cU loan or bank loan to consolidate debt?

I am new to this site and really unsure about finances and I really hope you can help me.....

we moved into our first new home a year ago and with all our our initial housing exenses we are really struggling every month now to manage the debt we have got in with both our credit cards and overdraft maxed (overdraft halfway through the month regularly). we are both in reasonably paid jobs but cannot seem to clear this debt that moving in has cost us.

to complicate things further we are getting married early next year and while we cannot afford to pay for the wedding in full(
we cannot save at the moment) we have been kindly offered financial assistance from parents towards the wedding of €20K.however, we figure we would still need to borrow €40k to fund most of our other wedding expenses and to consolidate our existing debt in order to put it into one managable controlled payment every month rather than trying to juggling it about as we are now.

I was wondering if it would be at all possible for us to use this €20K to lodge and then borrow from my credit union? Unfortuntely, i only started with them last month and have made one payment by standing order. we were wondering if we could lodge this €20k would it enable us to borrow the larger amount of €40K in 4 or 5 months time? do i need to make a smaller loan first? should i lodge the €20k into seperate lodgements over 3 months? is it likely they will let me borrow €40K?

unfortunately, we are also concerned as we will need access to finances to pay deposits for upcoming wedding expenses.

alternatively, we were going to apply for a €40K loan with our bank (PTSB) as this is were we have our joint account ( and overdraft)

would it be more finacially feasible for us to go to the credit union if this is at all a possible option for us?

I would really appreciate anyones advice on this matter as we try to manage and pay for 2 of the most expensive stages of our lives!

Many thanks!

Can't offer advice on Cu as no experience but think seriously about spending a packet on your wedding if you are struggling already. I know it's a special day etc but it can be done on the cheap and still be great. Who you invite is more important than how much you spend. Get the right people in a room ( any room ) and you will have a great party. Maybe think about a wedding abroad with just a few close friends and family - I have been at 4 of these and all were exceptional holidays and weddings - good luck

if you lodge the 20k and borrow 40k, you will have to leave the 20k in the account until your loan is clear.
i think it would be much wiser for you to budget with 20k instead of borrowing to have everything.

Yeah I definitely agree. Weddings are so expensive over here and can be done way cheaper abroad.

thanks for the advice but unfortunatley plans are already made and the €20k will cover the costs for the reception alone. deposit has been paid on venue already and both are from big big families so its too late to change now.in hindsight going away would have been such a smart move but we're getting on with it our decision now....

it will be a special day and we have no problems paying for it for a few of years to come...its just finding out how or what would be the best approach to go about getting the funding and managing our current debt also inthe process......anyone?

thanks

I'm sorry to be blunt but you cannot afford a wedding of 40K. You cannot cope right now so how do you think you will cope with an extra 60K of debt (20 from relations and 40 from credit union). You do not currently live on your monthly income, your overdraft is maxed as are your credit cards, what did you spend all that money on? You need to post all your income and expenditure to get good advice, check out the money makeover section for how to do this. I can't believe you are proposing to go further into debt for one day's enjoyment.

Don't know many banks that would lend €40K to a couple that are overdrawn each month!!

Stop spending and living a life you can't afford to live. Go back to mummy and daddy and asks them for another €40k they seem to have plently of cash to burn.

Bronte said:

I'm sorry to be blunt but you cannot afford a wedding of 40K. You cannot cope right now so how do you think you will cope with an extra 60K of debt (20 from relations and 40 from credit union). You do not currently live on your monthly income, your overdraft is maxed as are your credit cards, what did you spend all that money on? You need to post all your income and expenditure to get good advice, check out the money makeover section for how to do this. I can't believe you are proposing to go further into debt for one day's enjoyment.

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I would have assumed the 20k from family was a gift and not repayable.

Maybe I misread, but the 40k would then be the total debt - consolidating the existing debt and the other wedding costs). Consolidation 'could' reduce the current monthly servicing costs (depending on rate, term etc), but this may be negated by the additional borrowing (we don't have figures of current versus proposed).

As you say, for proper advice OP needs to fill in the standard 'form'. From wedding point of view, they need to review and see what, if anything they can cut back on at this stage. It may make sense to write off deposits on some items etc...

OP, some will see this as impolite etc, but have you factored in 'cash gifts' from wedding guests? Or considered explicitly asking for them - particularly from extended family members.

Sorry to see some of the unhelpful replies you've received. There are a lot of us in the same boat at the moment. I think asking for cash gifts from your wedding guests is a good idea and rarely seen as impolite anymore. Have you also considered renting a room in house for a while to bring in some extra cash?

haventabean, you still need to post the debts you have and the interest rate you are paying on them.

You should also look into the interest rates you are likely to pay for a CU or a bank loan.

Generally speaking, it makes sense to pay off credit cards as the interest on them is high compared to other forms of debt. But this only works if you stop spending on them.

You also need to look at your overdraft. Is it arranged? Talk to your bank and see if you can arrange an overdraft at a lower interest rate than you are currently paying. Again, this will only work if you can stay within the overdraft limit. This means you need to start working in cash.

Have you any other loans? Car loans, HP agreements for furniture, white goods, tv?

You really have to get control of your day-to-day spending if you are going to make a dent in the debts you have built up. If you can't show evidence of managing your debt to some degree, you will not be able to get a loan at a decent interest rate (one that makes taking the loan worthwhile), so it is really important that you manage to live within your means for a few months, however hard that may be.

I would suggest cancelling the wedding photographer and getting as many people as possible to take pictures with digital cameras and send them to you. You can build up a great album this way. Let's face it, you only need one photo for the mantelpiece and maybe one for the bedroom!

Get a friend to make up the flowers if you can. Buttonholes for the men and your bouqet - again it needn't cost a fortune.

I agree, receptions can be expensive and there can be no getting out of family commitments, but that is all you *have* to do, so I would try and keep all other expenditure to a minimum, like deferring the honeymoon until you have your heads above water. You can always say that the weather isn't great where you want to go, so you are waiting for a different season to have your dream holiday...

Best of luck.

What you are asking is what is the best way to finance debt of €40k on a joint income of €5.5k per month i guess?

This is a conciderable amount of debt you seem to have got yrself in to in a short period of time. You are right to deal with it now.

A very simplistic answer is to pay it off as quickly as possible at the lowest interest rate you can get. €40k over 60months would cost around 800-900 euros a month. Over 50% of your income would go on servicing debt which could be considered high. But you know in 5 years time you would have an extra 900e a month. This asumes the banks would lend you this amount.

If the banks won't lend you this then its all about cost cutting to pay off the most expensive debt first. In fact you should be doing that anyway as its key that you don't run up more debt. Ways of increasing yr income through renting a room is "easy" money if you can put up with someone living in yr house. Maybe not the best way to spend the first years of your married life mind.

You might not want to hear this but getting yrself in €40k debt in such a short period of time could be argued to be quite irresponsible. The cheapest way is to save for things you think you need/want.

You should call into www.mabs.ie to discuss how best to deal with this before you get in too deep

Sorry if I sounded harse but your debts sound high to me hence I would never advice to get into further debt. You also have not mentioned that your mortgage is your largest debt and you should clarify it it's a 100% mortgage and the value of your house relative to the mortgage debt. The more details you give the more advice you will receive, both positive and negative.