Eddie Hobbs - Show me the Single Mum

Another disappointing episode i think, basically remortgage the house and get your parents to mind your child.

Did anyone else think that the 2500 per annum child support was a bit low?

Agreed, very disappointing; I thought the maintenance was miserable. What more can I say?

I thought the last 5 minutes were the best. She had cut down on all of the many fripperies in her life and still she was spending down to zero each month.
This series has gone on too long and stretched itself too thin. Perhaps after his summer success, the production company are looking to capitalise on his fame while it lasts ?

Whats a frippery/fripperie/fripperies?

http://www.tfd.com/frippery

I saw a bit of it and thought that it was pretty poor. Eddie initially stated that the loan to mortgage consolidation would represent a saving of c. €7K a year. Later he correctly qualified this by saying that it represented a cashflow saving of €7K a year. A subtle but important distinction since over the term of the mortgage it would most likely actually end up costing significantly more than the original debts for the sake of lower monthly repayments. I wondered why he didn't suggest scheduling the top-up over a shorter term than the full mortgage term? I also wondered why we got a glimpse of the IIB logo on the mortgage consolidation application form? Surely this is product placement advertising in breach of (general or RTÉ's own) broadcasting guidelines? If she was with IIB for her home loan then perhaps there was scope for switching to a more competitive lender/rate but this was not mentioned?

At least we didn't get the usual CU panacea since she was already maxed out with two loans from them already. I thought that Eddie's rant about private childcare costs in Ireland and the inappopriateness of the recent €1K p.a. supplement to parents of under 6's was a bit misplaced/out of place to be honest and should have been on Rip-off Republic rather than SMTM. I also disagreed with Eddie's analysis that the subject's financial problems were not of her own making and largely attributable to childcare costs out of her control. More Rip-off Republic style polemics in my opnion.

It was never pointed out that, after being diagnosed with asthma and having to buy c. €100+ worth of drugs each month, she would probably qualify for the Drug Payment/Refund scheme which would cap her expenditure on prescription drugs. Obviously an asthma sufferer should give up the fags as a first step but I guess it's not a medical/health advice programme.

I am surprised that the multi-national for whom she worked presumably (since it was never mentioned) didn't have any Employee Assistance Programme to help employees with financial and other problems. It's not that unusual for larger companies to do this.

In short - neither entertaining nor educational in the financial sense. 4/10 at most.

I'd love to see Eddie have an episode directed at giving general advise rather than on specific situations eg. someone with SSIA maturing, what should they do with the money (mortgage v's spending, etc). Also, covering more everyday things like, where is the best place to place your savings, and illustraing the best interest rate on the market for deposit accounts and mortgages, which provider charges fees, benefits of pension upgrades, car loans, etc
I'm not learning anthing new from this program, which is a real shame. The same things seem to be covered almost every week.
Maybe Eddie should check this site more, so he gets a better sense of the questions people are asking!

Eddie's always welcome to post some case studies here. Unfortunately we don't pay though!

ClubMan said:

It was never pointed out that, after being diagnosed with asthma and having to buy c. €100+ worth of drugs each month, she would probably qualify for the Drug Payment/Refund scheme which would cap her expenditure on prescription drugs.

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I shouted 'tell her to get a drugs payments card' at the tv but Eddie didn't heed me, all that resulted was that I woke up my fiancee who has just had four wisdom teeth removed.

Also I was amazed that the girl didn't have a SSIA a/c, presuming that she was on good wages when it was introduced and her bambino wasn't on the scene at the time. For the price of a nice bottle of wine a month she could have opened an account.

ClubMan said:

http://www.tfd.com/frippery

Eddie initially stated that the loan to mortgage consolidation would represent a saving of c. €7K a year. Later he correctly qualified this by saying that it represented a cashflow saving of €7K a year. A subtle but important distinction since over the term of the mortgage it would most likely actually end up costing significantly more than the original debts for the sake of lower monthly repayments.

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Faulty deduction. Not true - when comparing cost NPV must be taken into account. Therefore, Eddie is correct when he told her (and others) to look at the rates at whuch she is borrowing and compare these. She could also increase her mortgage repayments anyway when she is in a position to do so.

As an example:

• Personal loan: €20K at 10% over 3 years = €3232 in interest
• Mortgage topup: €20K at 3.5% over 20 years = €7838 in interest (excluding any additional mortgage protection life assurance costs)

Can it be shown that the latter is actually more cost effective than the former? If so, how?

Thanks.

ClubMan said:

As an example:

• Personal loan: €20K at 10% over 3 years = €3232 in interest
• Mortgage topup: €20K at 3.5% over 20 years = €7838 in interest (excluding any additional mortgage protection life assurance costs)

Can it be shown that the latter is actually more cost effective than the former? If so, how?

Thanks.

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It can be done if you assume the rates are fixed ie you know the exact cost of capital .You would need to calculate the present value of the future " cash flows ", in this case the present value of the loan repayments for each of the two loan types that you describe above, then calculate the NPV in each case and compare the two. The discount rate to be used would be the cost of capital in each case ie 10% for the short term loan and 3.5% for the long term one. AFAIR the NPV method is only relevant where you know for certain what the cost of capital is ( discount rate ) - an extremely improbable assumption if you have a 20 year variable mortgage.

Laurie how can you endorse Eddies view that the cheaper option is the mortgage route when you are only guessing what the discount rate is going to be over the next 20 years - the cheapest option will depend crucially on the cost of funds.

what does NPV stand for? Thats throwing me??

NPV=Net present value=the value in today's terms of a series of future cash flows discounted at a cost of capital.

I switched channels after about 5 minutes when it began to appear like a repeat.

Brendan

CCOVICH said:

NPV=Net present value=the value in today's terms of a series of future cash flows discounted at a cost of capital.

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Thanks I am still confused as to what it exactly means in the earlier post

Laurie is saying, in my hypothetical scenario above for example, that you can't say that €3232 costs less than €7838 by just looking at the nominal amounts and without factoring in the real value of money and how it is affected by inflation over the relevant periods of time. However I'm not clear how this actually applies in this case or in my hypothetical example above and would be interested if anybody (in particular Laurie) could show me if/how €3232 represents a higher cost than €7838 in that example.

Did not see the program so only going on what is said on AAM

after being diagnosed with asthma and having to buy c. €100+ worth of drugs each month, she would probably qualify for the Drug Payment/Refund scheme

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As she is working and paying tax she can also claim the Drug Payment/Refund scheme ie 85 pm and other medicial expenses doctors fees etc. against tax

ClubMan said:

As an example:

• Personal loan: €20K at 10% over 3 years = €3232 in interest
• Mortgage topup: €20K at 3.5% over 20 years = €7838 in interest (excluding any additional mortgage protection life assurance costs)

Can it be shown that the latter is actually more cost effective than the former? If so, how?

Thanks.

Click to expand...

• Personal loan: €20K at 10% over 3 years

• Mortgage topup: €20K at 3.5% over 20 years

Sorry - I don't understand that at all. Where do the monthly repayments come from? How is 20 years a term of 33 months? Perhaps you could explain in more detail? My total interest figures for the loan scenarios outlined came from Karl Jeacle's mortgage calculator and for the personal loan scenario it gives a monthly repayment figure of €645.34 but for the mortgage top-up scenario it gives a figure of €116.

ClubMan said:

Sorry - I don't understand that at all. Where do the monthly repayments come from? How is 20 years a term of 33 months? Perhaps you could explain in more detail? My total interest figures for the loan scenarios outlined came from Karl Jeacle's mortgage calculator and for the personal loan scenario it gives a monthly repayment figure of €645.34 but for the mortgage top-up scenario it gives a figure of €116.

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• Mortgage topup: €20K at 3.5% over 20 years