# Advice on current financial situation please



## sfl07 (27 Aug 2007)

Brief history,

I am employed and husband is self-employed. Up until this time last year he was earning 1300 net a week and I was earning 550, which was great, had no problems with repaying mortgage bills etc… and generally had good lifestyle. 
We have one son and I went on maternity leave in sept 2006 and no 2 was born. I was on maternity benefit of 285 per week and no top up from employer. In sept 2006 work for husband seriously started to slow down and he was lucky to be making 600 a week. In dec and jan he earned nothing as was out of work completely. So that’s the reason we’re in the position we’re in. all our savings were pretty much used up.From feb to july he was earning about 600 per week and we were barely able to keep things paid, I went back to work four days in feb and was earning 600 a week but obviously had extra crèche payments of 727 per month. I m now back working full time making 750 per week and husband is making approx 900 per week, which is great I know and hopefully will continue. Our main concern is how to carry on paying off our loans. I was reluctant to go to banks and say he wasn’t working because we always thought well next week should be better etc.. 
Anyway thanks for reading so far here’s our monthly breakdown, any advise greatly appreciated. Just to note we spend very little on going out, nothing on clothes, holidays, meals out. We just buy the bare essentials for kids. 

Mortgage:                     1128 – fixed 2 yr with F Active (242,000 remaining over 27 yrs)
Mortgage top up :           325 – variable rate with F Active (55,000 remaining over 27 yrs)
Car loan:                       525 – variable rate with F Active ( 6,800 remaining over 1 yr)
Creche:                         1067
Credit union:                  480 – repaying 400 off loan 17155, 80 into shares balance 9850
Credit union:                  480 – repaying 400 off loan 16100, 80 into shares balance 6000

Credit card:                   7000 – paying approx 400 per month

Life assurance:              100
House insurance:            48
Car insurance:               40
Mortgage protection:            118
Bills:                             220 per month
No investments
Took payment breaks from pensions til Jan 07
Didn’t have ssia as were savng for house at time, which we were buying before ssia’s matured. 

We also owe family members 3,600, I know we can over our monthly costs with our wages we just need to kind of clear the backlog of things if that makes sense. Get the credit card paid and credit unions and of course pay back our very generous family members. If anyone has any advise or maybe idea’s I d really appreciate it.


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## ClubMan (27 Aug 2007)

What was the mortgage topup for?
Why are you saving with the _CU _while also paying off loans (c. €16K in shares with €160 being added p.m.)? You would be better off using this money to reduce your borrowings.


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## sfl07 (27 Aug 2007)

Clubman,

the topup was for an extension and general work to the house.
there's no real reason for us saving money in the credit union so will stop that and pay the extra 40 a week 
off the loans.


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## ClubMan (27 Aug 2007)

Can you not use the c. €16K in _CU _shares to reduce your borrowings too (probably prioritising the _CC _balance since this is likely to be your most expensive debt)?


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## pc7 (27 Aug 2007)

while it might not be the best solution, but if your husbands work is not 
guarenteed, if you were to consolidate all loans onto your mortgage you would roughly be paying 1850 a month (first active 5.3% over 27 years) against the current 3400 you are paying servicing these loans.  It isn't a great idea to pay back loans like this over such a long period as you end up paying so much more. But if it took the pressure off you and if you saved the bulk of the 1500 you are saving you could try take chunk payments off it to get it down quickly.  Or just stick at it and as clubman says try pay back the highest interest ones asap with the shares in credit union.


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## ClubMan (27 Aug 2007)

Yes - your immediate priority would seem to be to sort out your cashflow problems and if this means consolidating or something like that then that may be necessary. Then you need to make sure to live within/below your budget and try to clear any of the expensive debts or those that were consolidated onto the mortgage etc. As ever MABS might be able to advise.


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## paddyodoors (27 Aug 2007)

Hi

So your current net income is around €7k and your outgoings around €5k- 

Seems to be quite a bit of additional cash to utilise whilst at yr full earning potential? - Hopefully for you this continues and if so you will be able to quickly tidy up your finances.

What rate are you paying on the CC balance?

If it is not Zero - then Cash the 1st credit union savings acc and clear the CC balance immediately. Not sure if you need to maintain some savings in the CU account - if so leave a few hundred - this still leaves you with 2k after clearing the CC.

I would then use the 2k plus the €400 freed up from paying back the CC and then the additional €160 from no longer adding to the CU savings to pay off the car loan in 4 months. - if you do have an additional few grand with your current earnings you should be able to wipe both of these debts straight away - which then frees up €1k extra per month

From here you are in a much cleaner position.

one other question - the mortgage protection insurance - did they pay out whilst yr hubby was unemployed? I think there are always harsh restirctions on these - such as needing to be unemployed for 6 months before a payout - and €118 a month for something which isn't much help is pointless...

Paddy


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## ClubMan (27 Aug 2007)

paddyodoors said:


> one other question - the mortgage protection insurance - did they pay out whilst yr hubby was unemployed?


Assuming that "mortgage protection" in the original post means "mortgage repayment protection insurance" and not simply "mortgage protection life assurance" with the other "life assurance" being general cover?


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## sfl07 (27 Aug 2007)

paddy, the creditcard is at 13.5% interest rate so i will talk to credit unions about freeing up shares to clear this as suggested. can we just ask to withdraw our shares or would the loan be secured on the savings? i ll phone them tomor to find out. 

the 118 is for the mortgage protection as required with your mortgage. the extra life assurance is something we want to have for kids sake should anything happen to us. No husband got nothing back for being unemployed. we kind of didnt want to draw too much attention to the fact he wasnt working if u know what i mean. 

agree that if creditcards were cleared and car loan and family paid, so long as he is still working we would be doing well and able to save money to cover us if this happens again.


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## paddyodoors (27 Aug 2007)

Hi SFL

okay as Clubman suspected a second life assurance policy - In that case I would suggest contacting the providor of the original and asking to add on dependants - could be cheaper then the completely new product?

Yes check with Credit union - I cant see how you would need so much savings in order to qualify for a loan - so see what they say, if you can cash in the 9k you are well on your way to getting back on yr feet.

good luck

Paddy


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## Brendan Burgess (27 Aug 2007)

Hi SFL

Just two things to comment on:

1) Why are you worried about drawing attention to your husband's falling income?  Lenders are used to this. If you have kept up the payments during a period of maternity leave and reduced income, fair play to you. But if you do find it difficult at some stage to keep up the mortgage repayments, so to First Active early and tell them. They might reschedule the loan if there is equity in the house. 

Of course, if you do need to remortgage later, then you probably don't want to highlight the volatile nature of your husband's income. 

2) Credit union:                  480 – repaying 400 off loan 16100, 80 into shares balance 6000

This really shocks me and I don't know how the Credit Unions push this. You have a net 10,100 in borrowings. If you borrowed this from First Active, the interest charge would be around €500 a year. 

As it is, you are probably paying 9% of 16,100 or €1449 and getting around 3% of 6,000 or €180. In other words, you are paying net interest of around €1300 on a loan of €10,100. 

I will let you do the calculations on the other loan yourself. 

The true APR on this arrangement is 13%. Bizarrely, you might even be better off taking cash out with your credit card to pay off this loan. I am exaggerating, but you get the point. 

Brendan


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