Moneymakeover Married couple - debt and high expenses

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angeldelight

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Personal details

Your age: 39
Your spouse's age: 40

Number and age of children: Two - 11 and 7


Income and expenditure
Annual gross income from employment or profession: 35000
Annual gross income of spouse/partner: 95000 + bonus of approx 14k this year

Monthly take-home pay: 7200

Type of employment - Both employees
Employer type: Both private companies

In general are you:
(a) spending more than you earn - yes, despite budgeting every month

Summary of Assets and Liabilities
Family home value: approx 350k
Mortgage on family home: approx 197k

Cash: 0
Defined Contribution pension fund: Husband has company pension, was paying AVCs but paused for the past 12 months - paying 5% as that's what company matches. I didn't have private pension so now auto-enrolled in state scheme

Family home mortgage information
Lender Haven
Interest rate 3.55%
Type of interest rate: Fixed recently for one year

Remaining term: 25 years
Monthly repayment: 975

Other borrowings – bank loan 11000 remaining, repayments 605 per month

Do you pay off your full credit card balance each month? No
If not, what is the balance on your credit card? 12000 - just finished 0% interest rate on transfer so repayment now 275 per month

Pension information

Value of pension fund: Not sure

Other savings and investments:

Invested: Have been investing child benefit for two years towards college years which don't seem that far away now with older child so approx 6k in that account

Other information which might be relevant

Life insurance: Yes, have had it since 2016 when we bought the house - 60 euro p/m, dual-life policy which would pay out 238k on death of one party and a second 238k on death of second, but no specified illness cover. Health loadings on premiums due to medical conditions and family history.

Income protection - husband has policy with Aviva 190 euro p/m


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

What do we do first?

I think when reading this it's clear to see what the issues are but we just don't seem to be getting anywhere in getting out of the hole.
I have ADHD, now diagnosed and medicated so things are better but financially there have been many many bad decisions over the years, in particular
over lockdown years and when kids were smaller - had complete neurodivergent burnout and everything was crazy. I am really keen to get us on a more secure and responsible path, but we do struggle a lot with not "justifying" purchases/spends etc. (I am saying this to be transparent, I know it's an issue!)

Looking at our outgoings per month

Debt: 1900 (mortgage, loan, credit card, Humm)
Groceries: 600
Kids expenses: 390 (clothes, activities, hair cuts, books, after-school club)
Insurance: 645 (health, income protection, life, house, pet)
Car running: 230
Utilities: 235
Date night: 100 (recently-introduced as marriage needed it)
Health expenses: 300
Personal grooming: 140
Cats: 100
House stuff: 100
Ironing/dry cleaning: 80
Subscriptions/broadband/tv: 175
Phone bill: 65
Transport: 65
Clothes: 150
LPT: 35

Then there are different kids activities bills each month eg swimming & diving 300 every 10 weeks, gymnastics 300 every 8 weeks, scouts camps and fees - varying amounts ad hoc, kids birthday parties coming up, summer camps, try and keep money aside to do things with kids when they're off school for Easter/summer etc
 
angeldelight said:
Income protection - husband has policy with Aviva 190 euro p/m
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Is this a typo?

I pay about 70 pm for IP, and my wage is similar to your husband's.

angeldelight said:
Subscriptions/broadband/tv: 175
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Broadband is available for 40-45 in Ireland. What is the rest for? I think we also buy Netflix for maybe 10pm.

175 seems very high.

angeldelight said:
Invested: Have been investing child benefit for two years towards college years which don't seem that far away now with older child so approx 6k in that account
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You are saving CB, while at the same time paying interest on €23k of debt?
 
Protocol said:
Is this a typo?

I pay about 70 pm for IP, and my wage is similar to your husband's.
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No, he has a very high risk family history for cardiac and other health issues so premium is loaded pretty heavily unfortunately
Protocol said:
Broadband is available for 40-45 in Ireland. What is the rest for? I think we also buy Netflix for maybe 10pm.

175 seems very high.
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Sky is 50 which includes DIsney+ and Netflix, broadband is 70 with Virgin Media (issue with phone line coming to our house from exchange so we can only get VM broadband or a mobile dongle currently, they're installing full fibre in our area in the next few months so hoping this cost would come down. Spotify is 20 p/m and think I included the TV license direct debit of 15 in this category so maybe it's 155 rather than 175
Protocol said:
You are saving CB, while at the same time paying interest on €23k of debt?
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Yep... we were concerned about 280pm being swallowed, debt not being any lower and ending up down the line without any progress being made. This decision is one made off the back of our past behaviour with money and fear I'd best explain it as
 
Hello,

My opinion is that your outgoings are too high, and found myself looking at the same things as @Protocol

As a starting point, I would suggest:

* redirect the child benefit into repaying that credit card debt. It's a cash neutral move, on a month by month basis.

What pet insurance have you ? These policies are typically very expemsive and few ultimately benefit, apart from the insurance company and perhaps the vet.

I would also look for a better deal on your phone bill, TV and Internet -Virgin do deals for deals on mobiles, package deals on landlines etc. Check when your contracts expire and if they have already expired, ask for a better deal, to bundle them, if you need to stay with Virgin, for now.
 
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Your monthly take home is 7200, and your structured outgoings add up to 5300.

You need to do a full assessment of your ad hoc spending, go through a year of statements, categorise your ad hoc spending and work out the monthly averages there. Ad hoc is currently a 2 grand a month black hole in your budget.
 
angeldelight said:
Invested: Have been investing child benefit for two years towards college years which don't seem that far away now with older child so approx 6k in that account
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As above, saving child benefit with that level of debt doesn't seem to make sense.
Will your children be able to live with you if they decide to go to university. If so, with your level of income, if your finances were under control, you should be able to absorb the costs by then. That would be very different if they needed accommodation.
 
I would strongly suggest a money diary for a few months to see exactly where your money is going each month.
You need to know exactly where you spend to know where you can cut
When I was under budget, except the essentials, every expenses was analysed in terms of cost and benefits, and only the expenses that brought us the most were kept. Ex; if you hate ironing and you don't have the time for it, keep that expense but look at what else could be cut: clothes, personal grooming, phone... If date night is essential, do you need to spend 100? I used to say to my children that life was full of compromises.
 
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I would say take a breath OP. You have a very solid household income and have the ability to get back on track. Try not to look back on past spending with regret but rather with a view to learning how to prevent yourself getting back into debt. No good will come of punishing yourself over what you can't change.

One thing you can do is review whether or not you have claimed back all tax relief and health insurance rebate on health expenses, this can go back 4 years for tax. If you do get a refund, get that lump sum straight against the CC debt.

With regard the CC debt, I would seek to refinance that asap....it is going to be a very high rate. Can you do another 0% transfer or seek a personal loan at a lower rate? That way you will clear it faster.

Are there any activities that the kids are on the fence about? Though I would be loath to cut any of those out and they sound very active so well done on keeping up with that busy schedule! I would however divert some funds out of the 390 if I could - library for books (teaching them delayed gratification!), second hand/vinted for clothes/sports gear, cut down on paid activities and seek out anything free (7 yo should still enjoy craft/reading stuff at libraries for eg). A good idea might be to set the kids a smaller budget themselves, and let them chose how to spend it. For holiday activities, again seek out free or very low cost stuff...a day at a science centre is really spendy but a day at a heritage site with a picnic is relatively inexpensive. Or a week of camps can keep them busy at a lower cost than trying to do a few days out.
 
Depending on where you are in the country the cost of childrens' activities can vary, so while the costs seem high they may not be. Get to know the older kids parents- passed around club jerseys / leotards are a thing but you have to ask. Also, look around and see the parents who bring travel mugs of coffee and "forget" their wallets - more than you know, so its a good habit to take on.

In line with the previous advice can you take a month of tracking religiously what's going out, and using cash only. Credit card should not be used at this point and tapping is so easy so now is the time to re-evaluate the need versus want of every spend and tap. See where you are "overspending" and then work to reduce what can be reduced and keep what's of value (ironing costs might be worth the happy household, only you can say)

Finally - use the ADHD to your advantage - hyper focus on that credit card bill first and celebrate every "win" - reduced phone bill, better broadband, cheaper car insurance, second hand GAA gear that costs half the price. You are concerned about college so you should set a few goals now - 1 year to have overspending managed, get some better deals on the expenses questioned above, and pay down the credit card debt. And go out for dinner to celebrate the effort and "win"! Longer term goals would be to get to a place to max out pensions contributions, and then prep for secondary school and college. In preparing for the future, don't forget to have fun as a family now, just more modestly or within your means, you have a good salary and willingness to get to a place you are more comfortable. Good Luck!
 
MrEarl said:
What pet insurance have you ? These policies are typically very expemsive and few ultimately benefit, apart from the insurance company and perhaps the vet.
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Allianz pet policy, it’s the one that seems to be most recommended when you look online for actually paying out and covering bigger expenses, works out at €35p/m… we do also have the vet payment plan where we pay €25p/m for each cat and I don’t think that’s good value for money at all… it was €18p/m when we started and has increased yearly, but while we don’t have savings I’m reluctant to stop it as I couldn’t pay an unexpected vet bill if needed.
MrEarl said:
I would also look for a better deal on your phone bill, TV and Internet -Virgin do deals for deals on mobiles, package deals on landlines etc. Check when your contracts expire and if they have already expired, ask for a better deal, to bundle them, if you need to stay with Virgin, for now.
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Yes, definitely on the list to do thanks. My phone contract is up in May so I’m planning on moving to GoMo or 48 for a cheaper monthly plan.. we are in contract with Sky for another 10 months and I hope by the time that’s up the fibre broadband will have rolled out so we can hopefully bundle them up for better value
 
angeldelight said:
Other borrowings – bank loan 11000 remaining, repayments 605 per month

Do you pay off your full credit card balance each month? No
If not, what is the balance on your credit card? 12000 - just finished 0% interest rate on transfer so repayment now 275 per month
Click to expand...
How much was the original loan and what was it used for? What is it's interest rate. How long is the term.

What is being put on the credit card? What is the current interest rate. If you only pay 275 a month on the 12K balance that's going to take 4 year to repay with the vast majority of it being interest only. Which is ridiculous given the saving of the child allowance and the expenses like grooming/cats/clothing/kids clubs stuff.

You need a VERY thorough detailed look at the spending issues. Clearly you can cut back in many areas.

How many cats do you have? If 2 are you paying 35 + 25 + 25 = 1020 a year? What ages are the cats?
 
Bronte said:
Which is ridiculous given the saving of the child allowance and the expenses like grooming/cats/clothing/kids clubs stuff.
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I've seen it said elsewhere on the internet that having high interest debt is an emergency, and when you have an emergency you shouldn't be getting groomed or buying clothes.
 
balders93 said:
Ad hoc is currently a 2 grand a month black hole in your budget
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When put like that it's so ridiculous... I know with kids activities there can be an ad hoc of 300 in a month, there could also be an ADHD impulse decision like redecorate the living room which I did in January and still have bits left to finish now but you're right, there's a big black hole there so I'll commit to tracking everything and see what's what.
misemoi said:
One thing you can do is review whether or not you have claimed back all tax relief and health insurance rebate on health expenses, this can go back 4 years for tax. If you do get a refund, get that lump sum straight against the CC debt
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Yes all claimed.
Bronte said:
How much was the original loan and what was it used for? What is it's interest rate. How long is the term.

What is being put on the credit card? What is the current interest rate. If you only pay 275 a month on the 12K balance that's going to take 4 year to repay with the vast majority of it being interest only.
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So we've had a loan in some form or other since 2017 if not before, we have moved lenders, consolidated debt, paid for holidays with it, it has just been a constant. The latest iteration of it was a debt consolidation loan taken out in 2023 (used to have two credit cards both with 12k on them and had the loan as well) - it's about 7%, was due to finish up September 2028 I think we've taken a few months off that by over-paying at different times when we had cash left over.

Nothing been put on the credit card for a long time that hasn't been paid off as soon as we get paid, what's sitting on it is historical spending going back a few years. Interest rate was 0%, has just finished and now 22.9%


Bronte said:
How many cats do you have? If 2 are you paying 35 + 25 + 25 = 1020 a year? What ages are the cats?
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2 cats - yes, that's right. 420 a year is the insurance which would cover fees if they needed any operations or anything so I'm reluctant to change that. The vet plan is 600 a year for the two which covers vet consultations and their vaccines so I think if I take the past year as an example if we didn't have the plan we would have spent 385

In terms of actions to take now...

1. Properly track everything and see where the money is going
2. Divert the child benefit to paying off the credit card... thoughts on the 6k that is in that account now, park it there and allow it to grow or pay if off the credit card?

Should we increase the loan and consolidate the credit card debt and loan into one bigger loan? I just looked at BOI personal loan as a quick example, 23k over 3 years would have repayment of 708 per month - we could afford to pay 1160pm (605pm repayment we have currently + 275 credit card payment + 280 childrens allowance) so would repay earlier and no penalties for earlier repayments.

I really appreciate the kindness and decency being shown too, I was drading logging back in today - it's been a very up and down journey over the last few years very much not helped by the undiagnosed ADHD and two unpaid mat leaves which wiped us out multiple times.

Our income is looking good now after some decent increases in the past 12 months and I'm hopeful we'll get things under control
 
angeldelight said:
pay if off the credit card?
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100% this. 22% interest rate is punitive, it would make me assess all discretionary spending. Add this as a "tax" on top of what you don't absolutely have to spend as that is what it is costing you. That would be my focus, that and the loan. I would get more pleasure from seeing those balances fall than I would anything that I could buy with the money instead.

And everyone is here to help, not judge. Asking for the help is a tough step to take, but you will get great advice on here.
 
Pets are a part of family. Not something you can just stop taking care of. There are other areas the OP can cut back on but not this.
 
angeldelight said:
23k over 3 years would have repayment of 708 per month - we could afford to pay 1160pm (605pm repayment we have currently + 275 credit card payment + 280 childrens allowance)
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Could you play with the numbers to get a shorter term based on monthly repayments of €1160?
 
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