# Another debt disaster



## Fester1

Age: 33
   Spouse’s/Partner's age: 34

   Annual gross income from employment or profession: 60000
   Annual gross income of spouse:Home maker

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

In general are you spending more than you earn or are you saving? YES

   Rough estimate of value of home :No idea, paid 260k towards end last year
   Amount outstanding on your mortgage: about 258k,paying 1100 a month
*What interest rate    are you paying? ECB+.75%*

   Other borrowings – car loans/personal loans etc
    MBNA cc          15400(paying 750/month)
AIB cc             15000(paying 300/month)
car loan             6000(377/month
Friends First loan 8000(300/month)
   Do you pay off your full credit card balance each month? NO 
   If not, what is the balance on your credit card? ~30,000

   Savings and investments:
    0
   Do you have a pension scheme? 
    Yes
   Do you own any investment or other property? 
    no
   Ages of children: 
    2 pre-teens
   Life insurance: just to cover house


*What specific question do you have or what issues are of concern to you?* 
Currently struggling under weight of loans/repayments.
These are over 1700 month.
When I make a payment on cc, later in the month I need to use it for day-to-day living expenses.
I have an overdraft of 1200 and I currently have this at 3300.
So once I do get paid(about 3500). It's only a few hundred in credit.

I've talked to my own bank about consolidating but they told me all loan requests are done centrally so that request was refused. I asked for overdraft to be extended from 1200 to 3300 so that I'd not have the extra charges and they would not do this either.
I was looking for a loan of about 44-45k over 5 years, which would be about 910-920 a month.
The way things are going it will take me probably 10 years to come out the other side as I have extra charges no matter where I turn.
Appreciate any thoughts


----------



## brazen_dude

I guess its hard to consolidate your debts in the current crisis with banks as every one wants to play safe...you can try to raise more money on your mortgage if the value to loan ratio is high.... the next best thing you can do find ways to generate additional income from part time jobs etc


----------



## Kemo_Sabe

brazen_dude said:


> I guess its hard to consolidate your debts in the current crisis with banks as every one wants to play safe...you can try to raise more money on your mortgage if the value to loan ratio is high....


 
not a runner, they paid 260k last year and have a mortgage of 258k -therefore they are in negative equity (as the place can't be worth anywhere close to 260k now)

OP, have you done a full analysis of your day to day spending? it's probably worth writing down everything you spend over the course of a month or two and then analsysing your expense to see where you can make savings?

re. the mortgage, have you investigated:

negotiating a payments holiday?
extending the term?
going interest only for a period?

any of these would free up some income to tackle the really expensive debt on credit cards, car loan etc

Do you need a car? i.e. can you sell it and pay off the car loan?

Can your spouse work? If the kids are in school, could she work in the mornings?


----------



## brazen_dude

Try contacting your CC and ask for any interest rate reduction... mine got reduced from 15.9 to 10.9 with a simple phone call.


----------



## Fester1

thanks for replies guys.
We have started a review of our expenses and have started to pull in savings(reductions in sky,broadband,WoW  and some other small bits) of about 100-115 a month. So I'm hoping by the end of this month that we'll see the enlarging OD start to slowly retreat the other way.
We've become real bargain hunters in the likes of Tescos and Dunnes and do most shopping in Lidl/Aldi but always using offers where available(50c bread in Superquinn 2 weeks ago for example-stocked up well on that!)
Also trying to make an impression on ESB and oil bills.
Looking at meter reading last night makes me think this months bill will be about the same or a little less than the last-Which would be a great acheivement for us)

My OH can not work at the moment due to some personal issues, so for the time being that is not a runner.

Regarding mortgage options
Going interest only for a period could be useful. How long a term is this usually over? We have a 30+ year mortgage so maybe this isn't a runner.

We have one old(8 year old) car so trading it down isn't really an option and we do need it.

I have both c/cs at 10.9%..I was pushing to get them down to 9.9%

What really eats at me(other than getting in this mess) is that with a consolidated loan and cancellation of C/C cards we could relax slightly on the tight spending restrictions, save some money and have an end date to our current debts, which currently seem to go on for ever!)


----------



## BoscoTalking

Fester1 said:


> What really eats at me(other than getting in this mess) is that *with a consolidated loan and cancellation of C/C cards we could relax slightly on the tight spending restrictions, save some money* and have an end date to our current debts, which currently seem to go on for ever!)



no you actually can't afford to relax spending restrictions or save at a lower rate than you have to pay back. Sorry to be blunt but lumping the loans into one over a long period just to allow the good times roll is silly.


----------



## mercman

As you are a Civil Servant (job security and all that),most banks should welcome you with open arms. Have you trie to bring your affairs to another Bank ? Tell them you require a loan to amalgamate the CC debt and then work on repaying a bank loan which should be cheaper. If you are trying to reduce your ESB, try changing the 100 watt bulbs for 60 watts and the 60 watt bubls for 40 watts.


----------



## Fester1

pennypitstop said:


> no you actually can't afford to relax spending restrictions or save at a lower rate than you have to pay back. Sorry to be blunt but lumping the loans into one over a long period just to allow the good times roll is silly.


Perhaps I should expand a little. At the moment with the spending restrictions in place means that I pay bins late, don't pay TV licence,late on ESB payments.It's getting these back in to line. There is no rolling on of good times on the cards here. Far from it. Just getting outgoings under my control.


----------



## Fester1

mercman said:


> As you are a Civil Servant (job security and all that),most banks should welcome you with open arms. Have you trie to bring your affairs to another Bank ? Tell them you require a loan to amalgamate the CC debt and then work on repaying a bank loan which should be cheaper. If you are trying to reduce your ESB, try changing the 100 watt bulbs for 60 watts and the 60 watt bubls for 40 watts.


Thanks for the feedback Merc.
  Job security is good but not civil servant secure!
I am currently trying to consolidate with another bank so should know in the next few days.It was interesting talking to my own branch. They told me that there was no point in looking for loan centre to consolidate cc loans as they had forwarded several cases and all were refused. Just something they are not doing. Is the CC debt more of a VISA/Mastercard issue if it's not paid?

Moved all lights to 7w/11w energy efficient ones about a year ago,


----------



## Welfarite

By my calcualtions your repayments are 2827 per month (incl. mortgage.) You say income 3500. Is that per month? If so, you have only 700(+ maybe CB) per month to feed, cloth, heat a family of four! This is too low. The CC debt is your most expensive, even at 10%. You'll need to consolidate that debt. What about visiting MABS for advice?


----------



## michaelm

It sounds like you're doing pretty much all you can.  If I were in your position I'd ask the bank if they would switch my mortgage to interest only for a while, or maybe allow me to take a mortgage payment holiday, until I could get on top of other bills.  I'd also consider getting a Saturday job.

I get paid on the 28th of the month and my mortgage was coming out a few days later(start of the next month) - one time I went into the bank (1st of month) and had them change my payment date to 28th, saving me one mortgage payment by pushing it into the next pay cheque (from a cash flow point of view).  Something like that may free up €1100 cash flow for you to catch up on some of your utilities.


----------



## mercman

Have you tried going to the Bank where your employers Bank ??


----------



## Fester1

Welfarite said:


> By my calcualtions your repayments are 2827 per month (incl. mortgage.) You say income 3500. Is that per month? If so, you have only 700(+ maybe CB) per month to feed, cloth, heat a family of four! This is too low. The CC debt is your most expensive, even at 10%. You'll need to consolidate that debt. What about visiting MABS for advice?


Hi Welfarite,
You are correct, that amount isn't enough, which is why I've had to use the c/c for day-to-day. The only saving grace is that the 1st loan finishes in  just over a year and the second one a year later, so if I can't consolidate but can stay afloat for another year things will start to improve.
I know we will come through it but it's going to take a long time.


michaelm said:


> It sounds like you're doing pretty much all you can. If I were in your position I'd ask the bank if they would switch my mortgage to interest only for a while, or maybe allow me to take a mortgage payment holiday, until I could get on top of other bills. I'd also consider getting a Saturday job.
> 
> I get paid on the 28th of the month and my mortgage was coming out a few days later(start of the next month) - one time I went into the bank (1st of month) and had them change my payment date to 28th, saving me one mortgage payment by pushing it into the next pay cheque (from a cash flow point of view). Something like that may free up €1100 cash flow for you to catch up on some of your utilities.


Yeah, I'm considering a payment holiday for a month or two or perhaps even interest only for 12 months.
The Saturday job is something that I have also been thinking about...time to put some action with those thoughts though.


mercman said:


> Have you tried going to the Bank where your employers Bank ??


My employer is based in the UK so even that isn't a runner...although these days I don't think that would matter(see my comments earlier about loans been decided at a central location)


----------



## Fester1

Thanks for all the advise,sometimes it's good to discuss things out loudly with others.
I hope it's okay but I will give some updates over the next few days or weeks. Might provide useful to others.


----------



## Raskolnikov

I'm looking at your finances and simply cannot see any way for you to reduce your debt burden. The only thing I can suggest is that maybe you can transfer the balance of some of your credit cards and avail of the 0% interest free for 6 month offers that many banks have. That might save a few Euro's off every month. Have you a credit union account? Maybe it's possible for you to take out a loan and swap a high interest rate for a low rate? 


Fester1 said:


> thanks for replies guys.
> We have started a review of our expenses and have started to pull in savings(reductions in sky,broadband,WoW  and some other small bits) of about 100-115 a month. So I'm hoping by the end of this month that we'll see the enlarging OD start to slowly retreat the other way.


If you get sick or go through a crisis, you have no savings or insurance. Your situation is extremely dangerous. You need to eliminate much of your debt, as quickly as possible. I think you need to maintain a spending diary.


----------



## Fester1

Raskolnikov said:


> If you get sick or go through a crisis, you have no savings or insurance. Your situation is extremely dangerous. You need to eliminate much of your debt, as quickly as possible. I think you need to maintain a spending diary.



My aim is to reduce my debt as quickly as possible. God forbid I was sick long term I would be covered by my employer(up to 5 years I think!) which is good to now. The worst think that could happen is to be made redundant, the best is to be killed outright-this would clear mortgages,loans and employer would provide nice lump sum and pension to wife!


----------



## Bob_tg

Fester1 said:


> Moved all lights to 7w/11w energy efficient ones about a year ago,


 
Have you considered using candles?


----------



## Welfarite

Keep a daily diary of your spending counting everything. I'm sure you're cutting back as much as you can but there may be small areas where savings could be made. (i.e. mobile phone credit, takeaway coffees, etc..) with foodf, make stews and cassroles from cheaper cuts of meats, for two days dinners. Get rid of sky if your paying monthly. Get rid of house phone if you have mobile. Go for walks in the park instead of  cinema with kids (if ypur doing that). You know the stuff I mean. Main thing is for both of you to do it together and look at it as challenge not problem to overcome this. As you said yourself, one loan will be gone in a year so light starting to peep in....!


----------



## Fester1

Bob_tg said:


> Have you considered using candles?


Thanks for the great tip Bob...I'll keep it in mind.


----------



## Fester1

jaybird said:


> Have you seen the price of candles? Won't be any saving to be had there! What about short term, a second job, bar work, odd-jobbing, delivering pizzas? Might be difficult to get or fit in, but thats what I did in the past when I was struggling. It has the added advantage of giving you no time at all to spend any money!



yeah, someone suggested that earlier. I'm going to do some looking around in places at the weekend and see what's available.


----------



## Bronte

Fester I've just reread your original post.  You seem to have a 100% mortgage, how on earth did a bank give you a mortgage with all your other debt?  I think you should go to MABS for some advice, they may be able to negotiat with your creditors.  You must cut up your credit card, the interest rate must be crippling.  Have you anything you could sell to reduce your debts?


----------



## Fester1

Bronte said:


> Fester I've just reread your original post. You seem to have a 100% mortgage, how on earth did a bank give you a mortgage with all your other debt? I think you should go to MABS for some advice, they may be able to negotiat with your creditors. You must cut up your credit card, the interest rate must be crippling. Have you anything you could sell to reduce your debts?


 
Bronte,
The debt wasn't a problem at the time. My money was 20k+ higher and my wife was bringing home 50k also.
We have destroyed one credit card but currently we need the other credit card as I outlined in more detail earlier.It's not the interest, per se, thats crippling but the overall loans monthly payment.

Not surprisingly a second institution turned down the consolidation loan.
I will try one more but expect absolutely no joy with them, but I'll try anyway.
Did my first odd job at the weekend and made about 75 quid. A lot of effort to get it though!


----------



## circle

Fester1 said:


> The debt wasn't a problem at the time. My money was 20k+ higher and my wife was bringing home 50k also.


 
Your income has halved since you bought the house, this would seem to be the main cause of your current difficulties. Might your wife be entitled to any welfare allowances? If she stopped working recently she may be entitled to Jobseekers Benefit.


----------



## Fester1

circle said:


> Your income has halved since you bought the house, this would seem to be the main cause of your current difficulties. Might your wife be entitled to any welfare allowances? If she stopped working recently she may be entitled to Jobseekers Benefit.


 
Circle, She is currently not in a position to seek work. I'd rather not get in to it but let's just say that her working again in the short-medium term is not on the cards.

If anyone wants to put up 45,000. I'll pay them an annuity with monthly repayments of 900-910 over 5 years,let me know!!!!!


----------



## Fester1

As I said earlier I would post some updates.
I had tried a 3rd lender for a consolidation loan and was refused.
Things hit a nadir earlier this month.
I had some yearly expenses hit my account(home and life insurance) and both were unpaid DD from my account. Also car payment was unpaid DD also-First time this had ever happened in 16 years of banking.

Thankfully in Novemeber I realised that since I changed job in May that I had not received my PAYE tax credit(I had been self employed). So in the nick of time I got this tax back in my pay.
Along with our spending restrictions this was enough to clear what we had built up over our overdraft and allow us to catch back up on the missed direct debits(which was done by them been represented a few days later-Does the car loan get marked as a missed payment with ICB?)
So going in to 2009 I will need to use my overdraft but will not be going over it. I rang my bank and now pay my VISA by Direct debit which allows me to pay only 3% each month(300 less a month). I'm well aware that this is going to cost more in interest but in the short term this will allow us to breath when we were very close to defaulting on Decembers DD. I will up these payments with the money freed from the loans which finish in 2010/2011. 
It's a long road but we do see a very faint light at the end of the tunnel!!
I'll update again next year.


----------



## viztopia

fester,

have you looked at all your tax credits to make sure you are claiming your full entitlements? i.e. home cares allowance for your wife. also are you claiming your tax relief at source on your mortgage? may seem obvious but you would be amazed at the number of people that are not claiming this.


----------



## so-crates

Besides approaching the lender and getting your tax credit, have you done anything else Fester? Have you approached MABS yet? Have you checked out all entitlements your wife may be able to get? Is your family keeping a diary? It isn't a criticism but from reading your posts Fester1 I get the feeling you would rather fix the problems yourself where possible. It isn't a bad thing to look for help when you are in difficulty. Your family needs you more now than ever and handling everything yourself is not looking out for their best interests or yours.  I am not suggesting reneging or handing over control but using all available resources that the State can provide.


----------



## Fester1

so-crates said:


> Besides approaching the lender and getting your tax credit, have you done anything else Fester? Have you approached MABS yet? Have you checked out all entitlements your wife may be able to get? Is your family keeping a diary? It isn't a criticism but from reading your posts Fester1 I get the feeling you would rather fix the problems yourself where possible. It isn't a bad thing to look for help when you are in difficulty. Your family needs you more now than ever and handling everything yourself is not looking out for their best interests or yours.  I am not suggesting reneging or handing over control but using all available resources that the State can provide.


SC,
Many thanks for your comments. Yes you are correct in that I do want to deal with these myself as much as possible. I(we) racked up the debts so I want to sort them out. 
I'm pretty sure that I know what MABS will do. Work out a budget of what you need to live and whatever is left over goes to paying debts. They will then assist you in having the banks agree to some write off in debts or extend payment periods. I can do that myself if required.
I feel things are twice or three times better than they were in October/November. 
We just need to stay focussed and watch the cents. I have some nice spreadsheets that show how the debts are reducing..Seeing how rolling over payments as loans finish help clear things quicker iis good encouragement. All going well we should clear the loans in mid 2012. Naturally things will come up, but if in 4 years time we were debt clear(or close to it) I would be very happy(2 loans clear in 2010, 1 in 2011 and the last in 2012)


----------



## so-crates

Good luck and mind yourself Fester


----------



## Strider

Its a small thing but we did it a couple of years ago and never looked back. Try taking out Sky card and switch unit off for a while then switch on and see what channels you get. We get almost all UK ones and film4.


----------



## nesbitt

Good advice on here, wondered if you managed to go into your bank and consolidate your loans on the basis of your points made on here.  At least you are clued up and facing facts now, I do know some folks who are still burying head in the sand etc.  In order to cut back on all outgoings you need to have your other half totally on board, there is no point saving on one item and frittering away money in other unseen areas.  The weekly Grocery shop can be an area you can really save on.  You already do this by shopping around and going to Aldi etc.  However it is very worthwhile to get a shopping list made out each week and stick to it.  The shopping list is based on a weekly meal planner, check stock already in freezer and cupboards, check what personal care and cleaning products are actually required.  If shopping at Aldi some treats for kids can be added but other than that stick to the list and shop without kids.  I cannot stress this enough.  Hope things are going a bit better.  Most of us have some or all of your issues regarding debt, what matters now is to sort it out.


----------



## Fester1

Nesbitt,
I had gone directly to my customer service manager(AIB appoint you one) back in October and I was told that all decisions are made centrally. My manager wanted to try and help me but 'central' would not do anything to help.
I don't think this attitude is helpful for someone that is trying to sort out a situation pre-emptively.


----------



## nesbitt

I looked at the MABS website some very good sample letters for financial institutions on their website.  I would telephone MABS and outline all the points.  I have an inkling you can get MABS to contact the Bank on your behalf...  If not discuss the matter with MABS regarding submitting a letter in person (keep a copy) to this Branch Manager at the bank and then in turn request/demand a response in writing from the bank.  This centrally located baloney seems to me to be a fob off...  You have a lot at stake here so please try again.  Perhaps getting a 3rd party such as MABS on board and indeed putting your request in writing you may get sorted out.  If you are given a negative response (demand it is in writing) go back to MABS and take it from there.  If you fell further behind I think the bank would find it harder to pursue you etc and you can prove your efforts to circumvent the inevitable.  You might be able to come back and let us know how you are bearing up.  All the best.


----------



## Fester1

Thanks again for suggestions Nesbitt.
I've been through the MABS site a few times and have seen those sample letters so certainly something that I could use if needed.
I have been able to reduce some of my loan burden as I outlined earlier so things are not as tight or as precarious as they were 3 mths ago.


----------



## nesbitt

Well done Fester1 for keeping on going to clear debt.  Reason I was emphasising re-visiting issue with banks is I know two people who had large credit card debt and managed to get much cheaper term loans to clear it.


----------



## Fester1

Nesbitt,I would have ideally wanted to trade the cc for loans but after trying my own bank and then 4 others with now joy I had to revisit my options.
The lowering of interest rates has really helped over the last few months and although they will raise again in the future I am hopefull that I will have a much better cash flow by then.


----------

