Looking for some Financial help.

MrTelek 14 May 2010 35

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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35 Responses to Looking for some Financial help.
merlin bodega merlin bodega 10:20 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.

deejay deejay 7:53 am 24 May 10

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.

Mistress M Mistress M 10:44 am 16 May 10


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

cleo cleo 2:44 am 16 May 10

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

Mathman Mathman 9:54 pm 15 May 10

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-Caruso Woody Mann-Caruso 4:03 pm 15 May 10

Nope, you were correct with the first calculation.

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

Mistress M Mistress M 2:55 pm 15 May 10

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! 😉

urchin urchin 9:58 am 15 May 10

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.

Ryoma Ryoma 11:54 pm 14 May 10

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 banshee screaming banshee 10:45 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?

Mathman Mathman 10:06 pm 14 May 10

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.

Mathman Mathman 9:30 pm 14 May 10

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-filed I-filed 7:41 pm 14 May 10

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.

housebound housebound 5:11 pm 14 May 10

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’?

Braddon Boy Braddon Boy 3:59 pm 14 May 10

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.

Braddon Boy Braddon Boy 3:47 pm 14 May 10

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.

MrTelek MrTelek 3:03 pm 14 May 10

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

housebound housebound 1:59 pm 14 May 10

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

MrTelek MrTelek 1:56 pm 14 May 10

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 ?????


loosebrown loosebrown 1:44 pm 14 May 10

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.

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