Advice on Mortgage and Personal Debt problems

J

JustCoping

Registered User
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Hi there, first time poster, long time reader....looking for a bit of guidance.

My wife and I have got ourselves into a bit of a situation with our finances and are finding it difficult to get things under control. We are both employed (public), I'm full time and my wife is part time (private). In terms of Salary we have a total net income of 4500 per month. We have a house which is valued at 225,000 approx with a mortgage of 260,000 we also have an investment property (some investment) that would probably only sell for 70,000 with a mortgage of 200,000 so a total mortgage balance of 460,000 and negative equity of 165,000.

Monthly Mortgage Payments of 1800, apartment is currently on interest only for next 3 months. Normal monthly mortgage payment is 2300.
Additional Income of 480 per month in rent and 420 in children’s allowance.
So a monthly total income of 5400 which seems like a lot but as you'll see below there is also a lot going out.
We have 2 cars, one is a family car and I have a car which I bought for 650 to run kids to school, running costs on my car are minimal but would run at about 60 per month to include insurance, tax and petrol. My wifes would be about 100 per month.

Total Monthly Income
-----------------------------------------------------------
Salary : 4500
Childrens Allowance : 420
Rent : 480
-----------------------------------------------------------
Total : 5400

Long Term Borrowings.
-----------------------------------------------------------
House: Value - 225000, Mortgage - 260000 @ 1100 p/m
Apartment: Value - 70000, Mortgage - 200000 @ 1200 p/m


In terms of short term borrowings, this is the breakdown.
-----------------------------------------------------------
Credit Card 1 : Balance : 6000, 125 Per Month
Credit Card 2 : Balance : 2800, 75 Per Month
Credit Card 3 : Balance : 1600, 60 Per Month
Personal Loan 1 : Balance : 4000, 120 Per Month
Personal Loan 2 : Balance : 950, 60 Per Month
Loan from Parents : Balance : 25000, 400 Per Month
-----------------------------------------------------------
Total : 840

What can I say other than we were very careless or carefree when it came to the above with no consideration or planning for the future. We now have three children so child care costs have increased to approx 800 per month.

Other monthly expenses.
-----------------------------------------------------------
ESB: 90 Per Month
Gas: 100 Per Month
Home Phone/Broadband: 60 Per Month
TV: 65 Per Month
Mobile Me: 50 Per Month
Mobile Wife: 60 Per Month
Management Fee : 100 Per Month
Travel : 100 Per Month
Cars : 160 Per Month
Food : 500 Per Month
Kids Activites : 80 Per Month
Gym : 40 Per Month
Child Care : 800 per month
Other : 100
-----------------------------------------------------------
Total : 2305

Total In : 5400
Total Out : 5445


I think I have covered everything and it looks pretty tight. Some figures will fluctuate and there are some savings that can be made but we are really borderline in terms of cash left over. We have no savings at all, we are not in arrears on any of the above but are getting close to having a problem as both mine and my wife’s current accounts are overdrawn, mine to the tune of 650 (every month) and my wife’s (400). Our mortgage account is currently 1000 overdrawn but will be brought back in line when I get paid. This is another issue in that we get paid monthly but pay dates are 2 weeks apart. We just seem to be in a constant cycle of battling to get back in the black.

Apologise for the long post but I thought including as much detail as possible would be the best approach. I guess I am just looking for some advice in terms of what can be done, we are starting to get worried about the future. Can we approach the bank, if so what would you suggest we do. Is a consolidated loan on the short terms borrowings a good idea. Would a payment holiday on both mortgages be possible so that we can tackle our other borrowings and build up savings. Any advice at all is very much appreciated.

Many Thanks
 
I must also say that we are fully commited to paying back all of our debts. We just need to get back on track. Cheers.
 
Just a quick note, home phone/broadband and tv are costing you €125.00 per month. UPC would do all 3 for €66.00 per month, with a once of cost of €90.00 http://www.upc.ie/deals/tvbroadbandphone/fibrepoweressential/

Mobiles seem very high. Do you mostly use them for phoning each other? If so, get a deal where you can phone each other for free on the same network. Should cut that cost right back.

Is the gym essential? If not, cut that too and just take up exercising yourself.

ESB and gas seem a little high too, especially at this time of year.

As regards payment holidays, I wouldn't know a great deal on that so someone else might be able to help you there. Could your parents allow you maybe a year off paying back the loan to them?
 
Hi Paddy W. Thanks for the few tips there. Yeah, I agree. Some quick savings to be made alright and I'll look into those. Mobiles are definitely a luxury at the moment. Tied into contract for another few months so will see that out and then look at something else. Just cutting back on a few of the obvious items will certainly help.

Thanks again
 
PaddyW said:
Mobiles seem very high. Do you mostly use them for phoning each other? If so, get a deal where you can phone each other for free on the same network. Should cut that cost right back.

Is the gym essential? If not, cut that too and just take up exercising yourself.

ESB and gas seem a little high too, especially at this time of year. QUOTE]

Agreeing with all of the above, especially the mobiles. Hubby and I both have iPhones, were with O2 paying 120 a month for both phones. My contract ended and I've moved to Meteor - better package (more browser allowances and most of my friends are meteor so free calls & texts to them!) for 30 Euros. Ye can slice the phone bill in half, but that all depends on whether yer in a contract and how much time is left as they charge hefty cancellation fees.

Gym is not a necessity - there are plenty of ways to get free exercise, particularly at this time of year. Go for a run, jog, cycle with kids, go to the park, play soccer, etc. and all free. Also concentrate on bringing down the kids costs each month with as many free activities as you can find.

The most obvious option would be to ask parents for a break on that loan as its the largest, for as long as they're willing (a year would be wonderful but anything will help). 1 year off will allow you to clear:

Personal Loan 2 : Balance : 950

And most likely, with some extra work!
Credit Card 2 : Balance : 2800, 75 Per Month
Credit Card 3 : Balance : 1600, 60 Per Month

Generally, the rule is to focus on clearing the card or loan with the highest interest rate. Given that the loans can be fixed, its probably best for you to concentrate on the credit card debt. Find the card with the highest interest rate, and work on that as priority. Are the balances frozen as of now, or are they still in use? Can you transfer the balances to 0% interest cards to help you along?

A 3-6 month moratorium on your mortgage would certainly help in some way in clearing CC balances, but be warned - theres no use in doing this if you're still using the cards as you won't make anything better!!

Your ESB and Gas Bills - look at changing over to have both bills together with Bord Gais, there can be nice discounts (I get something like 14% for having both with them). It also means one bill, less Mental and physical clutter. Each night before bed, do a scope of the house - plug out all appliances, turn off all lights, etc. etc. You need to be vigilant. Its the summer months and so these bills should be very low right now with so much daylight and no need for heating. Same should be done in the morninngs when leaving the house - and dont forget the washing machine and dishwasher!

Do a complete clean out of the house, and put what you can up for sale on Done Deal and eBay. I'm talkin old toys, furniture not being used, clothes that no longer fit baby or were never worn, perhaps old baby equipment in the attic, you never know! With three kids, there are no doubt lots you can be rid of!! And every penny counts.

I cleared out my wardrobe and sold three dresses only worn once on eBay for a total of 110 euros. Not bad, when you consider I was never going to wear them again and the charity shop would have gotten them anyways.

Bring Lunches to work, car share where possible with people from work, do whatever you can to cut costs on every aspect of your spending.
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Hi Dmos87,

thank you very much indeed for taking the time to reply. I appreciate any advice that I can get. On top of making some small changes to our monthly expenses, We have arranged a meeting with the bank for next thursday to discuss the mortgage situation. I'm not sure what to expect though, we are officially in arrears now as of the 26th but this will be rectified in 2 weeks time when i get paid.....


I also booked in for car boot sale on staurday so hopefully that will bring in a bit of cash.

Thanks again !
 
Good stuff, you need a start somewhere! For your shopping, where do you do it? Have you a LIDL near you? I use them all the time now and they are very cheap, but the food is actually of a very decent quality. Try it out!
 
Thanks PaddyW.

Yeah, we try and shop there as much as possible and you can see the difference when you have to go to tescos or dunnes. I will post again in a couple of weeks to share how things are going.
 
Just remember a spending diary - its the first step really for any unexplained expenditure.

Best of luck with the boot sale, I did one about 6 months ago and we got 400 euros selling off mostly old unwatched DVD's we foolishly bought, and some PS3 games etc. It all adds up :)
 
JustCoping said:
Thanks PaddyW.

Yeah, we try and shop there as much as possible and you can see the difference when you have to go to tescos or dunnes. I will post again in a couple of weeks to share how things are going.
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No problem, definitely keep us up to date with how you are doing and best of luck!
 
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