Help re Dept Defence relatives finance

[Kath Russell]

As a 'civillian', I'm asking if there are any members who are Dept. Defence (specifically R.A.N. if poss - maybe you'll be able to help more). I'm learning over the last few days RAN is very different from the civvy world. I'm assisting my cousins with their finances & they're desperate to buy a house.

$19K Due Dec 2011 for car lease / salary sacrifice
$19K Bal on car loan
$22K Bal on boat loan
$10K Credit cards

They're currently paying out $3700 per month on the above. They hate debt. They'd like to consolidate the above so it's less outlay per month then concentrate on saving for a house deposit I've explained they'll be paying more in the end if they do). They want to pay off all debt, then start savings for a house deposit then buy a house.

He's got a black mark against him for not paying a Telstra bill.

They've tried 2 banks to consolidate into a personal loan but got the big NO due to black mark.

Please make suggestions :
- Do utmost to remove black mark?
- Sell boat now worth >$20K
- Consolidate to get 1 loan for above or go for half each?
- Start saving for a deposit or at least get a record happening showing they CAN save. All the money they'd be saving due to consolidation go into a separate untouchable account!

- Their stamp duty will be refunded by RAN / ADF once they buy a house
- They will get $800pm towards mortgage repayments from RAN / ADF. Apparently you MUST go through only 1 of 3 banks to take advantage of that.

Thanks very much.

 

[Humphrey]

I'd start by selling the boat and using the proceeds to pay out the debt with the highest interest rate. I'd also cut up the credit cards so that they aren't used anymore.

Make sure that they've fixed up the Telstra debt but I don't know of anyway of getting a legitimate payment default actually removed from someones credit record.

 

[Propertunity]

$19K Due Dec 2011 for car lease / salary sacrifice
$19K Bal on car loan
$22K Bal on boat loan
$10K Credit cards................... They hate debt.

They did not hate debt when they signed up for a car and then a boat and the starting wacking things on their credit card. When did this hatred of debt start? ....after purchasing all the stuff?

They'd like to consolidate the above so it's less outlay per month then concentrate on saving for a house deposit

I think they will struggle to find a lender who wants to consolidate all that consumer debt (although they may??) when they have a mark on their credit file.

I've explained they'll be paying more in the end if they do). They want to pay off all debt, then start savings for a house deposit then buy a house.

That may not be the best advice either. e.g. if house prices rise 10% in a year, say, then they may "make" $40-50K buying the house first rather than paying off the consumer debt first.

 

[Monty Burns]

The good thing is the Defence Forces have special home ownership loans
available over and above the first home owners loans which they can apply for together with the first home owners loan.

The other thing that is available to them is the pardre's loan which from memory is $1500 interest free loan they can apply for. You can get 3 of these
over the course of your career which have to be paid back over the next year.

Won't help them clear the debt but something to look at when they get closer to buying the home and saving for the deposit.

Defcredit may help them with the consolidation loan worth a try especially if they can show they have been trying to clear the debt.

 

[Indifference]

Consolidating through Defcredit or ADCU may be an option.

Without more detail, it is hard to make specific comment. Please note, the subsidied Home loan is not a fixed subsidy. How did you derive $800 per month. It is based on the amount borrowed, subsidy entitlement, prevailing interest rate. (regularly adjusted) You say 'they'.... is this an ADF couple or more than one ADF individual? Other than above, the third DHOAS lender is NAB.

There is a good reason I know this....

Please PM me if you wish to chat in more detail.......

 

[Piston Broke]

Car lease, Car loan, Boat loan and whateva nik naks for 10k
imo:
Sell car
Sell boat
Forget this BS car lease/salary sacrifice.
Buy a used ole small car and live on $50wk per person for food.
Learn to cook!
No alochol or cigarettes or any other non food mind alterating substance.
Sell every nik nak in the house (garage & yard) that don't get used on ebay.
I wonder how "desperate" they really are to buy a house.

 

[Kath Russell]

Thanks very much everyone.

They're no longer entitled to the FHOG. He's owned a house previously before they married.

"Padre's loan" is $4000. I've suggested they take advantage of that when the time comes if they're still short on deposit & costs.

Piston Broke - I've already told them off! They've got a baby now so reality has hit. They're still computing all the information I've slapped them in the face with.

Propertunity - as I said, I've already told them off! I also reminded them how they didn't hate debt too much while they were collecting toys....... I don't reckon they should pay out their current debt if property is their priority. I'd consolidate to reduce payments to then get savings, then get the house ASAP. THEN sort out the personal debt. I've also suggested they look into Vendor Finance, lease options etc. if they're that desperate.

We immediately did the "I own this", "I owe that" list. They've never written it down. It's depressed them even more.

Both are employed by the Royal Australian Navy. They nett $6400 per month between them. The $800 is made up of $600 for her, $200 for him. I don't know yet how they came up with this. I'm just going by what they tell me.

Cheers

 

[Indifference]

On face value, without knowing their current or future plans, I think they would be financially better off in a DHA house, and buy an IP in a locality they will not be posted to.

Once again, if they let their hearts rule their finances, they may potentially throw away more (even buying a PPOR)

 

[Piston Broke]

I don't reckon they should pay out their current debt if property is their priority. I'd consolidate to reduce payments to then get savings, then get the house ASAP. THEN sort out the personal debt. I've also suggested they look into Vendor Finance, lease options etc. if they're that desperate.
We immediately did the "I own this", "I owe that" list. They've never written it down. It's depressed them even more.

The second paragraph is what I expected.
Problem is who is going to lend them money in that situation, even if the debt was consolidated?
How much less than $3,700 mth would a consolidated debt cost with no RE as security?
My guess is not much, and it won't improve their situation all that much either.
If they could sell all and eliminate those debts, they would be in a strong cashflow position to start over and have a go at it.
Sometimes you just have to hit the reboot button.
And I doubt there's many here who didnt have to eat humble pies at one time or another to make it happen.
And of course there's still the other $2700 going who knows where...

 

[Simon]

I did suggest an idea in a previous post:

Here it is

 

[Kath Russell]

Thank you Simon. One point taken which I've just passed on is paying off the smallest debt first, instead of the highest interest loan. That will DEFINITELY give them a bit of satisfaction & be able to pat themseles on the back. They're the sort of people who need that.

It's going to take a bit of time or another slap on the face from the 'bank'. They're going to see DefCredit in the next few weeks to check out their options.

At least they're finally looking into things.