Can I keep up with business

[celtic]

Six months ago I left a solid job to start my own business in service industry. It is going ok, making some money but not as much as previously earned when I was working in previous job. My wife is working and earned 30,000 last year.
Our outgoings are as follows:
Mortgage 245,000 repayments 1100 per month
Credit union loan ( financed new business) 15,000 left outstanding repayments 300 per month.
Credit cards one at 2,500. Credit limit 3000.Paying just minimum.
Car loan 10,000. 300 per month

Usual bills esb, phone and oil to fill tank every 3 months.
Car Insurance, house and life insurance in place.
Wife pays into pension scheme. Not to sure on figures.
My wifes take home pay at the moment is 500 per week net.
I have no tax to pay, clear with taxman.
I have 3 kids with childrens benefit of 500( i think)
Savings 7,000 in credit union
House valued at 380,000. I dont want to lose it

New business has monthly costs of 800 euro including office, advertising etc. Only outstanding bills with business is stationery and office supplies of 2000 euro, which I am paying gradually.
I myself made since January this year about 4000 euro.
How much trouble am I in? accountant is very positive that business is going ok but is not aware of my personal finances.
We have had trouble paying mortgage so we have requested a payment holiday of 3 months to give me a chance to get business going.
Cash flow is a problem at the moment. Any advice to help my finances. I do not want to borrow anymore increasing credit.
We have budgeted as much as possible this year. we have cut back in every way I can think of. I want to get sorted out before mortgage is due again. It is due again in May. What steps can I take now. Please help

 

[Brendan Burgess]

A few small issues first. Why have you 7k in the Credit Union earning you around 3% while you have borrowings elsewhere?

What rate are you paying on your Credit Union loan? It could be up to 12.5%.

What rate are you paying on your Credit Card? It could be up to 19%.

Withdraw the savings to pay off the most expensive loans.


Your accountant should be aware of your personal finances. Tell him.

Making 3k a month within the first 6 monthss is good going. Your business is going well.

Your problem is that you expected too much too soon and you did not have the funds in place for it. A lot of young businesses fail because they do not have enough cash in place at the start.

Is your business a cash business? Do you have debtors? Are you strict about collecting them promptly?

Dont worry about losing your house. This is very unlikely. If you are making efforts to pay your mortgage and speaking to the lender, they will generally be very flexible. Even if they go to court, the judge will not grant repossession if you are doing your best.

Are you in a position yet to assess the medium to long term future of your business? Are you busy? Will your income improve? Or is 3k a month the maximimum you can earn?

It just might be that you can earn more as a PAYE employee than you can running your own business. If that is the case,then you might find it easier to start applying now for permanent jobs.

If you are confident that the medium term outlook is good, go back to your mortgage lender and credit union in April and put the full figures in front of them. Ask them if they can do anything to help you. Most lenders want to help people particularly if you tell them a good, human interest story about your business.

Maybe the Mortgage lender can switch to interest only, but that will be a very small savings for you. Whatever happens, make a payment every month to the lender, even if it is not as much as they would like.

The best of luck with it.

 

[camlin90]

I would be wary of using too much of your savings to repay loans - if 7K is all you have, that already sounds very low. You don't know when you'll need some cash in an emergency.

Look closely at the credit card - can you save money by switching to another provider? Several of the banks have 0% APR on balance transfers for 6 to 9 months. Check out Ulster Bank and Halifax.
Having said that - make sure you don't rack up any more credit card debt in the meantime.
I would go so far as to switch to a new provider, cut up the card and do my best to repay the balance during the interest-free period.

Is it a personal pension your wife pays into - can she take a "premium holiday" - then you can top-up when cashflow is less tight? Currently it sounds like you're only getting tax relief at the standard rate anyway.

Best of luck

 

[mathepac]

...
Credit union loan ( financed new business) 15,000 left outstanding repayments 300 per month...

...Savings 7,000 in credit union ...

Sorry about this guys, maybe there is somthing I don't understand about the Credit Union movement (very likely) but are Credit Union "savings" the same as shares? Until I'm clear on this I'll refer to 7k "CU capital".

If they are the same, then unless OP discharges his Credit Union loan, the CU capital is pretty much locked in place, with some local flexibility regarding the ratio of loan:CU capital.

If shares and savings are not the same, then OP appears to have missed an asset in his compilation of his current financial position.

 

[celtic]

Thanks a mil for replies.
As far as I know credit unions woudnt give back savings if you have a loan, I realize they are not real savings. however I will speak to credit union about maybe paying loan off with it and thus reduce payments.

I have already changed to 0 % interest credit card and trying to get balance down but every time I reduce I need to take out more cash. It is a vicious circle. I have also forgot to mention that I have maxed out overdraft on my personal and business account. This is another vicious circle. I want to clear overdrafts and credit cards. I am not a spendrift. I try to cut back anyway I can But so far every penny I make pays business expenses and I have worked out that it will probably take another 3 months before these are cleared and I will finally get a decent wage. My wife is very supportive and I have promised her mortgage repayments will be paid. I have also placed our car on carsale mags to try and sell it but no takers. I want to sell and buy a cheaper car. I am just starting to panic now. I dont want to get any more loans and I would not qualify for one anyway.