# Eddie Hobbs - Show me the Single Mum



## contemporary (13 Mar 2006)

Another disappointing episode i think, basically remortgage the house and get your parents to mind your child.

Did anyone else think that the 2500 per annum child support was a bit low?


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## Carpenter (13 Mar 2006)

Agreed, very disappointing; I thought the maintenance was miserable.  What more can I say?


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## TarfHead (13 Mar 2006)

I thought the last 5 minutes were the best. She had cut down on all of the many fripperies in her life and still she was spending down to zero each month.
This series has gone on too long and stretched itself too thin. Perhaps after his summer success, the production company are looking to capitalise on his fame while it lasts ?


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## Lauren (13 Mar 2006)

Whats a frippery/fripperie/fripperies?


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## ClubMan (13 Mar 2006)

http://www.tfd.com/frippery

I saw a bit of it and thought that it was pretty poor. _Eddie _initially stated that the loan to mortgage consolidation would represent a saving of c. €7K a year. Later he correctly qualified this by saying that it represented a *cashflow *saving of €7K a year. A subtle but important distinction since over the term of the mortgage it would most likely actually end up costing significantly more than the original debts for the sake of lower monthly repayments. I wondered why he didn't suggest scheduling the top-up over a shorter term than the full mortgage term? I also wondered why we got a glimpse of the _IIB _logo on the mortgage consolidation application form? Surely this is product placement advertising in breach of (general or _RTÉ's _own) broadcasting guidelines? If she was with _IIB _for her home loan then perhaps there was scope for switching to a more competitive lender/rate but this was not mentioned?

At least we didn't get the usual _CU _panacea since she was already maxed out with two loans from them already. I thought that Eddie's rant about private childcare costs in Ireland and the inappopriateness of the recent €1K p.a. supplement to parents of under 6's was a bit misplaced/out of place to be honest and should have been on _Rip-off Republic _rather than _SMTM_.  I also disagreed with _Eddie's _analysis that the subject's financial problems were not of her own making and largely attributable to childcare costs out of her control. More _Rip-off Republic _style polemics in my opnion.

It was never pointed out that, after being diagnosed with asthma and having to buy c. €100+ worth of drugs each month, she would probably qualify for the _Drug Payment/Refund _scheme which would cap her expenditure on prescription drugs. Obviously an asthma sufferer should give up the fags as a first step but I guess it's not a medical/health advice programme.

I am surprised that the multi-national for whom she worked presumably (since it was never mentioned) didn't have any _Employee Assistance Programme _to help employees with financial and other problems. It's not that unusual for larger companies to do this.

In short - neither entertaining nor educational in the financial sense. 4/10 at most.


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## Massey (13 Mar 2006)

I'd love to see Eddie have an episode directed at giving general advise rather than on specific situations eg. someone with SSIA maturing, what should they do with the money (mortgage v's spending, etc). Also, covering more everyday things like, where is the best place to place your savings, and illustraing the best interest rate on the market for deposit accounts and mortgages, which provider charges fees, benefits of pension upgrades, car loans, etc
I'm not learning anthing new from this program, which is a real shame. The same things seem to be covered almost every week.
Maybe Eddie should check this site more, so he gets a better sense of the questions people are asking!


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## ClubMan (13 Mar 2006)

_Eddie's_ always welcome to post some case studies here. Unfortunately we don't pay though!


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## KatieC (13 Mar 2006)

ClubMan said:
			
		

> It was never pointed out that, after being diagnosed with asthma and having to buy c. €100+ worth of drugs each month, she would probably qualify for the _Drug Payment/Refund _scheme which would cap her expenditure on prescription drugs.


I shouted 'tell her to get a drugs payments card' at the tv but Eddie didn't heed me, all that resulted was that I woke up my fiancee who has just had four wisdom teeth removed.  

Also I was amazed that the girl didn't have a SSIA a/c, presuming that she was on good wages when it was introduced and her bambino wasn't on the scene at the time.  For the price of a nice bottle of wine a month she could have opened an account.


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## Laurie (15 Mar 2006)

ClubMan said:
			
		

> http://www.tfd.com/frippery
> 
> _Eddie _initially stated that the loan to mortgage consolidation would represent a saving of c. €7K a year. Later he correctly qualified this by saying that it represented a cashflow saving of €7K a year. *A subtle but important distinction since over the term of the mortgage it would most likely actually end up costing significantly more than the original debts for the sake of lower monthly repayments*.


 
Faulty deduction. Not true - when comparing cost NPV must be taken into account. Therefore, Eddie is correct when he told her (and others) to look at the _rates_ at whuch she is borrowing and compare these. She could also increase her mortgage repayments anyway when she is in a position to do so.


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## ClubMan (15 Mar 2006)

As an example:

 Personal loan: €20K at 10% over 3 years = €3232 in interest
Mortgage topup: €20K at 3.5% over 20 years = €7838 in interest (excluding any additional mortgage protection life assurance costs)
  Can it be shown that the latter is actually more cost effective than the former? If so, how?

Thanks.


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## demoivre (15 Mar 2006)

ClubMan said:
			
		

> As an example:
> 
> Personal loan: €20K at 10% over 3 years = €3232 in interest
> Mortgage topup: €20K at 3.5% over 20 years = €7838 in interest (excluding any additional mortgage protection life assurance costs)
> ...



It can be done if you assume the rates are fixed ie you know the exact cost of capital .You would need to calculate the present value of the future " cash flows ", in this case the present value of the loan repayments for each of the two loan types that you describe above, then calculate the NPV in each case and compare the two. The discount rate to be used would be the cost of capital in each case ie 10% for the short term loan and 3.5% for the long term one. AFAIR the NPV method is only relevant where you know for certain what the cost of capital is ( discount rate ) - an extremely improbable assumption if you have a 20 year variable mortgage. 

Laurie how can you endorse Eddies view that the cheaper option is the mortgage route when you are only guessing what the discount rate is going to be over the next 20 years - the cheapest option will depend crucially on the cost of funds.


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## colc1 (15 Mar 2006)

what does NPV stand for?  Thats throwing me??


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## CCOVICH (15 Mar 2006)

NPV=Net present value=the value in today's terms of a series of future cash flows discounted at a cost of capital.


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## Brendan Burgess (15 Mar 2006)

I switched channels after about 5 minutes when it began to appear like a repeat. 

Brendan


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## colc1 (15 Mar 2006)

CCOVICH said:
			
		

> NPV=Net present value=the value in today's terms of a series of future cash flows discounted at a cost of capital.


 
Thanks I am still confused as to what it exactly means in the earlier post


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## ClubMan (15 Mar 2006)

_Laurie _is saying, in my hypothetical scenario above for example, that you can't say that €3232 costs less than €7838 by just looking at the nominal amounts and without factoring in the real value of money and how it is affected by inflation over the relevant periods of time. However I'm not clear how this actually applies in this case or in my hypothetical example above and would be interested if anybody (in particular _Laurie_) could show me if/how €3232 represents a higher cost than €7838 in that example.


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## asdfg (16 Mar 2006)

Did not see the program so only going on what is said on AAM 



> after being diagnosed with asthma and having to buy c. €100+ worth of drugs each month, she would probably qualify for the  _Drug Payment/Refund _scheme


 
As she is working and paying tax she can also claim the _Drug Payment/Refund _scheme ie 85 pm and other medicial expenses doctors fees etc. against tax


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## Laurie (16 Mar 2006)

ClubMan said:
			
		

> As an example:
> 
> Personal loan: €20K at 10% over 3 years = €3232 in interest
> Mortgage topup: €20K at 3.5% over 20 years = €7838 in interest (excluding any additional mortgage protection life assurance costs)
> ...



Personal loan: €20K at 10% over 3 years
Monthly Repayment = €645.34 pm 
Term = 36 months
Total Interest = €3232.37 
​
Mortgage topup: €20K at 3.5% over 20 years
Monthly Repayment = €645.34 pm ( €115.99 + €529.35 ) 
Term = 33 months
Total Interest = €940.45





​


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## ClubMan (16 Mar 2006)

Sorry - I don't understand that at all. Where do the monthly repayments come from? How is 20 years a term of 33 months? Perhaps you could explain in more detail? My total interest figures for the loan scenarios outlined came from Karl Jeacle's mortgage calculator and for the personal loan scenario it gives a monthly repayment figure of €645.34 but for the mortgage top-up scenario it gives a figure of €116.


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## Laurie (17 Mar 2006)

ClubMan said:
			
		

> Sorry - I don't understand that at all. Where do the monthly repayments come from? How is 20 years a term of 33 months? Perhaps you could explain in more detail? My total interest figures for the loan scenarios outlined came from Karl Jeacle's mortgage calculator and for the personal loan scenario it gives a monthly repayment figure of *€645.34* but for the mortgage top-up scenario it gives a figure of *€116*.


 


Mortgage topup: €20K at 3.5% over 20 years
Monthly Repayment = *€645.34* pm ( *€115.99* + €529.35* overpayment) 
Term = 33 months due to *overpayment
Total Interest = €940.45
​


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## ClubMan (17 Mar 2006)

So - the mortgage top-up scheduled over roughly the same term as the original personal loan(s) is cheaper. Isn't that what I said? My point was that if the loan to mortgage consolidation top-up is scheduled over the full/remaining term of the mortgage (as many people do and, in the absence of any qualification from _Eddie_, this punter was being encouraged to do) then this will cost less per month but much more in the long run in interest compared to the original higher rate but shorter term personal/unsecured loan(s).  Is that not the case?


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## Laurie (17 Mar 2006)

ClubMan said:
			
		

> So - the mortgage top-up scheduled over roughly the same term as the original personal loan(s) is cheaper. Isn't that what I said? My point was that if the loan to mortgage consolidation top-up is scheduled over the full/remaining term of the mortgage (as many people do and, in the absence of any qualification from _Eddie_, this punter was being encouraged to do) then this will cost less per month but much more in the long run in interest compared to the original higher rate but shorter term personal/unsecured loan(s). Is that not the case?


 
No. The correct way to compare loans is to compare the lending rate, i.e.
a loan at 3.5% (or at 1% for that matter) is much cheaper than a loan at 10%.

Take two loan examples:

LoanA: €20K at 10% over 3 years
Monthly Repayment = €645.34 pm 
Term = 36 months
Total Interest = €3232.37 


​
LoanB: €20K at 1% over 40 years
Monthly Repayment = € 50.57 pm 
Term = 480 months
Total Interest = €4274.18



​Following your flawed logic, Loan A is cheaper than LoanB because:

Total Interest on LoanA ( €3232.37 ) < Total Interest on LoanB ( €4274.18)


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## ClubMan (18 Mar 2006)

Laurie said:
			
		

> No. The correct way to compare loans is to compare the lending rate, i.e.
> a loan at 3.5% (or at 1% for that matter) is much cheaper than a loan at 10%.


I disagree. You have to factor in the term as well. A lower interest rate over a longer term can be more expensive than a higher interest rate over a shorter term. That was my original point and I don't see that you have shown that I was wrong. If I am I am perfectly willing to admit that. However I don't see how your arguments so far and the mention of _NPV _earlier make any difference to what I have been saying. Feel free to clarify.


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## colc1 (18 Mar 2006)

Laurie said:
			
		

> No. The correct way to compare loans is to compare the lending rate, i.e.
> a loan at 3.5% (or at 1% for that matter) is much cheaper than a loan at 10%.
> 
> Take two loan examples:
> ...


 
Are you not talking about cashflow?  Surely loan A *is* cheaper than loan B


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## ClubMan (18 Mar 2006)

OK - maybe the confusion arises her from my *non technical *use of the term "cashflow" in the post linked above? Maybe "cashflow" has a technical meaning different to my casual use to refer to the fact that the mortgage consolidation may result in lower monthly repayments (and thus more cash available to the punter each month) than the original personal loans. Even if the mortgage consolidation may cost more in the long run especuially compared to higher headline rate loans over a shorter period of time?


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## extopia (18 Mar 2006)

What you need to do is compare the two total interest sums in today's euros - in other words adjusted for inflation. For instance the sum of €7,838 in twenty years time, assuming inflation rate of 3%, is €4,299 at today's values. At the same inflation rate, €3,232 payable in three years time is worth €2,954 today.

However you need to compute this comparison allowing for the payment being made over time. [broken link removed] might be of use. Enter the amount of interest paid in each year, from 1-3 in one scenario, then 1-20 in the other,  and compare the two totals. I'm sure there are some others out there if you look for them.


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## ClubMan (18 Mar 2006)

I realise that but even allowing for the future value of money etc. I don't think that it's inherenty incorrect or flawed logic to point out that a top-up for consolidating higher cost unsecured loans onto the mortgage payable over the full term of the mortgage will often work out more expensive in the long run than the original loans over a shorter period.


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## extopia (18 Mar 2006)

I think the point is that you can't decide which is more expensive unless you express the total interest paid in some meaningfully comparative form such as today's values. Generally speaking the higher the interest rate the higher the cost. But the difference can be severely affected by inflation for example.

But certainly if the long term payment plan DOES prove more expensive, sure, it is of course correct to point that out. However you cannot necessarily use total interest paid as the yardstick for measuring expense.


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## Laurie (18 Mar 2006)

extopia said:
			
		

> I think the point is that you can't decide which is more expensive unless you express the total interest paid in some meaningfully comparative form such as today's values. Generally speaking the higher the interest rate the higher the cost. But the difference can be severely affected by inflation for example.
> 
> But certainly if the long term payment plan DOES prove more expensive, sure, it is of course correct to point that out. However you cannot necessarily use total interest paid as the yardstick for measuring expense.


 
Extopia, thank you. You have just explained succinctly the very point I was trying (in a very ham-fisted way admittedly!) to make.


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