# My escalating debt is crippling me!



## Jamjam (27 Jun 2006)

Hi everyone,
This is my story....please advise if you can...
i am 800 in to my overdraft. I owe 5000 to cu (uni loan), 11000 to boi (car), 2600 to MBNA (balance transfer for 6 months and have just started this), 360 on visa.

I earn 2300 pm (more recently it has been 2700 pm due to temp position, this stops in june)

I am getting 3000euro in July for extra work that i have done. What is my best use of this? I mean i know its small but should I use some of it to pay CU loan?

In september I am taking on extra work which will mean approx 500euro extra pm. 

I can not sleep at night worrying about my escalating debt. The following are my main out goings

Loan BOI=259pm
CU loan with 33euro savings=110euro
savings with BOI investment thingy=105pm
life assurance=30pm
Car insurance=40pm
rent=325pm
landline=50 pm
mobile =100 pm (I need this for work and thats why its a bit high ..sometimes its 200euro)

Then there is petrol= 30 pw,
electricy 50pm
food ...200/150 pm

Anyway ....can anyone advise me? I am at my wits end and really am not seeing light at the end of the tunnel

Any advise would be appreciated.

* note mispelling in title! Sorry ...


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## gordongekko (27 Jun 2006)

*Re: My escaling debt is crippling me!*

You should contact MABS . Would you be able to sell the car or at least trade down a bit .


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## Jamjam (28 Jun 2006)

*Re: My escaling debt is crippling me!*

Don't think trading down is an option as its 2002 206. i will contact mabs though. Hopefully they will be able to advise. i can't tolerate the worry. I'm making myself sick but I just can't catch up with myself. Thanks for your reply


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## ClubMan (28 Jun 2006)

*Re: My escaling debt is crippling me!*

Some obvious savings that can be used to contribute towards reducing your debts:


			
				Jamjam said:
			
		

> savings with BOI investment thingy=105pm


 Unless this is an _SSIA _you should probably stop it and redirect the money towards reducing your debt. Saving/investing while you have significant outstanding debts (other than a mortgage perhaps) simply does not make sense.


> life assurance=30pm


 Why do you have life assurance? If you have no dependents then you should probably also stop this.


> landline=50 pm


 €24 line rental + €26 in calls? Cut down and/or switch to another cheaper provider.


> mobile =100 pm (I need this for work and thats why its a bit high ..sometimes its 200euro)


 If you are an employee and need it for work then they should be reimbursing you for work calls. Otherwise cut down and/or change to a cheaper provider.


> rent=325pm


 Are you claiming rent tax relief and other common reliefs/credits?

Common PAYE tax credits and reliefs


> CU loan with 33euro savings


 How much do you have in the _CU_? Would you be better off using that money to clear/reduce debt? You certainly should not be saving money like this while encumbered with debt.


> I earn 2300 pm
> 
> I am getting 3000euro in July for extra work that i have done.


 Gross or net of tax/_PRSI_?


> What is my best use of this? I mean i know its small but should I use some of it to pay CU loan?


Use it to clear/reduce the most expensive debt first.

If you haven't done so already then stop using the credit card(s?).


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## gordongekko (28 Jun 2006)

*Re: My escaling debt is crippling me!*

If it was me i would cancel the saving policy . You are unlikely to be earning a rate of return that is more than the loan rates and the credit cards rates that you are paying. In reality you are borrowing at credit card rates to save at a much lower rate.


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## askalot (28 Jun 2006)

*Re: My escaling debt is crippling me!*

Do you need the car for work or would public transport do? If you could sell the car and clear most of the BOI loan then use the surplus 259pm + 40pm(insurance) + 130pm(petrol @30pw) to start on the credit card balance. Getting rid of the car would give you an extra 429pm.

Obviously you have the bus/train fare to pay and the odd taxi but it should be nothing like the expense of the car. 

Do you need life assurance? 

Is your 100pm spent on mobile calls a bill pay contract? If so, I would recommend switching to pay-as-you-go, also have a look to see whether you would benefit from switching providers. I cut my bills from about 150pm to less than 20pm though I now rarely have any long chats on the mobile and always try to call from a landline. Mobiles are a great way to waste your hard earned cash. Are you self-employed or can you get your employer to pay some of the cost of the mobile?

You say that you can hardly sleep because of worries so if I was you I would stop/reduce the 105pm savings with BOI.

You've probably already thought all these options through during the dark hours but I hope they are of some use to you.


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## Trish1 (28 Jun 2006)

I would use 3k to clear visa and mbna even tho you have a few months free of interest, get rid!  Check the value of the car and if it is close to 11k outstanding balance sell and clear.  Talk to your credit union they are all ears when it comes to troubles and they can negotiate with you about setting up a loan to cover remainder of your debts and possibly buying a cheap little run around.  Get rid of savings plan, insurance and cut down phone expenses.  Dont worry, it can be solved speaking as one who knows!!  Now you have started looking for the solution, it will come.  Just be ruthless with yourself.


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## nelly (28 Jun 2006)

speaking as a driver of a 96 micra, trading down makes a lot of sense. 

Also, in addition to others i would suggest you look at your credit card bills and see where that money went to and try to curb your spending in the future, if you don't trust yourself then chop the card. I would use your 3k coming to you to get rid of the CC debt as it will begin to hurt in no time - 6 months will fly. 

When i was in your shoes i recorded every cent going out and got tough with my spending habits, - Eddie Hobbs would be so proud... and i noticed simple changes freed up cash - like I stppped getting take out food because i noticed i could spend a fortune in a month on it.


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## abbie (28 Jun 2006)

I calculate that you have approximately 1,000 euros left over based on the 2,300 you earn or 1,400 based on the 2,700 you earn - I don't understand why you are getting so worried - some people live on 1,000 a month (including their bills)


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## Thrifty (28 Jun 2006)

I agree with the advise you have had above. I would look at the savings and cancel if not an SSIA related. i would use your €3000 to clear the MBNA and the CC and then start reducing your overdraft. I was unsure whether your credit union amount was €110 pw or pm. There seems alot going on to your shares and i would talk to them about reducing this. Even if it is €110pw that still appears to add up to expenditure of approx 1670 per month covering food, rent, loans, travel etc if you stop the savings and pay off the CC and MBNA loan. €632 left - limit your social life and other costs a bit and try to use €100 of this each month to get rid of the overdraft. I think its just a case of working out a budget and sticking to it.


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## purplealien (28 Jun 2006)

> I calculate that you have approximately 1,000 euros left over based on the 2,300 you earn or 1,400 based on the 2,700 you earn - I don't understand why you are getting so worried - some people live on 1,000 a month (including their bills)


I don't understand it either - i certainly wouldn't be worrying myself sick if i were in your situation. Lots of good advice - take it and don't ever get into the situation again because you're too much of a worrier and it's bad for your health!


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## Hel_n (28 Jun 2006)

I would back up the advice given by previous posters. Use the €3000 you are receiving in July to clear MBNA and Visa debt. You should also work on clearing your overdraft - maybe by cashing in your BOI savings policy? (unless this is an SSIA). By cancelling this policy and your life assurance you will have an additional €145 pm. You didn't say how much your CU savings are but you could look at using them to reduce your loan and maybe even use some of the €145pm you are saving to repay it faster. 

The main thing is that for now you work on reducing your debt. You say that you will be earning an extra €500 pm from september, you shoud then be in a better position to start saving but for now you should clear as much of your debt as possible.


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## jhegarty (28 Jun 2006)

Jamjam said:
			
		

> CU loan with 33euro savings=110euro
> savings with BOI investment thingy=105pm




how much is in these saving account ?


to be honest , I don't think things are that bad , we get people on here in far worse shape.... a bit of good planning and moving money around will do you the world of good.....


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## oysterman (28 Jun 2006)

Jamjam,

By all means have a chat with mabs but I think they'll be a little underwhelmed by the extent of your difficulties!

You have negligible overdraft/cc debt - which the €3k you're about to get will nearly eradicate.

The car loan is hardly excessive if the car improves your quality of life and is important for work.

There is probably some scope for you cut back on phone expenditure - other posters have mentioned that you should be passing on some of this cost to your employer if you are using it for work. Do this - no worker should subsidise their employer.

The €5k you owe the CU for what you describe as a "uni loan" - your university education is a massive asset that will reward you handsomely financially (and otherwise) throughout your life so €5k is a tiny amount to have left to pay for this huge benefit to you.

What I'm getting at here is that you should not be worrying about your level of indebtedness and it should certainly not be coming between you and your sleep as it is at the moment. You are in great shape and your debt is well under control.

Take a couple of the steps suggested by other posters and you'll feel more in control of things.

And then get on with enjoying yourself. Life is good.


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## Jamjam (28 Jun 2006)

*Re: My escaling debt is crippling me!*

HAvE STOPPED CREDIT CARD! Thats why im in my overdraft.

Thanks everyone for your replies. I can not sell my car. I live in the middle of nowhere. No public transport and drive 50 miles to and from work each day. In addition i also do alot of travelling with my job and require a car as could not be carrying what i carry on public transport. Its a 1.1 and its 2002 I don't think I could down size it anymore!
 I have life assurance beacuse I felt I was pushing on (33) and was advised to get it. Is this of no use to me?
My cu savings isn't worth talking about. very little 100euro!
I have the tax relief on my rent.

i have been doing the smart choice savings with BOI with 15months only because I never saved before. Here is a bit about it. If you think I should give it up I will. [broken link removed]
I consider my landline to be cheap enough. I am with imagine.ie and have limited net access which is what i require.

My mobile is with 02 and is under the business plan. 

So should I cancel all savings and pay off loans immedicately? I was given a mortage of 265k on my own. Obviously i'm not foolish to take this up!!! I will be renting until my loans are paid

I guess I could always start saving again once my debts are paid off. As for the 3000euro....this is after tax ...so I was thinking of putting 1000 in to MBNA and 1000 in to CU  and the rest for my overdraft.

Any other ideas? Seriously guys thanks a million for your replies. i really thought I would be ridiculed for screwing up my finances so badly. I swear i am so thankful for all the advice 

J x


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## Jamjam (28 Jun 2006)

jhegarty said:
			
		

> how much is in these saving account ?
> 
> 
> to be honest , I don't think things are that bad , we get people on here in far worse shape.... a bit of good planning and moving money around will do you the world of good.....


 
Thanks a million ....I hope so. Just that I'm sick with worry over it. Constant debt and I can't get out of it. Mabs here I come.


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## ClubMan (28 Jun 2006)

*Re: My escaling debt is crippling me!*



			
				Jamjam said:
			
		

> I have life assurance beacuse I felt I was pushing on (33) and was advised to get it. Is this of no use to me?


Most likely not if you have no dependents or mortgage. See this thread:

Life Insurance/assurance difference


> My cu savings isn't worth talking about. very little 100euro!


Are you sure? It's very unusual to have €5K in _CU _borrowings on the back of €100 in shares/deposits. 


> i have been doing the smart choice savings with BOI with 15months only because I never saved before. Here is a bit about it. If you think I should give it up I will.


Why are you saving €33 p.m. in the _CU _and €105 p.m. with _BOI _when reducing your debts seems to be more of a priority to you? That doesn't make sense. As mentioned above this means that you are effectively borrowing (at credit cards rates) to invest. It's not an issue of whether or not the BOI fund is good/bad but more whether or not it's appropriate for you to be saving/investing when you want to clear/reduce your debts.


> So should I cancel all savings and pay off loans immedicately?


As long as you have significant and expensive debts it makes sense to prioritise reducing/clearing these over any other savings/investments (other than _SSIA_).


> I guess I could always start saving again once my debts are paid off.


Yes.


> As for the 3000euro....this is after tax ...so I was thinking of putting 1000 in to MBNA and 1000 in to CU  and the rest for my overdraft.


Most expensive debts first.


> Any other ideas?


There is a wealth of other useful debt/money management advice in the key topics pinned at the top of this forum.


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## Jamjam (28 Jun 2006)

Thanks a million Clubman. Very much appreciated.


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## jhegarty (28 Jun 2006)

*Re: My escaling debt is crippling me!*



			
				Jamjam said:
			
		

> So should I cancel all savings and pay off loans immedicately? I was given a mortage of 265k on my own. Obviously i'm not foolish to take this up!!! I will be renting until my loans are paid



unless you saving are marking more than the loans are costing you (they won't be) then stop them and pay off...


write down all the debts with apr...

i.e 

credit card €xxx  @ xx.x apr
bank load €xxx @ xx.x apr

then rank them in order of apr , and use the extra money to pay them off first...


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## Noor77 (28 Jun 2006)

Definitely get rid of the credit card - or at least stop using it and racking up more debt. I used to be a financial disaster zone but got my act together over the last year, and one big step was saying adios to the Visa

Good luck!


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## ClubMan (28 Jun 2006)

Read all about it! Before and after. It can be done...


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## Noor77 (28 Jun 2006)

ClubMan said:
			
		

> Read all about it! Before and after. It can be done...


 
I've gone up to €45k now....and no debts. It CAN be done.

Just prioritise your outgoings JamJam - and if it means being a social hermit for a while it will all be worth it in the end. Try to think everything through rationally - because panicking will actually make you spend more. Believe me, that bit is true - I have a friend who gets in to blind panics about her financial status and _then_ to calm herself down goes on a spending spree.

My Aunt tried meditation to try and get rid of a nasty shoe-buying habit ...and it worked!


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## Jamjam (28 Jun 2006)

Very positive indeed ...the only thing is I wish I was to get a mortage for 750 pm!

Not likely these days and if I could I wouldn't be able to afford it. Time for major observations and analysis of my outgoings. I think I will cancel that savings thingy...i mean its only 1500 but at least it will go towards paying my credit card. I wonder beacuse this is 0% for 6 months should I pay the credit union loan off first as it appears to have the highest apr. Anyway when I take on the extra work in October I will be lodging thsoe earnings straight in to CC.

Meditation ....sounds what I need....could I put it on the credit card??? LOL! 

At least I'm relieved and can actually see light at end of tunnel after all the advice here. I can not emphasise enough my appreciation to ll

Jane


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## ClubMan (28 Jun 2006)

Noor77 said:
			
		

> My Aunt tried meditation to try and get rid of a nasty shoe-buying habit ...and it worked!


You mean she only buys nice shoes now? Or she's kicked the habit altogether?


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## Havana (28 Jun 2006)

All great advice!! Follow it!!! I was in a similiar situation a while ago (about 10k in debt) and came on here and got similiar good advice. It took me a long while to get into a frame of mind to make the changes but finally I did it and while I still have some debt (€4000) its one loan, one repayment, low interest rate and will be gone in 18 months!!! Its feels so good and such a relief and managable!

And the Credit Card is gone!!! That is the best thing. Considered for a while keeping it and having a low limit, but decided NO! Tried that before and doubled my debt on it. So get rid totally. Reduce your CU shares to €1 if they require you to save with them.

And good luck. You will do it!


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## Jamjam (28 Jun 2006)

Havana said:
			
		

> All great advice!! Follow it!!! I was in a similiar situation a while ago (about 10k in debt) and came on here and got similiar good advice. It took me a long while to get into a frame of mind to make the changes but finally I did it and while I still have some debt (€4000) its one loan, one repayment, low interest rate and will be gone in 18 months!!! Its feels so good and such a relief and managable!
> 
> And the Credit Card is gone!!! That is the best thing. Considered for a while keeping it and having a low limit, but decided NO! Tried that before and doubled my debt on it. So get rid totally. Reduce your CU shares to €1 if they require you to save with them.
> 
> And good luck. You will do it!


 
Sincere thanks. I actually don't have any CU savings as I had previous loans and paid off no trouble and they didn't ask for savings when I applied for this loan. I seriously am only using the MBNA cc as a loan. Will not be buying anything on it and while the other CC is 0% for 6 months on purchases. The only purchases I will be making will be for flights which is necessary for me. for my work but i will get expenses. 

Can we just clarify what would be my best bet with the 3000K I am getting in July?


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## gordongekko (29 Jun 2006)

If it was me i would pay the 800 off the overdraft, lodge the balance and pay off the full credit card balance once the 0% balance transfer period is about to end.


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## Jamjam (29 Jun 2006)

gordongekko said:
			
		

> If it was me i would pay the 800 off the overdraft, lodge the balance and pay off the full credit card balance once the 0% balance transfer period is about to end.


 
Perfect ...that is what i will do. Thanks a mill.


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## ClubMan (29 Jun 2006)

Jamjam said:
			
		

> Can we just clarify what would be my best bet with the 3000K I am getting in July?


As mentioned several times previously - list your debts by the interest rate (_APR_) that applies and then start with the most expensive one. Try to clear your credit card balance(s?) before you exit the 0% period and go back onto the normal high rate.


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## Dipole (29 Jun 2006)

Your car loan got you in trouble here.  You paid too much for that car.
Your '02 1.1 206 is worth €7000, if that, and you have got a 11,000 loan.  No point selling it though especially if it is giving you good service.

Pay off and cut up the visa - that'll be one less €40 duty fee you'll have to pay next year.
Life Assurance?  I'd question the need for it at the moment.

Stop saving for the moment and accelerate your loan repayments
Use your savings to clear your loans.

Once you are out from the hole you are under you'll have got used to living on a smaller disposable income and you can start building up your savings again.

You are not in a bad position.  tackle the issue now and by Christmas you will be able to manage your debt comfortably.

If you have been in work for a while and your monthly wage has been variable from month to month perhaps you overpaid tax and you might be due some back - I got money back from the taxman a couple of years in a row because of overpayment and the cheque certainly was welcome when it arrived.
Explore rent tax allowance and any other allowances that may be available to you and see if they can be backdated to previous years to get money back.  I got a work related tax allowance I didn't know I was entitled to through viewing threads on askaboutmoney.com


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## lff12 (29 Jun 2006)

abbie said:
			
		

> I calculate that you have approximately 1,000 euros left over based on the 2,300 you earn or 1,400 based on the 2,700 you earn - I don't understand why you are getting so worried - some people live on 1,000 a month (including their bills)


 
To be honest most of the time I live on about 700 a month - and at my hardest up lived on only 75 euro per week.

I'd suggest clearing the credit cards and possibly the overdraft first.
Get rid of the savings and life assurance.

To be honest I don't think you have a problem if you've 1000 left in the bank, but if I were you I'd put an extra 200 euros a month off the car loan to try to pay it off more quickly.  My way of working is that once my credit card goes over 1200 I pay off 650 a month until its cleared before I start spending again.  It hurts but I learn the lesson.


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## mell61 (29 Jun 2006)

as well as looking at your debt, look at your current spending.   My personal favourite way of checking off where my money 'disappears' to is a notebook / money diary.    
as soon as a cent leaves your pocket note it down (playing catch up later that day doesn't work, its amazinf how easily I can forget a bottle of water, petrol, magazine...).    It can provide a wake up call for where you are spending unneccessary money.    You might feel silly for a day or 2, wandering around with a notebook, but if you have one a PDA is a useful, or even post-its.   Check your progress at the end of the week and see if there is a trend... does a night out have you spending excessively on energy drinks / breakfast rolls / chocolate....   Do you treat yourself to something on payday, even when it isn't payday...
you may find another hundred Euros or so that you can use against your debt.
Personally I found Alvin halls books 'your money or your life' and 'money for life' very good for giving you the basics of getting out of debt.   If you are close to dublin, I've noticed that Chapters on abbey st frequently have 1 or other second hand.   If it helps to encourage you at one point he had maxed about 30 credit cards at the one time (he's american, we'd be bankrupted with the tax here!), so he's been there and does know the pain.

One other item you might want to consider is if you have Eu3000 to pay off against debt, do you want to reduce the number of debts... would it help your frame of mind to only have fewer outstanding debts? so would you prefer to pay off overdraft, visa and  most of your MNBA and only need to concern yourself with CU and BOI.    paying off highest interest first is a good idea, but sometimes you may find that only have 2 debts instead of decreasing balances on 5 may help you focus.     Its a personal preference I have, others will disagree.

Good luck to you


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## ClubMan (29 Jun 2006)

mell61 said:
			
		

> One other item you might want to consider is if you have Eu3000 to pay off against debt, do you want to reduce the number of debts... would it help your frame of mind to only have fewer outstanding debts? so would you prefer to pay off overdraft, visa and  most of your MNBA and only need to concern yourself with CU and BOI.    paying off highest interest first is a good idea, but sometimes you may find that only have 2 debts instead of decreasing balances on 5 may help you focus.     Its a personal preference I have, others will disagree.


Yes - I disagree with this. Applying subjective personal preferences to dealing with debt is a dangerous approach in my opinion. Much better to adopt a stringently objective analysis. Such an analysis will consider the costs and benefits of all strategies and, when it comes to debts, will generally dictate that the loan(s) with the highest overall cost should be tackled first.


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## clareG (29 Jun 2006)

MABS will advise you how to get out of debt but I would suggest that you cut up the credit card NOW. Check out the mabs website www.mabs.ie.  There are hints there on what to do and also a spending diary for you to fill in.  Good luck.


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## mell61 (29 Jun 2006)

Hi Clubman, Jamjam
As I did say it was a personal point of view regarding paying off the smaller loans so that the focus could stay on the larger loans.
In much the same way some people losing weight focus on the scales, others focus on the size label on their jeans.     Different people work with different targets.
Jamjam has suggested that the debt is giving him a lot of concern, keeping him awake at night, perhaps along with the various options open to him outlined already, would a couple of fewers debts assist him in tackling the biggest problems and being able to give them indepth analysis.   He would already have hit a couple of 'targets' in clearing his debts, and each target can help to keep people on the road to financial freedom.
Its a different view point I recently came across in a personal finance book, and one that struck a cord with me.


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## Jamjam (29 Jun 2006)

Thanks again for all the info. I need to print it all off and digest it. I feel so much better however I really do feel I need to contact MABS as suggested here. 

Since the life assurance is only 30euro a month should I just hold on to it? I mean thats not breaking me. It's the credit card thats killing me. But i know what I will be doing with that now ....and thats for sure.


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## ClubMan (29 Jun 2006)

Bear in mind that _MABS _will just give you advice on your options and in some cases (don't think it applies here) attempt to mediate between creditors and debtors. However ultimately it is your job/responsibility to sort out your own affairs. Reviewing this thread, the key topics in this forum and other resources such as the _MABS _website, listing/collating/analysing your finances, keeping a spending diary, having a proper budget/financial plan etc. are all great ideas.


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## Jamjam (29 Jun 2006)

I was told by a friend of mine who is a bank manager that banks etc won't touch you again once (i.e give you mortage) they hear MABs are involved. I presume this is nonsense???


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## ClubMan (30 Jun 2006)

I think the only way they will know that _MABS _were involved is if _MABS_ make representations on your behalf to creditors. Otherwise (e.g. if you go to _MABS _for advice as opposed to direct intervention - which I presume they only do in crisis situations and/or for those with low means/earning capacity and high debts) I think it's all confidential between you and _MABS_. Certainly they can't check if somebody approached _MABS _through the _ICB _or whatever in case that's what's worrying you.


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## Jamjam (30 Jun 2006)

Sincere thanks for that. I actually thought/ hoped that would be the case. I have nothing to loose by contacting them. Meeting set up for next week !!


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