“A year ago, we just stopped opening the post. We had run out of road. We hit rock bottom and we didn’t have any money, and the debts were mounting. I called my solicitor and said I think we need to go bankrupt.”
At 39, Tom is part of the generation identified in a report this week as the “squeezed middle” suffering a “financial mid-life crisis”.
The Family Finances report by Aviva, carried out by the Red C research company among 1,280 adults, found that Irish consumers aged 35-54 are more likely to be struggling than any other demographic, with those aged 35-44 under the most acute pressure. One in three in that age group with a third-level education is struggling, along with 40 per cent of those without a third-level education.
In the space of 15 months in 2007, we got approved for a mortgage, started building, got married, had our first child, and both lost our jobs when our companies went into liquidation
The average outstanding mortgage debt is €130,000, and three quarters have other debts averaging €5,500. Two in three do not expect their income to improve.
The report contrasts the position of this age group with the under-34s and the over-65s, both of whom, it says, are faring much better. “The younger age cohort is the most positive in outlook with 44 per cent expecting their income and employment prospects to improve.” Forty four per cent of the over-65s are living comfortably.
“In the space of 15 months in 2007, we got approved for a mortgage, started building, got married, had our first child, and both lost our jobs when our companies went into liquidation,” says Tom.
Debt
“My wife, who worked in retail, had been off on maternity leave when her company went under. I took a job on the other side of the country. We did whatever we could, but it wasn’t enough.”
The couple owed €300,000 on their mortgage and a further €18,000 in credit card, overdraft and credit union debt.
For Tom, the phone call with a solicitor proved a turning point. “He knocked me into shape. He said that although we’re in arrears on our mortgage for the last 12 months, the outstanding amount is less than what the house is worth, so we’re not actually bankrupt. We started to ring the bank, the credit card company, the credit union and consolidate our loans.
I suffered severe mental health problems three years ago, and I know it's related to the stress
“I did the sums, and figured I was never going to be able to pay the debts off staying in a staff job in the media, the industry I was in, so I made the decision to become self-employed.”
Tom’s consultancy business took off immediately, and he is beginning to clear the debts. “I suffered severe mental health problems three years ago, and I know it’s related to the stress. It really had a big impact on both of us. I stopped listening and reading to the news completely. Now, we’ve been trying to breathe and trying to keep things going. For the first time in 10 years, I feel that things will be okay.”
Ann Marie O’Connor of the Money Advice and Budgeting Service (MABS) says her organisation sees “a lot of insecurity around employment in that age group. A lot of people lost their job or suffered reductions in their income in the recession”.
“And although housing costs are on the rise again, we are working with people who bought during the peak and still have expensive mortgage debt. Our clients are doing whatever they can to make it work – they work back-to-back with each other or rely heavily on grandparents for childcare. I have a lot of sympathy for that age group.”
Separate ways
Ciara, a civil servant, who lived in Berlin for nine years before returning in 2004 says: “We are the generation that worked really hard and has nothing to show for it. For so many days and weeks and months and years, I woke up every single day and my first thought was, ‘How am I going to get out of this mess? What am I going to do?’.”
In 2007, she and a friend decided to buy an apartment in Dublin together as an investment using a 100 per cent mortgage. “We bought for €360,000 and after the first year it was worth €400,000 and we were going to wait another year and then sell it, and go our separate ways. But then the crash happened, and the value of it fell to about €150,000. We were trapped,” she says.
I started cycling to work, found the cheapest mobile phone bill, and looked at every single bill
“In the meantime all the pay cuts happened, and then five years ago, my friend moved out, and started a family. Because I’m single, I had to pay every bill on my own. So all I could do was cut back. I started cycling to work, found the cheapest mobile phone bill, and looked at every single bill.”
Because she joined the civil service late, Ciara says she will never have a “cushy retirement”. “Our generation really is the squeezed middle. We all bought during the boom, so the amounts we owe are absolutely huge. I used to wake up in the morning with the figure of €360,000 going around in my head. I lost years to stress, anxiety and constant worry.”
To compound her problems, Ciara and her friend were unable to agree on what to do with the property, which is still in negative equity. The friend wanted to rent it out to take advantage of the rising rental market, which would have left Ciara with no home.
Earlier this year, they came to an agreement that Ciara would take on the loan and the remainder of the debt, and the friend will walk away. “If there’s any good to come out of it, it’s that I kind of feel invincible now. I am getting through it all myself, with no help from anybody,” she says.
No sick pay or holiday pay
Lorna, who works in marketing on a contract position, says she is “one of the lucky ones” because she and her husband both have a good income. “But our debts are crippling – including nursing home fees for my elderly parent and childcare costs for our son. We both work on contract and can’t get permanent employment because we are both 50. So there’s no certainty, no sick pay or holiday pay.
“We have a second property that we bought as my pension 11 years ago, but will never be worth what we paid for it. We’ve never missed a payment on anything, but even an invite for our son to a kid’s birthday party sends us into a panic.”
Anthony, a 42-year-old who works in the film industry, made the difficult decision to leave his wife, a teacher, and two children behind in Ireland and move to the UK to find work. "We had no choice. We were not living; we were merely surviving. Everything that came in was going out, but also we were building up debt."
Nobody wants to be seen as the one who's failing emotionally or financially
They bought a house in 2008, “one of the last to dozen or so house sales right before the crash. We paid €360,000 for a three-bed in Galway. Over the next four or five years the ones next door were selling for €200,000.”
At the same time, rates in his industry were decreasing. For him, a large part of the stress was the inability to talk about it to anyone. “As financial woes come in, stresses within the relationship can easily form and it’s not a thing you can discuss with people. Nobody wants to be seen as the one who’s failing emotionally or financially. You’d hear ‘keep the recovery going’, and you’d think ‘what recovery?’”
Older relatives would also make insensitive remarks about how “they couldn’t understand why, after all the time we had been working, we didn’t have the things they thought we should have. They’d say ‘oh, we had hard times too but we managed’ and ‘we still went on holidays’. But they bought a house for maybe €35,000 and paid it over a long period time. My own parents were very supportive, but it’s humiliating in your 30s and 40s to have to go to them for a loan.”
Older generations
O’Connor points out that, for older generations, it was reasonable to expect a single income family to be able to pay off a mortgage. “That’s just not the case anymore. And if you’re relying on two incomes and you lose one or two get halved, you’re in quite a serious position.”
We can't go back to the way things have been. I would know three men who were professionals, good earners, married with kids, and just could not take any more
Being in the UK away from his family is hard, but Anthony is optimistic about the future. “This is the first time we’ve been able to save in about eight years. I’ll get about €300 more per week for doing the same job, and my flat share is only costing €400 per month extra.”
If his current contract is extended into next year, the whole family may emigrate. “We can’t go back to the way things have been. I would know three men who were professionals, good earners, married with kids, and just could not take any more. I think it’s very hard for men especially to talk to other men about it, to go there and lay it out that things are tough.
“In one case, I got a call from a friend saying someone was found dead last night, and I’d spoken to him two weeks before and he’d told me things weren’t good financially. That’s a real wake-up call.”
Some names have been changed
