My Story: 2 Incomes, 2 Kids, Debt out of control

[Ceist Beag]

Lots of good suggestions here. As others have said your food bill is too high. It should be comfortable enough to get by on €100-€120 per week. Make your lunch at home to bring to work. That should save you around €300 per month on your current spending.
I think if you break down your spending as suggested (use the excellent spreadsheet link provided above) and just set some goals for yourself, you'll find over the course of the rest of this year that it becomes easier to see where you can cut costs further to make things a bit easier.

 

[TRipley]

the mortgage is not the issue here - since when did people start measuring in multiples of net income? in multiples of gross income its x3.6. This is not excessive at the beginning of a mortgage. The issue if anything is the long term and the immediate high interest rate (which might improve in 2 years anyway as you come off that fixed rate).

The focus point as others have pointed out is the lifestyle debt which you have identified as being an issue anyway so behaviourly you're on the right track which is the first thing......

 

[pebbledash]

It's important to say well done on taking the step to tackle the spending.
Anxiety around finances can often cause people to bury their head in the sand and make things worse. It can become hard to even look at a bank balance. Well done on writing everything down and looking for advice. Best of luck with the budgeting.

 

[Mpsox]

This thread and some of the other Money Makeover ones are really annoying me.

How can someone say that €100 a month for lunch is crazy. That’s a fiver a day!

We have to have some pleasures in life. For four days a week I spend that, but on Friday normally have a nice lunch. That saves my sanity.

Also many of the makeovers forget the realities of life – this week alone I have had a €55 doctor fee, €88 prescription, taxi home from doctor as couldn’t see to get bus/drive, had to get my hair cut at €37, new glasses at €155, dry cleaning cause someone poured a pint over me at €20, broken dishwasher to be fixed at €100, new cooker switch at €50….what am I supposed to do, live in squalor…!

No arguement that you have to have some pleasure in life, but if you were bringing your own lunch to work, you'd probably have saved enough money in a month to pay for the hair cut and dry cleaning. It's not necessarily about cutting out pleasure, it's about spending more cleverly

 

[Turtledove]

Thanks again everyone for all the feedback. Bit the bullet and just cut up the credit cards! No going back.

Some more thoughts, I know some of these questions are probably basic, but any tips on:
Managing the cost of social commitments, e.g. Kids Birthdays, going to Weddings, entertaining Friends. Are these luxuries we can no longer afford?
Whats the most cost effective way to Grocery shop? One bulk buy per month or week, or a few disciplined trips when needed?
A few posters have mentioned an interest only credit card?
We also have monitored E ircom Phone Watch (25pm) so is this also a waste, does it mean I can't drop the Eircom landline?

 

[horusd]

Cutting up the cards is just part of the plan Turtledove, a good start tho, and well done on beginning to tackle the problems. But I suggest you take some time and plan what you are going to do. Use the earlier posts as a rough "to Do List" and the planner to get on top of what you are spending. Set targets to tackle each one, ie deal with phone, electricity and Gas etc by Fri, start spending diary tomorrow,complete budget by Sat and so on. Tackle them one by one and prioritize them based on importance and impact. BTW make sure you bring the other half on board.

On the groceries,you need to budget. Try a 10% reduction to 630 or so and see how that works. You won't starve. Buy in bulk and take up offers if available. Do a food menu for a week, use leftovers for sambos etc. If you have a freezer use it for items you can make in bulk like bolognese, stews, soups etc. There are some fantastic recipes online from Jamie Oliver and the like. Set a meals budget and stick to it. Buy treats in bulk for kids etc. Set up an entertainment/presents budget, and fund it from some of the savings. You can enterain friends without being extravagent, use your imagination to come up with nice dinners, home baked breads etc. Above all, make this budgetting exercise fun! Believe me it can be either seen as a dreary hairshirt imposition or an exciting challenge. As soon as you start to succeed you are going to be so pleased with your progress it will make you want to do more. Budgetting is a learning experience, you've started to tackle it so well done and best of luck.

PS Yep, ditch the phonewatch if this is not needed. 25 pm = 300 pa.

 

[niceoneted]

Well done on cutting up the cards. The 0% interest cards are where companies take on your existing balance and there is 0% interest on that balance for a period of time be it 6/8/12 months. Its a matter of finding out who is still offering them and applying.
If you get one it will just make it easier to pay off what you owe as there will be no interest adding onto the balance but I would suggest if you get one the minute you get it cut it up to.

In relation to kids parties, your are young yet but as they get older, bake buns, make sandwiches, cocktail sausages rice krispie buns cake, biscuits etc. Receipes readily available. Make parcels for games such as pass the parcel, pin the tail on the donkey etc. So many go to the cinema and play centres that can cost a fortune the kids will be delighted with the traditional one as it will be different. Put on invites no presents please just your presence. Know of someone who did this recently and they were the one to start the trend.
If you know of a wedding or other special occassion coming up start putting a few bob by for it. I never give cash gives but buy luxury items in the sales as gifts.
Same for kids presents nearly always half price after xmas.

Do a weekly manu plan and work out your shopping form this. Select dishes that are cheaper to make like, bolognese, shepards pie, stew, home made soups etc. If you see special offer on breads buy few loaves and freeze them.
Check the special offers each week and buy them in bulk but only if they are things that you buy ordinarily.
ALWAYS bring a list.

Phone watch a waste, having the alarm is a deterent in itself, remember to always set it and use it whether you are there or not.

Utilities like ESB and GAS can well be reduced esp given you are not in the house during the day. Look at when you put the heat on and off. Can you shorten the time. If I think its going to be chilly in the mornings I set it to come on for 15 mins before I rise. Thus the chill has gone out of the house and your usually moving around getting sorted so keeping warm. turn down the settings slightly. Don't have it just coming on because it is such a time of year judge by the weather. Invest in good duvets. I did got all duck down.
ESB don't leave lights on, invest in CFL's there are lots of offers on these. If you have a lot of those down lights that use halogen bulbs switch to LED's. Less usage and better lighting. If you use dish washer use only when full or perhaps restrict use and wash the dishes a couple of the days. don't leave appliances on standby plug them out. Perhaps invest in sockets that you can turn off if you don't have them.
I use vodafone for BBand land line, I pay about €40 a month.

 

[Bronte]

It's important to say well done on taking the step to tackle the spending.
Anxiety around finances can often cause people to bury their head in the sand and make things worse. It can become hard to even look at a bank balance. Well done on writing everything down and looking for advice. Best of luck with the budgeting.

That's a very good point pebbledash. Already Turtledove is making progress, one is coming on here recognising there is a problem and two cutting up the credit cards. Three should be to have a family conference with spouse on finance. Nothing like a team effort.

Further to the other advice, when you have the extra money for the savings you are going to make you must decide which debt you will tackle first. This will give you a sense of achievement. You can decide on say the 2K credit card first, you'll have that quickly cleared and it will give you impetus to tackle the other ones (if you prefer tackle the highest interest rate card first). Goals are important.

 

[Bronte]

This thread and some of the other Money Makeover ones are really annoying me.

How can someone say that €100 a month for lunch is crazy. That’s a fiver a day!

We have to have some pleasures in life. For four days a week I spend that, but on Friday normally have a nice lunch. That saves my sanity.

Also many of the makeovers forget the realities of life – this week alone I have had a €55 doctor fee, €88 prescription, taxi home from doctor as couldn’t see to get bus/drive, had to get my hair cut at €37, new glasses at €155, dry cleaning cause someone poured a pint over me at €20, broken dishwasher to be fixed at €100, new cooker switch at €50….what am I supposed to do, live in squalor…!

Not sure what your point is. If people have money problems then they have to bring their spending down to their income, they have to learn to save and they have to repay debts. To do this one has to make cuts. In the context of that 100 Euro a month on something that is discretionary is a no no. Don't think anyone was making the point that buying a sandwich or going out to lunch is wrong per say.

In your particular week presumable you had savings to pay for all the expenses you listed. You hardly put those expenses on credit. The OP has no savings so things like this can really throw a spanner in the works.

In relation to your squalor point. Not cutting your hair, not fixing the dishwasher and not doing the dry cleaning would not lead to one living in squalor. That's far from squalor.

 

[truthseeker]

Managing the cost of social commitments, e.g. Kids Birthdays, going to Weddings, entertaining Friends. Are these luxuries we can no longer afford?

I think you can still afford these things but you have to think smart about it. Usually a wedding has the following costs associated with it:
An outfit
A present
A day drinking
Travel
A night in the hotel

So from the above, dont buy new outfits, buy an actual present - as someone mentioned get something in a sale, or be creative and make something - when I got married a friend brought her camera, took lots of pics and made me a beautiful photo album as a present - it was a wonderful present. One of you drive to it, and that way only one person is drinking, and dont stay in the hotel, let the driver drive you both home - you really can go to a wedding cheaply if you do this.

As for kids parties - same applies, cheap thoughtful present, same clothes, if you are throwing the party yourself arrange it in such a way that you are not feeding a meal to hordes of children, just snacks.

Entertaining friends, dont do it with a meal, ask them round, tell them to bring their own booze, and provide cheap snacks (chips and dips, or LIDL frozen party snacks).

Whats the most cost effective way to Grocery shop? One bulk buy per month or week, or a few disciplined trips when needed?

We tend to do one large shop a month where we buy tinned goods, dried goods (like rice, sugar etc..) and then most weeks we buy fresh fruit/veg/staples (like milk/bread) in LIDL, and fresh meat (I buy in a butchers and avail of his deals). Generally there is a weekend a month where we dont shop at all and just live on the stuff in the freezer and whatever bits of fruit and veg are left over.

For lunches I buy an oyster of ham in the butchers (it costs a fiver if I buy it with a chicken - a tenner for both) and cut it in half, freeze half and boil the other half and slice it and use it for sandwiches for the week. I also cut the chicken in half, freeze half, roast the other half and use it for same - there is 2 weeks worth of lunches in a chicken and a ham - for a tenner. You may also get a dinner out of them as well.

I write a list before going grocery shopping and stick to the list. I used to find myself binning jars of stuff that Id bought to try or binning meat that had been sitting in the freezer for months waiting for me to make some particular meal with it - now I just buy what we actually like to eat and thats it.

LIDL/ALDI are cheap for the cleaning and personal hygiene products as well.

I also shop on ebay for bargains. Just last week I bought 2 pairs of summer sandals for 3 pound sterling each, the postage was 4 pounds - so net cost was less than a tenner per pair - and Ive already worn one pair to a wedding and been complimented on them.

 

[laobhise]

Agree with other posts about making a shopping list and sticking to it. We do a weekly shop from supermarket for tinned food and jars, cleaning products etc but then I go to local wholesale butchers once a fortnight and stock up on meats and freeze bits. I buy fruit and veg every week with weekly shop or from local shop depending on if I have time. We set a budget of €120 a week for all groceries for 2 adults and 1 child. We often dont spend all this and anything left I put in a money box we have for treats/savings etc.

There is a great excel sheet that someone posted on here before which has a pie chart at the end and you can see how much of your disposable income goes on different categories and how much surplus/deficit you have at the end of each month-definitely use some tool like this.

Also my husband and I give ourselves a weekly allowance of €120 per week each which we lift from the bank each Friday. We use this for weekly petrol, lunches, credit, lotto etc. Any money that we have left over come the following Fri we put in the money box. We find this works for us- just work out what you can afford each month. This way if you can save on your weekly allowance then you can have a treat and means you are more likely to bring in lunches etc. You could compete with each other to see who will have more left at the end of a week- ha ha!!

With the money box then every time if goes over €150 we lodge the money in the post office for holidays/rainy day etc but we have €150 handy for a take away as a treat or family day out, emergencies with house etc. However, you might want to clear your debts first.

Also make sure you claim back all medical expenses, bin tag tax etc and pay debts or save it etc.

 

[Guest105]

Also my husband and I give ourselves a weekly allowance of €120 per week each which we lift from the bank each Friday. We use this for weekly petrol, lunches, credit, lotto etc.

That's €240 a week for treats apart from petrol, few families can afford such a luxury.

I think the aim here is to steer the OP away from treats such as lunches and lotto until such time his finances are in order.

 

[txirimiri]

Hi Turtledove, well done for making a start on financial controls! You've had loads of good advice on the thread, but I thought I would also reply as we have almost exactly the same household net income per month (5400) and are also a family of 2 adults and 2 smallies, so thought it might be helpful to let you know how we structure things. Our mortage is similar to yours but our childcare bill is a good bit higher - between the 2, we are paying out 3600 per month which is probably equivalent to what you pay out in mortage, childcare and debt repayments. We manage very well on the remaining balance.

First thing that is crucial - after using the planning spreadsheet to work out your monthly outgoings, set up a day to day spreadsheet into which you put EVERYTHING you spend. It is an excellent way to identify where you are overspending and get an exact picture of whether your costs are within your budget and where you need to cut down. If you want to PM me your email I can send you the one that we use.

Some other thoughts (might be repeating what other posters have said)

Elec/Gas - we have changed to Airtricity and have got a 16% reduction in unit cost (incl direct debit and paperless billing). Thermostat is set at 19 degrees max instead of 21. We use chimney balloons in winter to keep draughts out and I manically go around closing doors, switching lights off etc

Phone/Tv/Broadband - have basic package wiht UPC, 70 a month. Has plenty of kids channels and all the mainstream ones.

Waste - we have a compost bin and also make the most of the green bin - usually get away with 1 or 2 black bags a week at 3 euro per bag

Car/house/life/health insurance - shop around. Worth taking the time to ring loads of brokers and fill in lots of online forms. Work out the minimum you need - we have just cut our VHI bill in half by changing to a different plan without loosing any essential cover. Likeswise, up your excess and drop accidental damage from your house insurance and you should save a package. Depending on the age of your car, think about getting third party instead of comprehensive.

Kids - most activites we do with the kids are free, park, picnics, exhibitions, walks, visit to friends and relatives. Yours are young still, so no need to after school activites yet which are beginning to cost us a fair whack! For their birthdays, I have their cousins and one or two friends around for sandwiches, cocktail sausages, fruit, homemade cakes and scones, football in the garden, balloons etc, at very little cost. For their clothes, I go to Dunnes or M & S in the sales for the older one and the younger one weas hand me downs. They don't need elaborate birthday presents at this age. For other kids parties, I stock up on good value children's books or toys when I am shopping in Tesco or whatever to give as presents.

Having friends arounnd - I like cooking, so make everythjing from scratch. Homemade smoked fish pate wite homemade brown bread, chicken and chorizo stew and homemade madeira cake - stuff like that is delicious and not particularly expensive.

Groceries - we spend approx 550 - 600 a month and our kids are minded at home with a childminder so that is effectively for 3 adults and 2 kids. We could prob spend 100 less a month with careful planning. Also do up menu plans before you shop, use Aldi and Lidl, if you in Dunnes or Tesco buy only or mainly offers (3 veggies for 4 euro, 3 meat for 10 euro etc). That cuts down on shopping bills by about 1/3. Always bring lunch and what you need for coffee and tea to work

But main thing is to USE SPREAD SHEETS TO TRACK SPENDING!! Has helped us live within our means without even being particularly frugal and having extra money most months for treats or activities or holiday savings.

Good luck, let us know how you get on!!

 

[yram]

Am I reading this right? (please correct me if I am).
You have a brand new car, with a 17k loan?

If this is correct, can you justify why you are swimming in debt, yet just bought/financed a 17k car loan?

The e350 per month on this is ludacris. 350 X 12 = e4200 per year. You could have alot of your debt paid off, and not worrying as much........all for a car?

Like, why cancel the sky, which you could get for, what, a basic package e25pm, yet pay hundreds for a car you cannot afford. I cannot see your logic, and dare I say, if this is the way you live/logic to paying bills/managing finance, it is easy to see how ye have initally gotton into this mess in the first place.

 

[Neadyk]

Some great suggestions here and well done on acknowledging and tackling your money problems. It is completely doable and once you get into it you and your OH will be addicted and will really think about what and where you spend your hard earned cash. A few suggestions:
Portion control: This is important both financially and from a health point of view. Freeze leftovers or use them the following day for lunches. When doing your shopping plan your meals for the week and only buy what you need.
Learn to HATE waste. Once you do this with the above it’ll become second nature. Feed your green bin as much as possible and if you don’t have a brown bin maybe consider composting. Shop around for best priced waste providers.
Start baking at home. It’s good for treats, homemade bread and if you can get the kids involved it’s a great skill for them to learn.
Kids parties. I know a lot of mums that “recycle” their childrens toys. A lot of kids get too much on their birthdays and Christmas so some of the toys are “put away” and used again. They key is to keep a note of who gave you what. Kids never miss things as they get too much anyway. I also go in “pound” shops and buy a bundle of cards at the start of the year for all birthdays, anniversary’s, communions etc. They are usually €1 each as opposed to €2.50+ in some branded shops. “Pound” shops can also do toys and a selection of items in a goody bag will often keep a child more interested than one big thing eg crayons, colouring books, plastic jewellery, books, bubble guns etc. Lidl/Aldi often do toys (colouring books, CD’s etc) that are much cheaper than toy shops so, if you can, stockpile these and use them again.
Weddings etc – the same rule applies here. If you see a sale in big department stores or jewellers and you know what weddings you have for the year ahead go in and buy at a discounted rate. I know somebody who does all their wedding shopping for the year in the January sales and it’s a great trick. Why pay full price for crystal etc when you can pay half or more?
Entertaining friends. Have them over to your place. Bake your own bread (they’ll love it) and make a big pot of something. Most people bring their own bottle so you can utilise that. Better still make your own cocktails. EG cheaper brand Prosecco’s and own brand OJ for Bucks Fizz. Nobody will know the difference and they’ll love it.
Eating out with kids. Get juice boxes or beakers & make your own juice and bring them together with fruit, homemade sambos etc and bring the kids out for a picnic. The weather is getting better (!) and you can make a day of it.
Renegotiate all insurance – health, car, house etc. As others have mentioned there are deals to be done. Just be sure that you are getting the same cover.
Electricity. We got an energy monitor about 1.5 years ago and it’s really made a difference. There is an initial outlay (€50 or so) but it’ll teach you to turn off lights etc when not needed obviously keeping safety in mind especially with kids. Change to energy saver lightbulbs too.
Sit down regularly with your OH and see where you’re making a difference. Decide where the money you’ve saved can be best used. As others have said probably your credit cards which are costing you the most. As I’ve said this process is addictive and you’ll gain a real sense of control once you see results.
Best of luck.

 

[chlipps]

.......
I would be the saver in the relationship, my partner is an impulsive spender, ....QUOTE]


time to get the reins on the other half and get the spending under control. Once this is under control and you spend within your means... then you should be able to get the debts under control.. You have considerable earnings and shame to be wasting so much if it.. with your earnings, you have no problem to clear your debts..

best of luck

 

[Turtledove]

Again thanks to everyone who replied to my post. Really good ideas and lots of food for thought. I thought I would give an update on our progress.

• We've stopped eating out, not as hard as I thought it would be actually. We were using it for convenience more than entertainment. It’s made no difference to our quality of life. We are both taking lunches to work. Amazing the knock on effect it has on our spending. Besides the actual saving on lunch spend, you don’t find yourself in shops, which has helped my impulsive spending hubby a lot, he’s stopped bringing the paper home
• We now shop in Ldl, didn’t have everything we usually buy in Tsco, so after a disastrous double shopping trip (saving in Ldl shop, but then spending a fortune on ‘needed’ luxuries in Tsco) we just changed our tastes and now only shop in Ldl. Working out at about 120pw.
• We to switched to Airtrcity. We also bought an Energy Monitor (thx Neady K), wow, never had a clue what uses the most electricity, and what we spend our money on. Makes you think twice about using the dryer and dishwasher. We also used to leave Bathroom spotlights on all night to light the landing for the kids. These lights were draining power. Energy savings light bulbs in all rooms cut the usage by half. We’ve ordered more efficient LED’s for the existing spots, which just eat electricity. We also checked the timer for the heating. It wasn’t set properly and was coming on during the day when we were at work.
• We left Eircm for Vdafone (45pm broadband and call plan)
• We are now on a cheaper waste service
• Renegotiating our House Insurance – Currently have 45pm instead or 55pm, reduced the building value, what’s the thinking around not going with accidental damage? Worth doing? A risk? We’ve never claimed on this to date. Found that our 79pm life insurance was only 20yr term which wouldn’t cover our mortgage, now looking at getting a 30yr instead for the same price.
• My hubby had been resisting canceling the AVC, he reckons no matter what, we are going to need something for retirement and even though we put in 250 that this is before tax, so the real saving is half that. Does he have a point? That said, we are going to stop paying it anyway. We are considering selling the car.

Over all I’d say that we have made a real change to pretty much everything we do. Of course it is early days. The excellent spreadsheet from this forum shows we will have gone from about a e250pw overspend to a e40pw week under spend. The only disappointing aspect is that even with all these changes and with the decent income, it is still so tight a margin, with no room for error until we get on top of the debt.

One question on the credit card debt (they are cut up). As most of the debt is with one lender we could ask the bank to roll it into a term loan. Would this effect our credit rating impact us in the future? The other option is to get an interest free credit card, but could we consolidate the three other cards into the one new one? Do they allow you to consolidate more than one existing card?

 

[homebird]

Just a little theory of mine... It is worth buying a few nice things in the supermarket. Getting fed up with poor/boring fare on offer at home can result in an expensive trip to a restaurant which will blow at least €50.

 

[niceoneted]

Well done on all the changes. You will notice the difference over time as all the €40's build up.
Yes the LED's are great - have them instead of halogens - I prefer the light from them too.

Not well up on AVC's myself so cannot advice there.

Credit rating should not be affected by asking to role CC debt into term loan. Remember though that you did this before and it only worked short term.

I would seriously consider selling car.

Use snowball method to clear cc's. Pay min on two larger ones, and lump all of the 2k one then when that clear lump that money of next lowest balance and so on.

 

[irishmoss]

I agree with homebird, maybe having one special cooked meal a week with a cheep bottle of wine. Aldi do lovely strip loin steaks for arounf 12 euros for two. Or buy chicken fillets, stuff with cream cheese and wrap with Lidl Black Forest Ham

It's important to have something to look forward to keep you on track and have a little downtime to enjoy something.