# Sorting out finances to buy a house



## brokeagain (12 Sep 2007)

Age: 29
Spouse’s/Partner's age: 29

Annual gross income from employment or profession: 33000
Annual gross income spouse:36000

Type of employment: e.g. IT

Expenditure pattern: In general are you spending more than you earn or are you saving? Yes

Other borrowings – car loans/personal loans etc
Credit union 4300 / 355 per month
GE Money 10000 /455 per month
AIB 4100 /162 per month

Do you pay off your full credit card balance each month? No
If not, what is the balance on your credit card? 900

Savings and investments:
50 to CU per month
100 to RaboDirect

Do you have a pension scheme?No 

Do you own any investment or other property?  No


*What specific question do you have or what issues are of concern to you? *
My partner and I want to buy a home together but I have approx 19000 in outstanding debt. He has no loans and is good to save. I have spent the last two years getting my finances in shape and have managed to reduce debt to 19000. My question is..is there a quicker way to do this to get a mortgage in the next year? I don't want to be paying mortgage and loans.
Most of my debts arose from writing off a car and the rest are as a result of a 'round the world trip' I took a few years ago. The house we are looking at is 345K so we should hav eno problem getting approval one I clear my loans.


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## niceoneted (12 Sep 2007)

How much have you in the rabo direct account and how much in the cu savings. Can you use these to off set some of the debt. Also use what your saving in rabo to pay towards the debt and stop saving for a few months. 
Your attitude is right in getting the debts cleared before you go for the mortgage.


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## ClubMan (12 Sep 2007)

Yes - as ever maintaining and adding to savings while carrying unsecured debts makes no sense in most cases. Use the savings to reduce/clear the debts (highest cost first). If you are spending more than you earn then you need to track expenditure, budget better and live within (in fact below if you want to clear your debts) your means otherwise you will be permanently and most likely increasingly in debt.


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## brokeagain (12 Sep 2007)

I have 1500 in CU savings and 800 in Rabo Direct savings. The thing is I can't touch the saving in CU until load there is at least at same level which will take 6 months at least.

I am just getting impatient. The only consolation is that maybe house prices will come down in the mean time.

Would you recommend consolidating the 3 loans at this point. I am tempted to get all loans with GE as interest rate is the lowest of the 3. It is 8%. I would still pay the 1000 per month back.


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## moondance (12 Sep 2007)

Note that a lot of banks won't give you a mortgage while you have outstanding loans. I had to clear my car loan (which had only 800 left to pay) before getting my mortgage approved. So clear those debts even if it means a few nights not going out - that's definitely where I saved loads!


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## csirl (12 Sep 2007)

No point in having savings if you are in debt as interest on savings is less than interest on debt.

Use the Rabobank 800 to reduce the balance on the loan with the highest interest rate - probably your credit card? Stop saving 150 per month and use it to pay back the loans more quickly. 

Cut up credit card so you arent tempted to use it. Adopt a "no more credit" attitude - dont buy anything on credit or borrow any more money for any reason. 

Look at other areas where you can release cash. If you and partner are living together, can you survive with only 1 car for next couple of years and put up with the inconvenience of e.g. one of you getting the bus to work?

Now for the advice that might offend you. 

One of the best ways to clear debt is to get a substantial pay rise and use the extra income exclusively to reduce the debts. Higher pay also helps with obtaining a mortgage. Both your salaries are on the low side for people who, I assume, have been working for at least 4-5 years. Can you look at your career options? Have you thought about seeking a better, higher paid job? Would additional qualifications improve your career outlook? 

I once had a friend who was always in debt. Used to moan about his earnings not being enough. Had been doing the same type of job for several years until it was pointed out to him that at this stage, with his experience, he should be the supervisor of people doing his type of job. Spurred him into action and he started applying for jobs at level above his & got one.


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## ClubMan (12 Sep 2007)

brokeagain said:


> IWould you recommend consolidating the 3 loans at this point. I am tempted to get all loans with GE as interest rate is the lowest of the 3. It is 8%. I would still pay the 1000 per month back.


What rates are you paying on the existing loans?

Apart from the debts this seems to be a key issue/problem to be addressed here:


brokeagain said:


> Expenditure pattern: In general are you spending more than you earn or are you saving? Yes


I presume what you mean is that you are spending more than you earn so something's gotta give eventually!


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## brokeagain (12 Sep 2007)

*What rates are you paying on the existing loans?*
CU 12.5% but I get a rebate on this at end of year.
GE Money 8%
AIB 11.5%

*I presume what you mean is that you are spending more than you earn so something's gotta give eventually!*
Yes, I used to spend more than I earn but I have nipped this at the bud. My main priority is to pay of my debts in the quickest way possible.

_*Have you thought about seeking a better, higher paid job? Would additional qualifications improve your career outlook? *_
I am almost finished a HDip so when I am finished I will be actively seeking a new job with better pay. I have to sit tight at the moment though as my current company are paying for it and will demand a refund of the fees (1500) if I leave after a year of completing the course. I will wait 6 months and then pay them back half of the 1500 if it comes to it.

My partner is also seeking a new job at the moment but things are quiet in IT in the West. It is not as easy to change jobs here and the pay is not as high.

I have thought about getting a part time job but I am restricted with time as I need time to study too. It's a catch 22 situation.


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## paddyodoors (12 Sep 2007)

brokeagain said:


> I am almost finished a HDip so when I am finished I will be actively seeking a new job with better pay. I have to sit tight at the moment though as my current company are paying for it and will demand a refund of the fees (1500) if I leave after a year of completing the course. I will wait 6 months and then pay them back half of the 1500 if it comes to it.


 
good for you that you are "upgrading"

Dont be too worried about the €1500 to pay back, I would still look for a job now for several reasons. Get a clear idea of the market and also, if you see a role you like, you can always try and negotiate that they pay for your fees as part of your contract. (or if you are lucky you can get a job now paying 5k or 10k more now then it would pay for itself very quickly)

Paddy


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## fago76 (13 Sep 2007)

When you say things are quiet in the West I assuming you're not referring to Galway.
Fidelity just announced another big round of recruitment and there are several other companies looking for staff at the moment.

I would think the market is as good as its been in the last 5 years.


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## csirl (14 Sep 2007)

> *Have you thought about seeking a better, higher paid job? Would additional qualifications improve your career outlook?
> *I am almost finished a HDip so when I am finished I will be actively seeking a new job with better pay. I have to sit tight at the moment though as my current company are paying for it and will demand a refund of the fees (1500) if I leave after a year of completing the course. I will wait 6 months and then pay them back half of the 1500 if it comes to it.


 
Teachers are in demand and, after weathering a couple of years on temporary contract, end up in long term secure jobs with a salary scale that rises ahead of inflation every year. Banks look very favourably on secure public sector incomes when giving out mortgages - little risk of unemployment. Also have the option of working another job during the long school holidays (while still being paid teachers salary) which is great for relieving short term debt.


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## moondance (14 Sep 2007)

csirl said:


> Teachers are in demand and, after weathering a couple of years on temporary contract, end up in long term secure jobs with a salary scale that rises ahead of inflation every year. Banks look very favourably on secure public sector incomes when giving out mortgages - little risk of unemployment. Also have the option of working another job during the long school holidays (while still being paid teachers salary) which is great for relieving short term debt.



Just because the OP is doing a H Dip doesn't mean her career is in teaching...


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## brokeagain (18 Sep 2007)

HDip is in IT actually...sorry if this caused confusion. I wish I did a HDip in teaching though


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