14 May 2010

Looking for some Financial help.

| MrTelek
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Were we were: both of us on good incomes and supporting our debts without any issues.

Were we are: Had a beautiful baby girl, another one on the way, wife’s income has gone down by a factor of more than 2.

The result: Aside from the mortgage, we have $155K worth of debt we can no longer service. Specifically our joint loan to the tune of $42K.

We have a house with $70K in equity. I have freed up money buy 2 means so far. a) paying only interest on the mortgage and b) refinancing the car. This gives us about $350 per month extra but wont kick in until mid to late july. The payment on the $42k was $950 per month. Once my tax return comes in, I will claim the tax free threshold and free up another $400 per month. The missus has freed up $300 per month by finding a better deal on childcare.

What we need: A way to keep the house and pay our debts and be able to live.

Any ideas or offers would be most appreciated.

Regards, John.

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merlin bodega10:20 pm 24 May 10

When things stopped being part of what was at the core of my happiness my life became a shedload easier. I have a better but lower paying job. I have more time. I appreciate what I have much more and the large amount we had in superannuation suddenly looked like more than we could ever spend rather than something that we had to consider merely as an asset base.

Move into rental accommodation, keep your house, and rent it out.

1. The place you move into? Small, basic apartment, in a less than ideal area (put your furniture into storage, and make sure the storage is the cheapest deal you can get – if you don’t need regular access, consider Goulburn or Yass, which is cheaper than Hume, which is cheaper than Mitchell). Your child is I assume under school age and will not be disturbed by school movements.

2. Your own house? Keep the loan interest only, get a quantity surveyor out so you capture the depreciation, get the best deal you can on property management, and put in an income tax withholding variation ASAP so you get the tax benefits of your negative gearing week to week.

We did this (well, a variation on the same theme – bought a cheaper house in another locality and kept the old one) and it saved us a fortune. Plus, we still have the big expensive house if we ever want to move back – but we like our new house better, and probably never will go back.


I smile as I write this as I love intellectual banter. As a Defence Academy cadet years ago I can see your investment in Mooseheads has paid well. One of my tips is “keep a low piss fitness (high fitness means your ability to drink copious amounts) and you will increase your financial fitness”. 🙂

Re the Centrelink Mum, she was actually teaching, raising 3 children almost single handedly due to no help from a man who wanted to put the children through private school and could not afford what most people call basic needs. The only activity she could offer the children was gardening on the weekend and commented to me that she couldn’t believe how enjoyable they all found it. Don’t get me wrong, women can be just as vicious in screwing their man for everything they have.

And I know ppl are quick to judge without knowing the full story. I too form opinions but have been told on numerous occasions I am one of the most non judgemental ppl “they know”. Perhaps because I have never bought a TV and am not influenced by the majority I prefer to create my own reality show of a life that is F#@$%^& Fantastic!! I am now strong, thank you to a life changing event (that at the time I thought would devastate me for life). I now believe that OTHER PEOPLES’ OPINIONS ARE NONE OF MY BUSINESS. The people that matter know my honourable intentions and if people in this world thought more about what they can give than get, we wouldn’t be in the state we’re in (although in this country we can’t complain)!

BUT BACK to the family at hand. MR TELEK – please let me know you have taken steps and are travelling a little better. If you’d like to meet me I am speaking this Thursday morning at a business breakfast in civic and can give you some more information on how to Whip your wallet into shape and Dominate your Debt!

Best regards to all for a wonderful Sunday! xx

You could go to some charitys for help, eg; food, petrol money, or cash, some pay a percentage of bills

Mistress M said :

… just ahead of S*X, that free, feel great, reliever of stress.

I’ve seen Centrelink mums happier & healthier than DINKS because they realise the best things in life really are free.

So that’s what I’ve been doing wrong! I’ve been going to Mooseheads when I should have been down at the local Centrelink office.

Mistress M said :

And to Mathman, if you have nothing to hide you have nothing to fear!

I’m more of the opinion unless you fear nothing, it is better to keep somethings hidden. People are quick to judge; social prejudice and discrimination are not always open and obvious.

Woody Mann-Caruso4:03 pm 15 May 10

Nope, you were correct with the first calculation.

Thank Erd?s! I knew you’d save us, Mathman!

Mr Telek,

I applaud you for asking. Indeed ASK is the best 3 letter word in the english language, just ahead of S*X, that free, feel great, reliever of stress. People forget this, sometimes spending on what they think they “need” to feel good. Yes, you should be spanked for not planning ahead but take comfort that you are just like 95% of the population and now that you are prepared to change your ways, you’re on the path to being part of the 5% that will be financially independent come retirement. 2 suggestions:

1. Speak to your bank about the Bankers Code of Conduct and Consumer Credit Code that allow you to request a reduction in payments or a postponement.

2. Speak to family / very good friends who may be willing to provide a few thousand dollars in exchange for equity in your house, with or without their names going on the title. I have just done this for a family member (providing $20,750 for a 5% share in the house). Of course you need to discuss all details, check with your accountant / lawyer re stamp duty etc & it could be messy if you stay living in the house. You can also do a complete sale called a love and affection transfer. If you’re paying a lot of tax it may be worth moving out of the house thus converting it to a rental with deductions. However this will probably mean the house is negatively geared if you keep the majority of equity (as opposed to trading it to family members) & may reduce your overall cashflow (although it means you can get tax back fortnightly). You’ll need to sell the house within 6 years if you don’t want to pay Capital Gains tax down the road.

As typing’s not my thing I hope this little helps. I’ve seen Centrelink mums happier & healthier than DINKS because they realise the best things in life really are free. On your deathbed you won’t wish for another item of clothing or pair of shoes. You’ll cherish those nights you snuggled up in bed together with your loved one, living like they did in the 1800’s with romantic candelight. Of course by then you’ll be comfortable because you took action early.

Enough from me, remember every challenge overcome is a stepping stone to your success. Of course I’d like to know you’ve read this & what you think 🙂

And to Mathman, if you have nothing to hide you have nothing to fear! 😉

sell the house. the market is completely insane right now, you will likely get far more for it than what it is worth. rent for a little while then when the market cools down (as it inevitably will) or when you are a bit more flush, you can buy again. if you are lucky enough to sell to an investor they might rent it back to you so you won’t even have to move.

the obvious thing, of course, would be to avoid debt in the first place. don’t buy an expensive car – get a cheap one you can pay cash for. hell, if you are really hard up ditch the car all together and use busses and taxis – it will work out to be a lot cheaper when you figure in insurance, rego, gas, maintenance and, of course, the interest on the loan.

but biting the bullet and selling the house seems the most logical thing to do – better to sell it on your terms than to have to sell it on someone else’s. and if the market starts to slow down (it already has a little – volume is dropping) you might find yourself in a position where selling the house won’t cover your debts… that would really suck.

Mr Telek, I have been lending to this website on a small scale for over a year: http://www.igrin.com.au

It’s a P2P (person to person) lending service, and so far the person I’ve lent to hasn’t missed a payment.

On the lending side it may also help, depending on your credit record. One thing to warn you on is that liquidity on the website does not seem to be that great – those who lend often only lend a few hundred at a time (but maybe if Riot Acters becoe aware of the website the spreads across various credit ratings will widen a little.

Each loan is on a 3-year basis, which may buy you a bit of breathing space, and hopefully will provide funds at a lesser rate than loansharks and the like for your family.

Another website where larger amounts seem to move (but where liquidity seems very slow) is at: http://www.lendinghub.com.au

Anyhow, I wish you both good luck.

screaming banshee10:45 pm 14 May 10

Mothy said :

Good on you for putting your hand up and saying you’re in trouble. A lot of people won’t do that until they’ve passed a point of no return.

Given the story we have so far I’m not so sure Mr Telek put his hand early enough.

As for the offer, you cant really expect a great deal of interest when you start by explaining how much financial trouble you’ve gotten yourself into then asking for someone to trust that you can pay them back. Your best bet is to approach some banks with a ‘package’ that will provide high returns with very little detail about the risk……..wait that’s already been done in the US.

Now to the problem at hand. On top of your mortgage for a property in which you hold $70K equity you have $155K of debt. Now either you have a) over-capitalised in said property, b) had some horrendous medical bills out of the blue, c) pissed money away with little regard, or d) substantial assets that this $155K paid for. So which is it?

MrTelek said :

I dont get it. what do you mean by low fruit ?

“Low hanging fruit” = all of the easy options.

MrTelek said :

loosebrown, thanks. Advice well recieved.

Whilst you’re taking on advice, I’d also be a bit more cautious about the personal info you give out.

Just with the clues you gave in this thread and a quick Google search I was able to identify your name, your home address, your employer and the company you have on the side, your mobile phone number, your three main hobbies, when you bought your house and what you paid for it, as well as having a look inside your garage.

Braddon Boy said :

Sorry, calculation error. What you are offering is a 3.74%pa interest rate. Still, this is little more than what you can expect inflation to get to.

Nope, you were correct with the first calculation. Repayments would need to be at least $1780 per month to offer anywhere near an acceptable return for the risk involved.

I don’t take any joy in adding to the put-down chorus, but seriously, how did you only build up $70,000 equity in your house on two good incomes, while accumulating debts of twice that? If you were both in high-income jobs, presume you are both fairly bright. Did it not occur to you to be frugal and build up equity? Did it not occur to you that having children drops your household income?
Little sympathy from me – folks who accumulate useless debts bring us all down – I now owe part of your frigging debt, as do all Australians.

You might find it’s cheaper to live on the one income (yours, only since it’s the higher one) and your partner can cook cheap meals, grow veges, and shop at the op shop – and not have to pay any childcare costs. Use public transport, use the public library, keep an eye out for free events. Send the kids to public schools. Your partner could also take some work shelf-packing at Woollies while you are at home, and earn $20 an hour. That would relieve much of the debt burden.

MrTelek said :

housebound:I dont get it. what do you mean by low fruit ?

I mean that you have done all the obvious things that our collective wisdom and experience can suggest – the debt restructuring, the sell-off of non-essential assets, the second job. Maybe ‘low fruit’ wasn’t the right phrase, since none of them are actually easy to do – perhaps I should have said ‘obvious options’?

Sorry, calculation error. What you are offering is a 3.74%pa interest rate. Still, this is little more than what you can expect inflation to get to.

MrTelek, I’m sorry, but were you serious about your offer in post #17?

This would equate to an interest rate of 0.31%pa. You can get this rate in any day to day bank account.

In a high interest bank account I can get 5% interest, at call. For you to match this, you will need to offer $1590.98 a month or $190,917.93 over the ten years. (Tax is not taken into account.)

If I wanted to take a bit more risk, I’d invest in shares with an average annual return of lets say conservatively 10%, where I can still get all my money back within a couple of days if I need it. This is the same as $1,982.26 a month or $237,871.33 for the term. (Again, tax is not taken into account.)

Given that you sound like quite a risk, I’d suggest that you go and see a bank that can diversify their risk with other loans to a multitude of assets. I’d be very surprised if anyone here takes you up on your offer.

housebound: I dont get it. what do you mean by low fruit ?

It sounds like you picked all the low fruit in your quest to survive financially.

It sounds like your next stop is to get advice from one or more of the groups listed here. It’s ok to shop around – all these helping groups have different approachs and mandates.

+ everything #16 said

loosebrown, thanks. Advice well recieved. I thought I’d make an offer here. What we need is $150K, Taking things into account, at a return of $1500 / mth, over 10 years that would equate to $180K. Is there anyone out there that would help us out ?????
Obviously we would not have any credit cards or hire purchase etc etc but just the 2 outgoings, mortgage and repayment of this combined loan. Just a thought ?????


There’s some excellent advice here. Take heed of it.

The only thing I would add is that keeping control of your finances is an ongoing enterprise that requires effort on your behalf – you will not find a ‘quick fix’ for your situation. Fine, you may be able to free up some extra cash flow in the short term and well done, but the next time you find yourself in this situation again, what will you do then?

The key is to sit down with your partner and discuss a few home truths. Together you have been jointly responsible for living beyond your means. You are in debt and (might) have no savings. You are both earning money, and now is the time you should be investing and putting cash away for your future together. This will require an honest assessment of your lifestyle. The most important thing is that you both agree to the changes that need to be made. If you are trying to save money and one partner comes home with a new item that is not really necessary then it is going to cause problems in your relationship. You will need to sit down and discuss the house finances regularly to make sure you are keeping on track and are both motivated.

Don’t feel bad about your situation – there are people out there who earn absolutely megabucks but who also live beyond their means and service a ton of debt. Do whatever you can to pay off your personal loan ASAP as the interest will be killing you.

Finally – your new lifestyle won’t be all depressing and doom and gloom. In fact, it may bring you closer to you partner as you will be developing a shared vision of the future together.

Good luck.

georgesgenitals1:31 pm 14 May 10

OK – how much is your home loan costing per month? What is the estimated current value of the house? It may be possible to get your bank to either capitalise interest for a short period, or draw on some of your equity in order to reduce other debts.

Fundamentally, you need to know exactly what your incoming and outgoing cash flows are. One way or another, you have to get the incoming higher than the outgoing. So sit down with a pen and paper and write it all down. You might be surprised what you can cut out.

Coffin RX2, I cant work a night job, conflicts with my obligations to my full time employer. I have a part time job but only under the condition that I can leave for however long at any time. I fix radio controlled cars. 🙂 and Longshanks, we shop at aldi or coles or woolies chasing the specials and the cheaper options. I have also given up the grog totally and noticed the benefits financially and health wise. I no longer race rc cars and have whittled my hobbies down to only one which is that of amateur radio.


The gist of the problem is that we were living in our means because my wife had a very good job. We were paying our loans and debts and had cash to spare. The problem arose when a) her employer pushed her out of her job purely because he did not like her. b) We had some issues with bub no1 and that put a kink in things. Now, while she has a job, it’s only one third of her previous income.

We dont go out, we rarely have takeaway, I have a car but it comes out of my package ( The issue with a cheap car was that we didn’t have the funds to run it, at least with the lease, we have reliable transport and don’t have to worry about coughing up cash )

I have refinanced the car, refinanced the mortgage and am looking to roll some of our smaller loans into the mortgage. Done the ebaying and the garage sales, and I have a second job. So It’s not like were not making an effort.

The thought of selling the house has come up but that would only take about $60K off our debt. At the rate the property value is going up, I could wipe the whole debt in about 4-6 years if I can hang onto the house.


Sell the kids and the wife. They both cost lots a money to keep. Keep the big screen TV. It has a remote control with an off button.

Really what where you thinking. Maybe you should sell the TV.

Options that worked for us, but some may just be re-arranging deck chairs at this stage:

1. Do a budget and stick to it.

2. Don’t buy anything that isn’t needed – ie essential to staying alive. Sell anything you don’t really need.

3. Solve the car problem – do the maths on what works best (depreciation only costs money if you sell the car, and an old car can cost a fortune to run). Cycle to work if you can, even if you keep the car.

4. Economise around the home – it means cheaper cuts of meat, learn to like lentils and chickpeas, put in a vege garden, make your own bread from flour (not bread mix), use home-made cleaning products rather than expensive commerical ones.

5. Shop at Aldis through the week and the vegetable markets at Belconnen or Fyshwick on Sunday afternoon when prices are drastically reduced (and buy only veges in season). Shop at St Vinnies etc for clothes (really good for baby girl clothes)

6. Make all your food and make all your outings picnics that you can take your own food to. Your real friends will go along with it.

7. Approach someone who can negotiate with the lenders for you. The Salvos are supposed to be very good and have helped a few of our friends. Another group, Christians Against Poverty, will also advocate for you with the lenders.

8. Contrary to what others have said, take a second job _only_ if you have to. Realise just how exhausted it will make you if you do it for too long, and it isn’t good for your family life.

9. And here’s the hardest one – consider selling the house and moving to something smaller, but take stamp duty into account, and the cost of transport etc if it forces you to the outer suburbs where cycling/busing is more of a challenge.

10. You will get through this, but it isn’t going to be easy. As long as you keep your family healthy and in one piece you’ll end up with something to show for it all.

Hells_Bells7411:01 am 14 May 10

Certainly if it’s the bubs main source of nutrition, I wouldn’t recommend watering down already homigenised and pasturised milk that has no vitamins/minerals added (sorry, sp?).

Stick with breast/formula even when you’re poor as a miser, I reckon.

Might have been different in carnation milk and straight out of the cow milk days.

Moles, only problem with your suggestion is that banks have seriously tightened lending criteria at the moment, and with only 70k equity in their place, thats not going to help them at all with most banks requiring minimum 90% LVR (and then factor in the LMI premiums etc) and if they financed the house when his wife was working, the servicability now wouldnt stack up.

My advice, sell the car, work a part time night job?

And this is coming from someone on a single income, about avg canberra wage servicing a nearly 500k loan on a house. … things can be done just have to make sacrifices

Someone already suggestion consolidating your loans so I’ll skip over that…

Alot more information is needed to help you save cash. Best way is too write down every single cent you spend for a whole week to an entire month. Eg/ $4 for coffee, $x for lunch, $x for parking.. blah blah blah. Work out where all your money is going and cut back
(Eg/ my old boss would buy up to 5 t/away coffees a day. In one week she would spend $100-150ish just on coffee, so she found an alternative, had no store bought coffee for a week and bought a fancy coffee maker for work at about $100)

If you have credit cards maxed out, do a balance transfer, Citibank have some good ones out at the moment with less than 2% interest paid on the transfer amount. (I’d recommend the Clear Platinum one at 0% for 6 months).

Carpool, share the costs of petrol/parking or bus it to wherever you work. $23ish for a 10 ride bus pass compared to $50ish for parking and even more for petrol makes sense to me.

Have a garage sale or sell EVERYTHING on Ebay/Allclassifieds. Most people don’t use up to 50% of items in there home.
-If you have a large DVD collection, head to Woden Trash n Treasue one Sunday and sell them off at $5-$10 a pop. You’ll probably come home with none left over. (Esp if you sell them under $10. A carpark I think is only $8??)

Second job !!!! No harm in doing nightfill or weekend work for some extra cash.

Budget budget budget… have every cent spent, before you even get paid. BILLS FIRST! Don’t buy anything new until you can afford it – including food! I once told a friend who was a tad broke to not buy any food for a week and eat everything in the cupboard/fridge/freezer. The only exception was buying bread/milk/meat/fruit and vege

Saving with a baby:
-used cloth not disposable nappies
-breast feed if you can over formula, or water down fresh milk
-blend veges and freeze over buying jars of baby food
-pick up cheap baby clothes and toys at garage sales, vinnies/salvos

Post a bit more info and so more accurate advise can be given

johnny_the_knife10:19 am 14 May 10

I’d reccomend you give Larissa at National Financial Fitness a call – the teaches financial literacy, and helps people in your situation all the time.


Or phone 1300 937 669.

Good on you for putting your hand up and saying you’re in trouble. A lot of people won’t do that until they’ve passed a point of no return.

Your next step should be making an appointment with a Financial Counselor. See here for a breakdown of what they do.

Canberra based Counselors are;

Care Inc. Financial Counselling Service
PO Box 763, Civic Square, ACT, 2608
6257 1788
6257 1452

Salvation Army Moneycare Canberra
4 Hawdon Place, Dickson, ACT, 2602
PO Box 1038, Dickson, ACT, 2602
6247 3635
6257 2791

When asking to shift to interest only, did you ask the bank if you can refinance the home, consolidating the other debts into the home loan, to simple down repayments? Helps if all other debts are with the same institution though not essential.

I would talk to your bank/lender about consolidating as much debt as you can under a single lower-interest loan. This usually means putting it under a home loan/mortgage.

If you have any relatively liquid investments (Like savings-accounts, shares, term-deposits, _not_ super), etc., you should seriously consider liquidating them and putting the cash into your debts.

See if your lender can set-up an “offset account”, which is a current account (Where you might have wages paid and pay bills / buy things from) which pays no interest but counts against your debt interest calculations instead. E.g. a $100k loan with a $25k offset means you have $25k “ready cash”, and only pay interest on $75k.

If you still have too much debt, have a look at selling-off illiquid assets (Second car? Big-screen TV? Art collection?). This is usually lots of effort for not a whole lot of gain (Have you seen the prices of secondhand cars nowadays?!). It _may_ be possible to draw-down from your superannuation if this gets you just that little bit extra you need, but you’re almost certainly better-off leaving this where it is (The tax implications are fairly bad).

If it’s a case of bridging the gap until your effective income increases (i.e. mid-late July), the lender may be able to set-up a “repayment holiday” till then.

It’s a bit hard to give specific advice without knowing how many debt parcels, what size and what interest you’re paying. Certainly eliminating the highest-interest debts first is the obvious best path.

E.g. if your “joint loan” ($42k) is high interest, you might be able to draw on your home equity ($70K) to eliminate it.

Still under water? Maybe Centrelink (Social Security) can help (That’s what they’re there for)

If you do all this and you still have more interest outgoing than income, you may have to consider moving into a cheaper house or location.

Hope that helps!

there (sorry typo)

I agree with CoffinRX2 sell the car! Buy an older one in the mean time.
Stat selling some items in the house you don’t use, it’s a great way to make some quick cash.
Maybe get a second job, I know I work during the day and some nights, and it helps pay the extra bills.
And finally budget, have the mentality of if I don’t need it don’t buy it.

I whish you all the best with this, light is at the end you just have to sacrifice your current lifestyle to get their.

The key phrase in your post is “be able to live”. How do you define “living”?

There’s lots of ways to save money – it all depends on how much you are willing to change your current lifestyle. For example (and I realise that some of these might not apply to your particular situation):
– stop smoking (if you smoke)
– drink less alcohol
– take leftovers to work instead of buying lunch
– less takeaway/restaurant meals
– don’t buy premium products e.g. fine wines/food
– try to use the car less (difficult in Canberra, I know, but even a small reduction can make a difference)
– make a list of all the stuff in your house which you no longer use/need. Sell some stuff on ebay or allclassifieds.com.au.
– Downgrade: do you really need that 50 inch plasma/$60K car/gym membership/etc.
– Think before you buy: do you really need a new pair of shoes/a new bike/a new dishwasher/a new set of golf clubs/a new phone/a new laptop/etc.

To be brutally honest, the fact that you have $155K in debt in addition to your mortgage suggests that you’ve been living outside your means for some time (although there may be other factors involved which you haven’t mentioned). Once you’ve dealt with the short term issue, you really need to engage in some serious long term thinking about your finances.

My wife and I have three kids, and one income ($80K per year). That’s a choice we’ve made, and we work around it. We haven’t bought a house – and we don’t have any personal debt whatsoever. We put aside a bit each year (we’d like to buy a house one day), and we eat well (always buy fresh produce) and we live comfortably – but we never spend money which we don’t have.

SHouldnt you have thought of this kind of situation before you launched so far into debt?

Why refinance the car? … why not sell it off, as its obvioulsy a depreciating asset you have that is under finance, and buy a cheaper daily driver?

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