# Too Many Loans Need help



## anna11 (31 Mar 2008)

Age:30 
Spouse’s/Partner's age: 32

Annual gross income from employment or profession: 42000
Annual gross income of spouse:35000

Type of employment: e.g. private sector

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

Rough estimate of value of home 480k
Amount outstanding on your mortgage:270k 
*What interest rate are you paying? tracker*

Other borrowings – car loans/personal loans etc YES WAY TOO MANY
Loan1 260pm
Loan 2 270pm
Loan 3 167pm
Credit unit 120pm
CREDIT CARD 150PM ( i owe 13,000 )

Do you pay off your full credit card balance each month? no
If not, what is the balance on your credit card? 13000

Savings and investments:5000

Do you have a pension scheme? yes

Do you own any investment or other property? no

Ages of children: 1 and 5

Life insurance: yes


*What specific question do you have or what issues are of concern to you? *

*I have just done out a spreadsheet of our outoings and bascially we are up to our eyeballs in dept*
*However i have cut up my credit card a few weeks ago (i will never ever get another credit card_)*
*we have 3 other loans adding up to about 25k *
*Anyone have any advise on how to tackle all our loans*

*Thanks*

*Anna*


----------



## sandymount (31 Mar 2008)

Do you have 1 or 2 cars?
What are their value?


----------



## anna11 (31 Mar 2008)

My Husband Has a company car 

I have an 02 car that is worth about 5000

sorry just edited to add i have no loan on my car!!!


----------



## Gus2008 (31 Mar 2008)

So you've a total debt of €48,000, excluding mortgage? You're paying almost a €1,000 a month on this. Have you looked into consolidating this into one loan? Or at least part of it? If this is an option, I would suggest ranking your loans by interest rate, and try to clear those loans with the highest rates first. 

Can you use the €5,000 savings to clear some of the debt? Also, if you are continuing to save anything, redirect that towards your debts. 

What about renting a room in your home to help bring in some extra income? Other than that, look at your monthly outgoings and see what savings you can make (less meals out, prepay instead of billpay phones etc.) and put whatever you can towards clearing your loans.


----------



## anna11 (31 Mar 2008)

Hi Gus

Thanks for that!!!
There is no way we could rent a room out as we have 2 kids and live in a 3 bed semi.

Unfortunetly i cant touch those savings as they are savings against one of the loans 

I was shocked when i saw we owe 48k i never really added up but its true

loan1 11,500
loans 8,500
loan3 6,400
credit union 6000
credit card 13,000

we have already remortgaged once so trying to avoid that. we got an extension and in hindsight we probably should not of done 
this all sounds so bad and very worrying!!!


----------



## Diziet (31 Mar 2008)

You need a good grasp of where you money goes at present. This link provides a handy calculator (no affiliation) . Keep a spending diary and use the calculator to create a budget and keep to it. 

There is a useful debt forum (UK based, but very useful nevertheless) here: [broken link removed]. Well worth reading through the postings.

Generally the advice is to create a realistic budget, stick to it and throw all the surplus at your debt starting with the highest interest (it's called 'snowballing'). No credit whatsoever from here on. You need a small amount of savings as an emergency fund to cope with a broken washing machine and the lie. The rest of the savings should go to pay off loans (again, starting with the one that charges most interest). Once you pay off the highest loan, redirect that payment to the next one and so on.

Is there any way you can increase your income?


----------



## Mpsox (31 Mar 2008)

You've made the first step by realising you have an issue. You'd be amazed how many people prefer to stick their head in the sand on issues like this

without knowing your current income, their is one simple question to ask, can you afford to pay €1000 per month on these now and for the next few years, without too much stress and hassle. If you can, you have little to worry about it, just console yourself with the thought that every month it get's less

However, if it is a concern, and 2 smallies can have their own unplanned costs, it may be worth your while to look at remortgaging, it might be worth your while to consdier a different provider, depending on your current rate


----------



## Howitzer (31 Mar 2008)

If one, or a number, of those loans were taken out directly to build your extension you should immediately get this put onto your mortgage. You can then legitimately claim mortgage interest relief against it. This would relieve the pressure in the short term on the other loans and give you a real saving, assuming you make the term of the remortgaged amount equal to the current term, and not the entire term of your mortgage.

You can't use your savings to clear your other loans as one of them is tied to it. I assume this is a Credit Union loan? The rational behind this isn't helpfull. Clear this loan asap, even if it just means shuffling debt from A to B, and get that 5K working for you.


----------



## infinity (31 Mar 2008)

> loan1 11,500 - 260pm
> loans 8,500 - 270pm
> loan3 6,400 - 167pm
> credit union 6000 - 120pm
> credit card 13,000 - 150pm


 
I assume the 5,000 savings is for the credit union loan ? Go and have a chat with them and get the savings paid off the loan asap. That leaves 1000 of a loan in credit union.

I would concentrate on getting the credit card loan down as quick as possible. 150 per month is probably just covering the interest ? 
Can you move any of it to a 0% interest card for 6 months ?


----------



## anna11 (1 Apr 2008)

HI Guys

Thank you all so much 

After a very long conversation with my husband last night we have decided to do the following

I am changing 10,000 of my credit card to another card with interest free for 6 months
we have uped the payments on our smallest loan to an extra 400 per month (cancelling our cleaner) i figured we will have that paid off in 8 months 
I have also uped my credit card repayments to 400 per month (no more take aways or makeup clothes, for me!!!)
We will then tackle our next loan with the extra money after the first loan is paid off.
So when we tackle our 2nd loan we will have an extra 600 pm to pay this off

Thanks again guys for your help and hopefully we will be back on the straight and narrow in a few years time

Anna


----------



## anna11 (1 Apr 2008)

and can i also say people like me should never never never have a credit card


----------



## Brendan Burgess (1 Apr 2008)

Hi anna

It's great to see you getting such good advice and taking it.



> we have upped the payments on our smallest loan to an extra 400 per month



The size of the loan should not be the criterion, but the interest rate you pay on it. 

It seems to me that the Credit Union loan is by far the most expensive and should be cleared first. You have a €6,000 loan at around 9% with a €5,000 savings at around 3%. So you are paying around €400 a year on a net loan of €1,000 i.e. a true APR of 40%! Get that loan down to €5,000 and then set the savings off against them. 

How did all these loans arise? If they were from lifestyle expenditure, then you need to cut that back to bring expenditure in line with income. But if you used short term money to pay for an extension or maternity leave, then maybe you should consider remortgaging. Your mortgage is at 5%. Your credit card and other loans could be anywhere between 10% and 20%. 

The big downside of remortgaging to consolidate your debts, is that a lot of people run up the credit card and other loans again. If you can avoid doing this, then remortgaging is a good idea. 

Thisis an excellent discussion on how to cut back your day to day expenditure.

Brendan


----------



## Diziet (1 Apr 2008)

Excellent, Anna!  I would agree with Brendan that the CU has to be the first target. get that out of the way first, then divert the money to the next highest interest loan.

Tracking expenditure, budget and loan repayments on a spreadsheet is an excellent motivator. If you are at all spreadsheet-savvy then I would advise you to set up some tracking. It is actually pretty easy, so even if you are not familiar with spreadsheets, it's a good opportunity to learn.


----------



## anna11 (1 Apr 2008)

i have just rang my mortgage providers and if i consolidated all my loans and credit card this will cost us an extra 205 a month
now i am really confused imagine that would free up about 1000 a month 
i know for a fact i will never ever get another credit card and if we want something it will have to be saved for

Oh guys wha do you think should i just consolidate on to my mortgage

helpppppppppppppppppppppppppppppppppppp


----------



## askalot (1 Apr 2008)

anna11 said:


> i have just rang my mortgage providers and if i consolidated all my loans and credit card this will cost us an extra 205 a month



How long a term is that for? 

If it is running for the length of your mortgage then it is probably a bad idea as the interest you'd end up paying would be huge! At most only consolidate for the duration of the original loan, it is also worth remember that if you do this then you are also converting unsecured loans to loans secured against your home.


----------



## anna11 (1 Apr 2008)

hi yes this was to run for 29 years oh my god i am sooo confused


----------



## annR (1 Apr 2008)

If you can see a way to pay your way out of it without putting it on to the mortgage that sounds better to me.  I think you're going well.  Can you use the CU savings to put against the CU loan?


----------



## askalot (1 Apr 2008)

I would steer clear of consolidating loans and credit card debt for 29 years - that 48,000 debt would end up costing you over 100,000.

How about asking your mortgage company to quote on a range of options where you pay back the consolidated loans over 3 or 4 or 5 years etc?

You will find it next to impossible to switch your credit card and get a 10,000 credit limit at the same time so maybe at the very least you can consolidate this to your mortgage and pay it back over 3 or 4 years.


----------



## Brendan Burgess (1 Apr 2008)

I agree with Askalot.

Remortgage - the term agreed does not matter much. 

But pay off the loan bit over 5 years. You can pay more into a mortgage than the set repayment if you want to and if you are able.

Brendan


----------



## Gus2008 (1 Apr 2008)

I agree with above posters. Remortgage yes, but over a 3-5 year term! You would be doing yourself no favours by extending it over 29 years... aside from anything else, you'd learn nothing from it and end up making the same mistakes in a few years time.


----------



## anna11 (1 Apr 2008)

ohh ok right back to the drawing board i think i will ditch the remortgage idea and go with my first plan 
thanks again guys for your help


----------

