Money v. tight. Can we improve situation?

H

Hello Kitty

Guest
Hello,

I would be grateful if you could offer some objective advice on our finances. Things are very tight at the moment and we have a lot of debt. I’m sure like a lot of people, up until recently we thought we were doing okay but now…well details are below:

My partner (42) and I (36) have two kids (6 and 2). I have recently gone back to work full time after a year at home with our children. We are in the early stages of a business that is growing. This has had an impact on take home pay for my partner as for the last 3 years he has taken a small enough salary (started off at €24,000). Also we had to take out a loan to fund the year I stayed at home.

His income only recently €50,000 pa
Mine €35,000 pa

Property:

3 bed - paid €365k / worth €310k / mortgage tracker rate €200,000 / monthly repayment €1,100

1 bed – paid €220k / worth €220k / mortgage tracker rate €140,000 / monthly repayment €850

Both properties rented out and we are in rented accommodation as we needed a bigger place. Tried to sell both places but no luck.

Loans:
Personal loans between us €48,000
Credit cards €9,500
Over drafts €3,000
Car loan €20,000

Incoming monthly: €2,300 + €300 C Benefit + €2,900 = €5,500

Monthly outgoings approx:
Rent €1,450
Car loan €500
Personal loans €1,000
Credit cards €400
Bills €400
Childcare €1,050
Groceries €550
Medication €100
GP’s / Hospitals €100 (on average – one of the kids has been very sick and requires a lot of meds each month)

€5550

This is obviously without buying kids clothes, shoes, going back to school stuff, swimming lessons etc.

We’re both in busy jobs, the kids are in the crèche and after school care and we’re broke 2 minutes after we get paid (plus all the guilt I feel about putting them there in the first place). Am I missing something? Could we organise ourselves better? I would love to sell both places but we have tenants covering the mortgages (just about) and the chances of selling now is remote. But I don’t even know if that’s the right thing to do.

We tried to re-mortgage the 3 bed to €250k but the computer said no so the bank gave us a seven year loan at a higher interest rate (how nice) and it’s crippling us each month. We’ve asked for a longer term loan but the computer said no to that too. We’ve both switched to 0% credit cards.

Any advice would be appreciated as we’re losing sleep. We have no savings. We don’t live a lavish lifestyle by any means. We rarely go out.

Thanks.
 
Sell your car(s)? Get a smaller, just as effective one?

Drop the price of either of the houses you want to sell to be in line with current market rates?
 
Move back into the 3 bedroom unless you have a very good reason not to. 3 bedrooms should be enough for a couple and 2 kids

Is the appartment worth what you believe it to be? the fact that you couldn't sell it for that price suggests that it is not.

if you haven't got a medical card, check to see if you can get one

Review your tax position to ensure you are claiming for all you can claim for
 
Have you got a [broken link removed]?
Can one or both of you get an evening job (one of my neighbours delivers pizza in the evening, another walks dogs)?
 
Kitty... i'm puzzled as to how you managed to get all these loans from different banks based on your incomes..

If i was in your position, i would move back into the 3 bed house... I would also check with the bank to see if they would give you an interest only loan on the 1 bed property as that would release some extra cash and then use the spare cash from this to clear the loan with the highest interest rate
 
If your 3 bed house is actually worth €110k more than the loan, why not sell it and use the equity to clear your personal and short term loans. Property is not easy to sell but priced correctly there are sales being made. Even if you got less than 310 it will allow you to clear loans that will cost you a lot in interest in the coming years.
 
I'd sell the one bed immediately. If you tried to sell it for 220k and nonone will pay that then its not worth 220k. Put in on for 200k and then two months later drop it to 180k.

You have equity tied up in a depreciating asset that you dont need. Get rid of it.
 
Robin Banks said:
I'd sell the one bed immediately. If you tried to sell it for 220k and nonone will pay that then its not worth 220k. Put in on for 200k and then two months later drop it to 180k.

You have equity tied up in a depreciating asset that you dont need. Get rid of it.
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+1
Get rid
 
Point 1. Move into the 3-bed.

Point 2. Sell the 1-bed for whatever price it achieves. Holding onto a depreciating useless asset out of pride is a mugs game. Cut your losses.
 
Hi,

Thanks for taking the time to reply. Having thought about everything we've decided to try to sell the one bed - at any cost. It was meant to be an investment but it has been a constant drain on resources. It was a crap investment in hindsight. It was 2.5 years ago the last time we tried to sell it.

Moving back to the 3 bed is a last resort as it would mean uprooting the kids from school and creche and we really don't want to do that. However if things got worse it seems like a good idea to keep the three bed as we can always live there if we have to.

I'm sure we're like so many people out there but up until recently we thought we were doing okay.

The debt built up over the last three years as a result of starting a new business, a second baby who has been very sick and me not being able to go back to work until 8 months ago. It wasn't funding designer clothes or fancy holidays. Earlier this year we had run up over 1,000 euro in medical bills and 500 euros lost in parental leave in 5 weeks. The medication and dietary requirements are easily costing 150 per month. I will look into the doctor card but doubt we'd be approved.

Anyhoo...at least we have a plan. So anyone want to buy a one bed apartment at a bargain price???? ;O)
 
Hello Kitty said:
Hi,

Moving back to the 3 bed is a last resort as it would mean uprooting the kids from school and creche and we really don't want to do that. However if things got worse it seems like a good idea to keep the three bed as we can always live there if we have to.
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I am afraid that you are being overdramatic with talk of 'uprooting the kids'. A six year old will cope perfectly well with a change in school, and a two year old will be over the creche change in a matter of days. You are not talking about teenagers, who are considerably harder to move! And to be honest you don't really have a choice. You are burning more money than you have coming in and the longer you are letting this continue the bigger the hole you are digging.
 
Can you not get one of those cards from the HSE for the prescriptions, it means you will only have to pay the first 80 euro (I think that is the rate). Everyone is entitled to one of those cards.
 
niceoneted said:
Can you not get one of those cards from the HSE for the prescriptions, it means you will only have to pay the first 80 euro (I think that is the rate). Everyone is entitled to one of those cards.
Click to expand...
The current max on the [broken link removed] is €100 per month, and An Bord Snip wants to push this up to €125. Obviously, €1200 is not considered to be enough of a burden on a family.
 
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