrowings – car loans/personal loans etc

Personal loan BOI - 175euro every second friday (husband is paid fortnightly) (14K o/s)
Credit Union - me 105.00 pw (balance 19,000)
Credit union - husband 120.00 pw (balance 14,000)

Do you pay off your full credit card balance each month? No
If not, what is the balance on your credit card? 

6,000.00 on Halifax card 0% int for 6 months til 21.01.09
5,800.00 on MBNA card 10.9% int

Savings and investments:

High int savings acc 200.00 pm, balance of 1,800.00 
Do you have a pension scheme? Yes 121.50 pm

Do you own any investment or other property? No

Ages of children: 3 and 4

Life insurance: yes 40 pm


*What specific question do you have or what issues are of concern to you? *[/quote] We are spending so much of our salary just repaying debts, we never seem to have anything left over. We have cut up MBNA cc and have recently opened halifax acc and transferred half the balance from MBNA to this acc at 0%. Balance was 12,000 tho and we only got a limit of 6,000 on halifax so could only transfer that much. We want to try to do anything we can to pay back debt as quick as possible and start afresh. Any advice would be apreciated


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## ClubMan (26 Aug 2008)

Some possible options:



 Use your savings to reduce your most expensive debts.
 Stop making regular savings (including pension contributions other than those necessary to avail of any employer contributions if applicable) and use the money to further reduce your debts first.
 Stop using the credit cards (even the new one) until you can do so purely as a cashflow management mechanism (clearing your bill each month) and not as a source of longer term credit.
 Rectify the lifestyle/expenditure issues that led to you running up so much debt - you seem to have c. €45K of basically unsecured non mortgage debt which is quite a lot - how did this happen?
Maybe rolling some of the unsecured debt onto the mortgage (ideally paying it off over a similar term to the original unsecured loans - i.e. years rather than decades) might be an option as a once off approach to regaining control of your finances - *but not if you are going to rack up a similar amount of unsecured debt having consolidated in this way*.


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## MaidUpname (26 Aug 2008)

Thank you for quick reply. We have €14K also o/s on the BOI loan, I didn't put that in original post. If I used the €1,800.00 from savings account against the MBNA credit card and then transffered the 200.00 pm savings off cc aswell, that would probably help.

Not really sure how it all happened, it is just an accumulation of 7 years living together sincewe bought the house/got married. We tried to consolidate before, we got a top up of 10K and then 15K (these are rolled into the o/s mortgage balance as it stands) and cleared some of it off Credit union (balance was 27K now 18K) and cleared a third credit card also. But since we had kids we just don't know where the money is going.


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## Welfarite (26 Aug 2008)

ClubMan said:


> Rectify the lifestyle/expenditure issues that led to you running up so much debt - you seem to have c. €45K of basically unsecured non mortgage debt which is quite a lot - how did this happen?






MaidUpname said:


> Not really sure how it all happened, it is just an accumulation of 7 years living together sincewe bought the house/got married. We tried to consolidate before, we got a top up of 10K and then 15K (these are rolled into the o/s mortgage balance as it stands) and cleared some of it off Credit union (balance was 27K now 18K) and cleared a third credit card also. But since we had kids we just don't know where the money is going.


 
I think Clubman's question is rhetorical for you to answer to yourself. Saying you're "not sure" how it happened is not telling you anything. You must examine your lifestyle/spending that caused 6.5k per annum overspend. Otherwise, consolidating, changing credit cards, etc. will not help in the long run. You say since you had kids you don't know where the money is going. This implies that you knew before the kidfs were born where your money went and that you had no unaccounted for debt. Is this really the case? You need to do a budget diary and get a handle on where your money goes sop that you can eliminate the unnecessary overspending.


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## MaidUpname (26 Aug 2008)

Before kids, we had only our mortgage and one credit card between us which was never maxed out. I honestly don't know where the overspend is happening as I try to stick to a tight shopping budget and we are claiming for all tax credits we are entitled to.  We never have money left over for any luxuries and after paying all the above mentioned and household bills, get petrol, car tax, insurance, health insurance, etc and food, there is just nothing left in the kitty. Usually have to buy clothes on credit from Littlewoods or put on Credit card, the rare time we do buy them. When a birthday or other occassion pops up where we have to buy a present, it always seems to prove difficult, we never have spare cash.


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## SunShine Boy (26 Aug 2008)

Hi OP

At the outset, it would appear that adding 60K to your mortgage would be the easiest way to dig yourself out of this hole- but, in your case, I would advise against it for 2 reasons: firstly, you re-mortgaged before, didn't change your spending habits and are back to square one now; secondly, until you manage to live BELOW your means it will be only a fire-fighting exercise.

If I was you, I would:

Start a spending diary (yes it will be hard work at start but it will get easier)...record every CENT that leaves your joint fiances for 3/4 consecutive months.... that is the only way you will find out for sure where your money is going if you don't already know.... this will also throw light on areas where you can cut-back/save money.

Leave €1000 of the €1800 in a savings account as an emergency fund - to be used ONLY IN EMERGENCIES.  This is pretty important with 2 young kids.  For example, if one of kids needs medicine, you don't want to be breaking out the Halifax card to pay for it.

Put the remaining €800 and the 200 a month against the MBNA card.

If your employer isn't matching your pension contributions, stop them temporarily and direct that money at your MBNA card as well.

I feel for you.... I know it may seem a daunting prospect..... but I really believe you can do this and be out of all non-mortgage debt by the time your kids start Secondary School if you make the right changes/decisions now....

Good Luck !!!!!!!  

p.s. how many cars do you have?  If you're in a 2 car household - is it at all possible to get by on one ?  Or can you sell what cars you have and buy ones that are 4/5 grand cheaper and use the money to pay off your CCs.... just an idea


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## Flax (26 Aug 2008)

Could you try to get a job where you earn more money?


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## ClubMan (26 Aug 2008)

MaidUpname said:


> I honestly don't know where the overspend is happening as I try to stick to a tight shopping budget


Well the borrowed money is going somewhere and it should not be that difficult to find out where. There are two major issues here (a) dealing with your existing debt and (b) addressing the underlying issues landing you in such debt. You need to do both. The suggestions above (e.g. spending diary etc.) and similar tips in the key posts etc. are very relevant.


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## ClubMan (26 Aug 2008)

ClubMan said:


> Maybe rolling some of the unsecured debt onto the mortgage (ideally paying it off over a similar term to the original unsecured loans - i.e. years rather than decades) might be an option as a once off approach to regaining control of your finances - *but not if you are going to rack up a similar amount of unsecured debt having consolidated in this way*.



I posted the above before knowing this:


MaidUpname said:


> We tried to consolidate before, we got a top up of 10K and then 15K (these are rolled into the o/s mortgage balance as it stands) and cleared some of it off Credit union (balance was 27K now 18K) and cleared a third credit card also. But since we had kids we just don't know where the money is going.


Now that I do I agree with the following:


SunShine Boy said:


> At the outset, it would appear that adding 60K to your mortgage would be the easiest way to dig yourself out of this hole- but, in your case, I would advise against it for 2 reasons: firstly, you re-mortgaged before, didn't change your spending habits and are back to square one now; secondly, until you manage to live BELOW your means it will be only a fire-fighting exercise.


It looks like getting into debt and living off credit has become habitual - you need to identify the causes (i.e. where the money is going) and break the habit and start living within your means.


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## MaidUpname (27 Aug 2008)

Thank you to everyone who has replied. A spending diary is a great idea, it's something we have never done.

Sunshine Boy - we have only one car, no car loan and is a one litre engine so that the tax and insurance are low. We can't sell it as we do need it.

Flax - if I could get a job were I could earn more money I would have done that by now.


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## ClubMan (27 Aug 2008)

MaidUpname said:


> Thank you to everyone who has replied. A spending diary is a great idea, it's something we have never done.


Also, in conjunction with this, try to sit down and analyse where the money has been going - e.g. look at annualised household bills and other expenses and then estimate the average monthly outgoings on each. Aim to draw up a budget allowing you to deal with your debts and live within your means. As already mentioned there are lots of existing links and tips in the key posts section.


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## dem_syhp (29 Aug 2008)

@ mpettigr - do you have any affiliation with debt relief?  What are their rates?  You've three posts, all directing people to the same site.  The site has no interest rates quoted.


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## SarahMc (12 Sep 2008)

Have to agree with others re: what on earth are you spending money on, particularly as you are sensible enough to have one small car between you?

It may not make financial sense, but I like the "snowball" debt repayment method, i.e. forget interest rates, pay off your smallest debt first.  It can give a real feeling of empowerment and control over finances to wipe a debt away.  I'd leave to 1,800 where it is, it is a great emotional cushion to have savings, but redirect the 200pm to MBNA.


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