25 Year old moving to a much lower paid job in next 5 years. How to plan ahead now?

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palmtrees

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Age: 25
Spouse’s/Partner's age: NA

Annual gross income from employment or profession: $100,000
Annual gross income of spouse: NA

Monthly take-home pay $5800

Type of employment: e.g. Civil Servant, self-employed
Full time, private sector in the US

In general are you: saving
(a) spending more than you earn, or
(b) saving

Rough estimate of value of home NA
Amount outstanding on your mortgage: NA
What interest rate are you paying? NA

Other borrowings – car loans/personal loans etc
None

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? 0

Savings and investments:
Ireland:
Investments (degiro) €4000
Prize €3000
AIB Savings Account €1000
Irish Life Investment fund: €200 / month. Current balance €4300

US:
Started saving $2900 per month in a savings account - interest is negligible.

Do you have a pension scheme? Had in Ireland - only about €1500 in it.

Do you own any investment or other property? No

Ages of children: NA

Life insurance: No

Question:
I am currently working in the US. The career that I want to move to in 2020 - 2022 is that of paramedic in the ambulance service. The salary for this job starts at €25,000 but rises annually, plus the option of upskilling to advanced paramedic which will add just under €10,000 to the salary. Getting that 'promotion' is not guaranteed though.

I will be returning to Ireland next year with a minimum of €25,000 saved. At that point I expect to get a job relatively easily with a salary of €60,000 - €70,000 given the current market so can build on these savings.

What is the best way to proceed when I return to maximise the return on all saved money? I see two main options:
  1. Invest the money - I don't have much knowledge in this regard so am a small bit reluctant
  2. Buy an apartment instead of renting when I return. Overpay the mortgage as much as possible while I'm in a higher paying job to reduce the cost when going to a lower salary job. The idea is that this could turn into an additional source of income in the future or at least reduce my living costs once the mortgage is paid off as I won't need to rent.

Ultimately - thousands of people work on this salary and less, and get on fine. I just feel that I'm at a huge advantage now to improve my quality of life in the long term and I want to make the most of it.
 
I think you haven't factored in training time as a paramedic? Will you be paid during that period or do you need to account for that too?

Are you saving your $2900 in a USD account or are you converting it to €? You say the interest rate is low, is that because it is an Irish account? Ultimately you want to use the cash in euros so it makes sense to save in euros but converting smaller monthly sums may prove costly.

I think you have a pretty clear path in your head that you want to follow. Planning on buying an apartment before you return to Ireland would be fraught though. You would not be able to view or negotiate easily. Banks would be beyond reluctant to give you a mortgage on the basis of a probable job at a probable income when you get back to Ireland. So irrespective of whether you decide to buy a place to live or invest otherwise I would suggest you plan on not buying before returning and factor in paying rent for a year.
 
Thanks, so-crates. Training as a paramedic takes 2 years and is paid for by the HSE.

I'm saving my $2900 is USD and the interest in most bank accounts here is even worse than what I'm getting in Ireland. <1%.

That's a good point about buying. I wouldn't be buying until I'm home again and in full time employment in Ireland. I guess I'd need life insurance and proof of regular savings in Ireland before any bank would look at me for a mortgage.
 
palmtrees said:
I guess I'd need life insurance and proof of regular savings in Ireland before any bank would look at me for a mortgage.
Click to expand...

You won't need life insurance to get approval, though you'll need at least mortgage protection life insurance before you actually draw down.
 
The ideal plan would be to get a place e.g. a 2 bed apartment, where you could rent a room out to avail of the tax free rent a room scheme. So in 5 years you could take a lodger if you need help with the mortgage.
Actually a small terraced house or bungalow would be better than an apartment. My thinking here is that apartment will have an annual service charge which will be a significant hit in your lower income years (1000 - 2000 euros). Whereas with a house you can front load any renovation work etc during your higher earning period.

But, you have a narrow window in which to build up the deposit and get mortgage approval on the higher paying job.
And I expect Irish bank won't talk to you until you have been at least 1 year in a permanent job here.

Make sure any mortgage overpayments reduce the capital rather than reduce the term.

Make sure to take out medical insurance before you are 35, but if you are comfortable relying on public system you could hold off until then.

You'd need to crunch some numbers to see if it'd make sense to take out life insurance sooner rather than later, and life insurance rather than mortgage protection life insurance.
What I'm thinking here is that the same life cover started at 25 will be cheaper than starting it at 30. Could it make sense to start a hefty life cover policy at 25 that will be enough to cover your expected mortgage (and any future ones?), rather than wait to take out mortgage protection? I'm not sure, just mentioning it as a possibility.
 
palmtrees said:
Thanks, so-crates. Training as a paramedic takes 2 years and is paid for by the HSE.
Click to expand...
I was thinking more about the cost of living while training than the cost of the course itself, however if the HSE are paying you while you are training that does help matters alright.

palmtrees said:
I'm saving my $2900 is USD and the interest in most bank accounts here is even worse than what I'm getting in Ireland. <1%.
Click to expand...
Wow - so savers in the US are being penalised too, that is unfortunate. I assume you have investigated the market there and have got yourself the best rate available? You also need to start now thinking about how you will move the money back to Ireland, ultimately you have a currency risk. The relative values of the dollar and euro will change over time (hopefully not radically) and your plan will be contingent on how many euros you have instead of how many dollars you have saved. You may want to consider moving the money to savings in Ireland piecemeal over time rather than as a single lumpsum. It may mitigate the risk of currency moveemnts. Hard to tell what would be the best approach but it would be wise to start thinking about it now.

palmtrees said:
That's a good point about buying. I wouldn't be buying until I'm home again and in full time employment in Ireland. I guess I'd need life insurance and proof of regular savings in Ireland before any bank would look at me for a mortgage.
Click to expand...
You'll need an income first and then evidence of regular savings. I know you are confident of getting a job but banks have less confidence :) They will also probably not look at you while you are in a probationary period so you need to hold off until you are out of that.

I'd be inclined to disagree with odyssey06 on life assurance, simply because you have no dependents (that you have confessed to!) and no debts to clear in the event of your death at present. Basically no-one would really benefit from you getting life assurance cover. Mortgage protection policies are relatively cheap, obviously they only really cover the cost of your mortgage but if you still have no dependents then that would be sufficient.
 
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