Moneymakeover Money Makeover - Debt Being Serviced, but no funds for living!

WHATNOW said:

My plan is to go back to my 1k limit CC for emergencies, etc

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I think you need to change your attitude. Using credit cards for emergencies is not a good mindset to become financially secure. You should keep aside some of your own money as an emergency fund.

jpmackey said:

You should keep aside some of your own money as an emergency fund.

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Not when you have such huge and expensive debts.

You should use your spare cash to pay down your debt and borrow again if there is an emergency.

WHATNOW said:

I've always had a CC, usually with a 1k limit

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Do you mean a €1K limit or a €1K balance?

WHATNOW said:

and a solid credit history.

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Not sure what you mean but carrying as much unsecured debt as you currently have isn't a great credit history.

Have to agree with @jpmackey above regarding depending on the CC for household expenditure.

You should start by clearly identifying your household income (as I mentioned above your estimate of €8K p.m. seems potentially inaccurate to me) and then where the money is going on an annual/monthly basis.

Brendan Burgess said:

borrow again if there is an emergency

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While I understand the point you are making, I would argue that a complete aversion to credit card debt would help this person long term. It is too easy to justify spending as emergency.

WHATNOW said:

Annual gross income from employment or profession: 88k
Annual gross income of spouse/partner: 88k
Monthly take-home pay: Total household 8000

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Your monthly take home should be higher ~€8.8k. Are you confusing this with bi-weekly pay?

WHATNOW said:

but we also havent had a holiday since before the children were born!

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You have a joint income of €176k in the public sector, take home of over €9k including child benefit and a mortgage of only €1.2k. What are you spending your money on????

By any chance are you "saving" the child benefit into a separate account?

It really doesn't make sense why you have built up so much short term debt and haven't been able to holiday for the past 11 years.

It looks like you have a spending/money management problem. The debt is just a symptom of it.

You should multiply your take home by 26.09 and then divide by 12. That's your actual take home per month.

You need a bit of Dave Ramsey in your life. He says things like - you earn too much money to be broke. He would suggest scorched earth - go nuts, have no life and pay down as much as you can as fast as you can. Others would suggest finding a balance. Either way you need a very detailed budget. You need to write down where every cent is going as it seems there's something we're not seeing - a huge diesel bill for commuting or something? Or as someone said above - have you the children's allowance saved somewhere?

Khublei said:

You should multiply your take home by 26.09 and then divide by 12. That's your actual take home per month.

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Why?

WHATNOW said:

Income and expenditure
Annual gross income from employment or profession: 88k
Annual gross income of spouse/partner: 88k

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ClubMan said:

€8K p.m. seems low unless you're making pension/AVC and/or other payments via payroll. According to this calculator your net should be closer to €9K p.m. on a gross of 2 x €88K public service salaries.

Budget 2025 – TaxCalc.ie

Plus you presumably get €280 p.m. in Child Benefit?
Are you sure that your tax credits are correct?

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That’s the maths I got from a union head once who was trying to help us mere mortals figure out what our monthly take home is, if we’re paid every second week.

I know, bills are monthly etc. but it’s still nice to know what your monthly average is over the year. And people here were questioning why the slightly lower than expected amount.

@ClubMan

If you are being paid €100 every two weeks, you are earning €2,600 a year. There are 26 payment periods a year.

€2,600/12 = €216 per month.

Brendan Burgess said:

If you are being paid €100 every two weeks, you are earning €2,600 a year. There are 26 payment periods a year.

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Actually, as mentioned above, there are 26.09 fortnights in a year:

365.25 days / 14 is 26.09.

I do all my budgeting on a fortnightly period. I can never understand how anyone can do it monthly. To go from 31 days in January to 28 days in February is a near 10% delta in time; far too much error for my ocd

Brendan Burgess said:

If you are being paid €100 every two weeks, you are earning €2,600 a year. There are 26 payment periods a year.

€2,600/12 = €216 per month.

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Yes, but my point is that the original poster isn't making the mistake of confusing fortnightly and monthly income. They just seem to be a bit off with their figure of €8K p.m. net on two public service incomes of €88K gross. It should be more like €9K p.m. (excluding Child Benefit) unless there are extra pension contributions or other stuff like LPT etc. being deducted via payroll.

@WHATNOW You asked us to be kind and I hope we are, there are a bunch of ideas that people can give you but a full understanding of your current income/outgoing would be most helpful especially for you. If you can identify patterns and options to change from the deep dive into the data that would help you feel in control and able to move forward.

I am guessing that your lives were taken up with study/work in the last while so that your household is time poor. This can lead to lots of extra small spending which add up over time. Now is the time to review all the expenditure in depth and see what should be prioritised in terms of spending and savings. This will differ from family to family and you should make a plan that suits your family.


Net Income per month

Check both your payslips to ensure you understand any deductions etc that might be bringing down your net income, that you are currently unaware of.

Expenditure per month

Once you understand your loan repayments and rates you can focus on clearing the ones with the highest interest rate first as they are costing you the most money. I think you said ye had €60K in loans apart from the mortgage but the figures add up to €67K, so the same advice again as with the payslips, understand exactly the debt. It may be depressing but with understanding comes control, and control brings mental ease.

And then as @ClubMan and @Sarah Ryan both said write down what you spend your money on day to day for all the bills, food, childcare etc that you have. Download all your account statements for the past 12 months and assume this is a general reflection of your current spending and categorise it to the last cent if possible.

Then section it into needs and wants. Ie you need to buy food but you may only want an audiobook subscription. So discretionary and non discretionary spending. And look at everything as a family and prioritise. Also ensure each family member gets to pick fun things to spend money on, maybe 1 thing each per month. Yours might be to put aside €100 per month to save for a family holiday, someone else might like €50 per month for a family takeaway.

Once you understand where all the money goes then you have control and then as a family agree on short, medium & long term financial goals. Short term, pay off the personal debt, (it may take years but it is the most immediate and pressing objective). Medium term might be car replacement or home improvements. Long term is probably pension - do either of you have a pension?

Are you paying health insurance via payroll deduction? That might explain the somewhat low take home for the salaries.

My dad is a civil service pensioner and his VHI is paid directly. Also he’s paid forthnightly.

OP I must commend you both for being able to undertake masters while working and parenting. No mean feat and as you said you are hopeful it will advance your careers. I am sure you are feeling the freedom of time now and would like to enjoy it. The work you need to do on budgeting and money management is a mini project, treat it as such. Use the tools at your disposal...bank downloads, excel, budgeting tools, handwritten notes, whatever works for you. Your research skills that got you through you courses should be employed at finding the best value for your spending.

You’re not as badly off as you may think You are in debt €60,000. You both earn €90,000 annually. You both have secure employment. Neither of you has hit 50 yet. The bad news is that you have potential financial problems in the future especially with your two children. Here’s my advice for the immediate future:-
Years 1+ 2

1. Forget about holidays and weekends away.
2. Burn your credit card now (as in yesterday).
3. Watch the week to week home spend on food. No more caviar and cut down on wasted food.
4. Grab Value shopping must stop - A bargain is a bargain only when you need it.
5. Mom and Dad can be your best friends - try them for some bailout.
6. Do you really need two cars? You may have one or none - I just threw this in.
7. The latest fashion accessory - paper cup of coffee - has to go. No more home delivered pizzas too along with no more takeaways.

Sorry for sounding like Frank Hall’s Minister for Hardship, but I reckon there’s no better way. Finance problems at home are huge causes in Marriage Breakup. I bet you need this like I need AIDS. Two years is not a long time to get your act together, go for it.

Hi all
myself and himself sat down again last night and detailed out our spending. I am reluctant to go into more detail on a public forum, but we do have significant monthly unavoidable expenditure (medical) which amounts to 520pm, childcare, 800pm, and some activites for the kiddos, (swimming/irish dancing etc)

Thanks again for all your advice, and yes, you were very kind!

Are you claiming tax relief on the medical expenses? You can do this now in real time online and can go back 4 years if you didn't already claim some. And ensure that you are claiming all you can back from health insurance for same, although they tend to have shorter look back periods.

While I would be reluctant to cut back on kids activities, do question if they still want or need them or could you do them a different way, eg for swimming would some private lessons rather than group give them greater progress in a shorter time and actually cost you less. Are they still as enthusiastic about the ones they are currently doing or could they change to something that costs less and still get the same benefits of teamwork, fitness etc? Also check your health insurance plan to see if you can get anything back on these too.

WHATNOW said:

myself and himself sat down again last night and detailed out our spending.

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If you now have a better handle on where the money is going you'll probably be able to make saving in multiple areas. You may ultimately be glad that the consolidation loan was rejected. If it was me, I'd cut my cloth somewhat and take the snowball approach, first targeting the 5k credit card, then the 12k credit card then the 17k loan and finally the 33k loan. That said it might prove complicated if you keep separate finances.

In order to kickstart the process I'd ask the mortgage lender for a 3 month payment holiday (I'd probably say it was to cover the cost of essential orthodontic work) and I'd put all of that off the 5k credit card.

WHATNOW said:

My mortgage is ECB +2.25%

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Just curious if it would be an option for the OP to roll all their debt in to a remortgage of their home? While they're at it switch to Avant or another provider that would offer a lower mortgage interest rate?

CharlieMac said:

Just curious if it would be an option for the OP to roll all their debt in to a remortgage of their home?

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Brendan Burgess said:

I presume that this mortgage is now owned by AIB?

Have you spoken to AIB about it?

They won't consolidate the personal loans onto your mortgage but they might reschedule your mortgage which would lower your monthly payments. It would help a bit.

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