top-up loan to consolidate as moving to one income

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assumpta1

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31
Age:
Spouse’s/Partner's age: both mid 30s

Annual gross income from employment or profession: giving up work but was approx. 60k
Annual gross income of spouse:40k

Type of employment: e.g. Civil Servant, self-employed : spouse civil servant, me - private sector

In general are you spending more than you earn or are you saving? spending more

Rough estimate of value of home 400k
Amount outstanding on your mortgage: 198k
What interest rate are you paying? 4.6%

Other borrowings – car loans/personal loans etc: Car finance 21k o/s 3 years left; credit union 16k; credit card 9k; overdrafts 3k

Do you pay off your full credit card balance each month? no (moved to 0% interest & planned to within a couple of months)
If not, what is the balance on your credit card? 9k

Savings and investments: 5k plus due lump sum next month of 18k approx due to redundancy.

Do you have a pension scheme? suspended due to redundancy & husband's public sector only.

Do you own any investment or other property? 2nd property worth 300k, mortgage 235k, rent currently exceeds mortgage by €300p.m. (to cover expenses etc.)

Ages of children: 1 year old

Life insurance: yes


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

I'm due to receive redundancy next month (see above) and want to stay off work if possible (doesn't look likely). Our monthly outgoings are:

Mortgage (17 years left) 1400p.m.
Car (finance lease) 513p.m.
Credit Union Loan 400p.m.
Bills etc. 500p.m.
Savings 320p.m.

My question is - should I get a top-up loan to consolidate the debts to the tune of 40 - 50k ? I assume this really the same as remortgaging and currently we're locked into a fixed rate. I would prefer to put away my redundancy lump sum.

The alternative to any of this is me going back into the work force & using a creche etc. which is really something I would prefer not to do. A lot of our savings have been spent lately on non-serious medical treatment as well. We didn't mean to spend so much on the 0% credit card it just got a bit out of hand with everything happening.

Any suggestions gratefully received !
 
assumpta1 said:
The alternative to any of this is me going back into the work force & using a creche etc. which is really something I would prefer not to do.
Click to expand...

You going back to work seems like something you really do not want to do.
Is there any reason why you cannot use your redundancy money to pay off debts (starting with highest % rate first)
 
Yes I thought of that but we'd still be left with too many outgoings to survive and then no savings at all.

You're right - I just can't leave the child in a creche...
 
If you are thinking of giving up work, then you need a very clear understanding of your outgoings, and target your debts accordingly. You have a lump sum which you can use to clear debts - remember that this will reduce your outgoings. What car do you drive? Can you sell and get something cheaper? If you have two cars, can you manage with one?

This url () has a very handy budget calculator. It is a very useful exercise to fill it in and see exactly what your situation is on a monthly basis. I think consolidating is by far the most expensive option, as you will be paying for a looong time and you are securing the debt on your home. How about keeping a small amount of your redundancy for emergencies and putting the rest towards the debts? What use are savings when you are paying a fortune on debt repayment?

(by the way, I have no association with the website I recommended above. I know that it is used extensively in the Motley Fool's Dealing With Debt board, so it is UK based but perfectly applicable here)
 
thanks for that - yes I would def. prefer not to consolidate & did consider using the redundancy to clear debts... might consider changing cars as well (ouch)...
 
Could you remortgage (ie increase the term) or go interest only for a year or two til you get re-organised or babs starts school?

Clearing the debt as far as reasonable and probably 6 months (current) income in a rainy day high interest account (eg northern rock)

Is part-time work an option for you...even at a lower grade??

My dh earns a good wage and we manage fine at the mo with me as a sahm....I have one friend whose family of 4 live on an income of €60 000 with her as a sahm....another who struggles to stay within their means of €150000 pa...we are all living pretty much the same lifestyle but with subtle but expensive differences eg 150k lady sends her 3 kids to private school...whereas 60k ladys kids are going to regular but excellent public school. I'm guessing their mortgages are about the same.

So you need to take a serious look at your spending and root out the overspend and address what is going to have to stop...you need to agree this with dh...or its going no-where. You need money for a social life...60k family back from great hols in southern hemosphere...but stayed with family and no meals out.

There will be decisions and trade-offs but if you want to stay at home you can do it...but there will be painful choices. But I can wholeheartedly recommend it :D
 
So am I right in saying if you stay at home you are looking to service €433 +40K debt on an income of €40K and €23k savings? Given the 40K income (and a bit of profit from rent) you seem to be highly geared, paper asset rich but cash poor?

Is the second property worth it for €300 per month (after tax?). Is your second property on an interest only mortgage? If so how are you planning to pay off the capital?

Would selling the second property be an option? This could give you cash to pay off all your non mortgage debt and probably have the benefits of being a stay at home mum.

At the moment you have debt over 10 times your 40k salary!! Lifes too short sell the second property, have less debt and enjoy your family?
 
thanks for all your replies - I've decided that considering my potential earnings it's silly for me to give up work so it's a non-runner. I'm going to either go self-employed or part-time and keep the car & apartment. Depending on how that goes I might go full-time and get hubby to go part-time - will see !
The apartment is a longterm investment so we do want to keep it - no point in selling it in this market either while it's viable.

Would have been nice to stay off work full-time and there's always the lotto...
 
So am I right in saying if you stay at home you are looking to service €433 +40K debt on an income of €40K and €23k savings? Given the 40K income (and a bit of profit from rent) you seem to be highly geared, paper asset rich but cash poor?
Click to expand...

btw this would not be right as the apartment is financed by the rent therefore it would be € 198k serviced by 40k etc. not €433k (not taking into account the excess rent).
 
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