How can I deal with my debt

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fredg

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Age: 43

Spouse’s/Partner's age: 43


Annual gross income from employment or profession: €42,000

Annual gross income spouse: None

Type of employment: Retail Manager

Expenditure pattern:

Rough estimate of value of home €415,000

Mortgage on home: €150,000 16 years are paid, Prepaid - €6,000

Mortgage provider: TSB

Type of mortgage: Tracker, Interest rate1.1%


Other borrowings – car loans/personal loans etc

Credit card debt €9000
Bank loan €6200
Overdraft €3800
Car HP €11000

Do you pay off your full credit card balance each month? I used to

Savings and investments: None

Do you have a pension scheme? No

Do you own any investment or other property? No

Ages of children:

3 children - 15,12, 9

Life insurance: No

What specific question do you have or what issues are of concern to you?

Hi all,
Hi,looking for any advice but pls no judging,
I’m the sole earner in my home and don’t worry my wife with financial issues
4 other dependants,
Salary €42000,
Mortgage prepaid €6000
Credit card debt €9000
Bank loan €6200
Overdraft €3800
Car HP €11000
I know it looks a mess so any advice that I could use in thinking of how to tackle it.
Thanks in advance
Fred.
 
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Leper

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Hi Fred,
1. Whichever one is costing you the most in interest rate, pay first in full (probably your credit card) as quickly as you can.
2. Don't incur another debt on the first you choose.(Tear up the credit card and cease the account).
3. Then concentrate on the next highest interest rate and pay it off over a period of time.
4. Don't incur another debt on this later.
5. You've guessed it, move onto the next highest interest debt and pay it off asap. And so on . . . .

Nota Bene:-I think you should involve your spouse/partner also. Otherwise you're in a costly parallel secret life. Two heads are better than one. If your spouse/partner works perhaps you can receive financial help here in clearing the debts.

Think:- Perhaps you need a part-time job to augment your income? Don't dismiss. It'll cause pain but perhaps less than never clearing your debts.

Bank of Mom and Dad:- If they are rolling in lolly perhaps they can get you out of some of the debt? If they do, ensure you don't get into debt again.

Credit Union:- I used to be involved in a Credit Union and the reality of lending was much for clearing debts with other agencies. Have a chat with your Credit Union Loans manager.

After all is paid, give yourself a break and never go into debt again.

Apologies, if I sound like I'm preaching.
 

fredg

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Hi Fred,
1. Whichever one is costing you the most in interest rate, pay first in full (probably your credit card) as quickly as you can.
2. Don't incur another debt on the first you choose.(Tear up the credit card and cease the account).
3. Then concentrate on the next highest interest rate and pay it off over a period of time.
4. Don't incur another debt on this later.
5. You've guessed it, move onto the next highest interest debt and pay it off asap. And so on . . . .

Nota Bene:-I think you should involve your spouse/partner also. Otherwise you're in a costly parallel secret life. Two heads are better than one. If your spouse/partner works perhaps you can receive financial help here in clearing the debts.

Think:- Perhaps you need a part-time job to augment your income? Don't dismiss. It'll cause pain but perhaps less than never clearing your debts.

Bank of Mom and Dad:- If they are rolling in lolly perhaps they can get you out of some of the debt? If they do, ensure you don't get into debt again.

Credit Union:- I used to be involved in a Credit Union and the reality of lending was much for clearing debts with other agencies. Have a chat with your Credit Union Loans manager.

After all is paid, give yourself a break and never go into debt again.

Apologies, if I sound like I'm preaching.
Advice heeded and appreciated
 

fredg

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Advice heeded and appreciated
The credit union option appeals to me but I’m afraid I’d be laughed out the door, is that naive of me? I’ve always paid every cent I owe and always before due date, my credit rating is perfect but it’s the fact that it’s got out of control at the moment that worries me Leper.
 

niceoneted

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Hey Fred,

It can be overwhelming so you need to take a step back.
Are you claiming all your allowances with revenue?
Get a notebook and write all discretionary spending down.
Shop around in relation to household bills/ gas/ electric/ phones/ Get rid of high subscription items. Get a cheaper alternative.
Write a menu for the week and shop for that. Shop around for special offers.
You have 30k in unsecured debt. Take it one debt at a time rather than try and hit them all equally.
Have you any savings? or if paying into a pension is there an option to suspend payments for a period so as you can clear debts.
Any other way of bringing in more money? through a hobby? are dependents old enough for part time job/ babysitting in order to look after their own expenses.
 

Leper

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The credit union option appeals to me but I’m afraid I’d be laughed out the door, is that naive of me? I’ve always paid every cent I owe and always before due date, my credit rating is perfect but it’s the fact that it’s got out of control at the moment that worries me Leper.
You said it yourself Fred "it's the fact that it's got out of control at the moment" - The people you owe money to will want it sooner or later and will charge you as much as they can. That's their business and they don't make apologies for that - they're a business and want to make as much profit as they can.

You will need an account at the Credit Union. If you don't have one perhaps now is the time to open one. From my experience when I got involved in setting up a credit union and working there as a volunteer we had clients that were up to their neck in debt with money lenders (some with several money lenders and had hovering threats to their physical well-being hanging over them). The Credit Union looked at their situations and (in my time) never failed. I'm only suggesting the Credit Union as an option. I wish to point out that Credit Unions are not charity institutions.
 

fredg

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You said it yourself Fred "it's the fact that it's got out of control at the moment" - The people you owe money to will want it sooner or later and will charge you as much as they can. That's their business and they don't make apologies for that - they're a business and want to make as much profit as they can.

You will need an account at the Credit Union. If you don't have one perhaps now is the time to open one. From my experience when I got involved in setting up a credit union and working there as a volunteer we had clients that were up to their neck in debt with money lenders (some with several money lenders and had hovering threats to their physical well-being hanging over them). The Credit Union looked at their situations and (in my time) never failed. I'm only suggesting the Credit Union as an option. I wish to point out that Credit Unions are not charity institutions.
I do have an a/c since I was in school. Many loans in the past with them. I’m not looking for charity.
 

Leper

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I do have an a/c since I was in school. Many loans in the past with them. I’m not looking for charity.
I know you're not looking for charity. I was merely pointing out that Credit Unions are helpful and are not loss making organisations. Apologies for not being clearer.
 

Thirsty

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You've got €22k of personal debt on a salary of €42k with (I assume, but correct me if I'm wrong) a partner and three minor children all living on that one salary.

You haven't a hope of getting out from under that weight of debt without reducing your outgoings or increasing your income.

So start by listing all the 'extras' you pay for every month.

If its not food, uility bills, childrens clothing or education, mortgage/ insurance, can you do without?

Can you bring extra income in? If your children are very young, then you may have chosen for one parent to remain at home for the present. You should both of you work on a plan to have two incomes as the children get older.

Granted COVID restrictions make the following suggestions tricky - but in 12 months time they will be worth considering. WFH is definitely an option for office / PC driven roles

- take in a student / lodger
- summer language school students
- childcare
- wfh office based roles
- overtime / part time work

There's whats known as the 'snowball' method of debt repayment, it's worth reading up on.

But make a plan together today.

Edit to add: your wife is an adult, stop treating her as another child in the house.
 
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SPC100

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Can you sell the car? Is it worth more than the loan? And then buy a cheaper one if you really need one?

You need to tell the wife how serious the situation is and get her on board with buying necessities only and a budget
 

Itchy

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Mortgage prepaid €6000
Hi Fred. To be clear, are you in a position that you are making all your payments on these loans ad its just that things are tight? Or are you missing any financial commitments? For example are you making a minimum payment on your credit card or are you paying off more?

Can you elaborate on the mortgage prepayment? If you are in a position to make all your payments then the first thing I would be doing is offsetting this against your credit card. If you can withdraw it or divert your monthly payment.

Whats the car situation? Do you need it? Can you downgrade? My advice is to not get rid of the credit card. Once its cleared, it can be your emergency cover. That way you can tackle the rest of the loans aggressively. The reality is with your salary, it will be a challenge. Let the wife know, it will take a team effort. You will be in a much better position at the end of it.
 

Introuble83

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At your salary and 3 kids you may be entitled to family income supplement. It’s a weekly payment and would help you out . Outside of this I would sell the car (assuming it clears the loan ) and buy a cheap car . Then focus on the credit card .
 

fredg

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Hi Fred. To be clear, are you in a position that you are making all your payments on these loans ad its just that things are tight? Or are you missing any financial commitments? For example are you making a minimum payment on your credit card or are you paying off more?

Can you elaborate on the mortgage prepayment? If you are in a position to make all your payments then the first thing I would be doing is offsetting this against your credit card. If you can withdraw it or divert your monthly payment.

Whats the car situation? Do you need it? Can you downgrade? My advice is to not get rid of the credit card. Once its cleared, it can be your emergency cover. That way you can tackle the rest of the loans aggressively. The reality is with your salary, it will be a challenge. Let the wife know, it will take a team effort. You will be in a much better position at the end of it.
Yes all payments being made and paying well above credit card min payment. Think I’ll approach my CU
 

fredg

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The last thing you need is another loan.

Everyone here has said the same thing - man up and sit down and talk to your wife.

*That's* your first step.
Surely if I consolidate all into one and maybe even save a small sum aswell in the long term I’ll find it easier to clear. I’ll certainly speak to an adviser in the CU. I’ll leave it there now thanks for all advice. Much appreciated. Fred B.
 

Laughahalla

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I'd look at selling the car if you can and buy a run around for 1k or 2k.Pay off some debt.

Stop borrowing, when you are in a hole stop digging.
Cut up the credit card.
There is no easy way out of this. Dont even think about refinancing/consolidating.

Check out a guy called Dave Ramsey on you tube or podcast.

If you follow his step by step rules then you will turn this around.

You need discipline to follow his advice but if you can follow it you will get rid of the debt

1. Gather up 1k as quick as you can. Sell so much stuff that the kids think they're next.
Most small emergencies are under 1k. Use the cash instead of the credit card. You need to get away from using credit cards.

2. After step 1 ,start putting every single cent towards the debt smallest to largest. Smallest first so you get a quick win, this will motivate you to get rid of the next biggest debt.

One debt at a time, what you focus on will get done.
Pay minimum off all other debts apart from the smallest, when that is paid off move to the next.

3. Make a budget, give every euro a job, no takeaway or treats until the debt is paid off.If something isn't in the budget it doesn't get bought. Delete any shopping apps off your phone.

4. Check Dave Ramsey out and take his advice seriously. If you do you will get out of debt sooner than you think.

5. The clue is in the name CONsolidate. It's a big CON and a big lie that people tell themselves. Stay away from it. You'll just run up the credit card debt again and be in a bigger hole.

6. You need to involve your wife and children in this. Explain that money is tight and they will have to lower their expectations ( temporarily)
They need to be part of the solution.
 
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michaelm

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You need to do up a spending budget for 2021 and start a spending diary to see where the money is going.

You should apply for family income supplement (now called Working Family Payment) as mentioned by Introuble83. You should qualify for €20 per week.

Perhaps you can return the car under the 'Half Rule'.

Might the €6000 "pre-paid" on the mortgage allow you to pause payments? I'd do that if I could and if not I'd ask for a payment holiday.

If you are paid monthly and the mortgage is paid earlier each month than you wages land then pushing your mortgage date to the day after your wages will boost your cash flow by one mortgage payment (once off move).
 
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