First World Problems!

Ceist Beag said:
The rental income seems to be covering the rental mortgage so that doesn't appear to be an issue (other than the fact it possibly isn't worth the hassle).
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He would have to pay taxes on the 33K once the interest and costs are deducted.

I am also questioning the inheritance issue. Of course, it is never a guarantee but the timeline could also be uncertain. I make the assumption that at some point I will receive some inheritance. I have a fair idea of how much it should be. But I know that it could be any time in the next 20 years if my parents are lucky to live long lives.
 
I think if relying on an inheritance to fund a future event like the capital repayment, be careful about what you think it might be. Unless you were very involved in the givers financial affairs there may be items to come out of the estate that you are not aware of. Or if the bulk of it is property, it can be hard to estimate value. Or taxes might change dramatically.
 
I have seen many cases of people really cutting back and overpaying their mortgage and not fully enjoying life with their kids when they should have been.

Only to find that they get a big inheritance in their 50s or 60s and have far more money than they need.

Of course, the inheritance might not materialise but if that happens, there are plenty of other options open to the O.P.

So you should plan your finances based on the most likely scenarios but with a Plan B in place.

Brendan
 
I agree Brendan,
However, the OP and their spouse have to understand that they need a realistic plan A and a plan B to pay off the €850K capital when they are 66.
 
Brendan Burgess said:
have seen many cases of people really cutting back and overpaying their mortgage and not fully enjoying life with their kids when they should have been.

Only to find that they get a big inheritance in their 50s or 60s and have far more money than they need.
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Sure if that happens they could always give some of the inheritance money to their kids, I'm sure they would happily forget about the perceived lack of attention in that case
 
joe sod said:
Sure if that happens they could always give some of the inheritance money to their kids, I'm sure they would happily forget about the perceived lack of attention in that case
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might have been said tongue in cheek but in all seriousness time spent with your kids will mean a lot more to them than money when they are middle aged.
 
Look at the biggest issue here.

A few people, including the OP, have suggested that he should trade down now to reduce his debt.
Others have suggested cashing the pension fund now.

If he receives the inheritance as expected, there will be no need to do either of those.

If he does not receive the inheritance before the loan is due to be repaid, he can cash the pension fund then or trade down.

So the expected inheritance should be an integral part of his planning.

Brendan
 
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I think it would be hasty making decisions on the big ticket items (house, pension, etc.) without first focussing on the small matter of the monthly income and monthly spending. Understand and sort out this first before doing anything drastic with your biggest assets.
 
Brendan Burgess said:
With respect, I think that certain assumptions must be made about the future.

Those assumptions may turn out to be wrong and then the plans may change.

But it seems much better to hold onto the pension fund and expect to clear the mortgage from the inheritance.

And if it turns out that no inheritance is received, then the pension fund can be cashed at that stage.

Brendan
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I don’t think it’s sensible to factor inheritance into one’s finances. The parents could spend it all. Or they too could put it all into EV stocks. Or their medical or nursing home care could devour it. Or they could change their Will.

I think it’d be sensible to take the tax-free lump sum now and throw it against the mortgage. It’s something I plan to do myself. I’m not suggesting ‘cashing in’ the pension as was originally suggested for the avoidance of doubt. That’d be crazy. I’m just suggesting that the OP take the tax-free cash and leave the rest to grow tax-free in an ARF.
 
Do a full tax review and see if there is anything you can claim back that you should be claiming back. Given the loss on investments, the 2 rental properties etc and potential profits from previous investments it would be worth finding a competent accountant and make sure you have everything squared away to ensure there are no potential tax issues coming down the line and any rebate, if available, can be collected as well

The fact that the OP is on an interest only mortgage of this size with rental properties is unusual. Was there something else that happened that triggered that and is there another unmentioned issue or debt that needs addressing?

Assuming the current loss making investment will not recover, sell that and the rental property, clear down as much as you can on the current mortgage and then see if you can re-mortgage.

the inheritance is a bonus but you probably have no idea when it will land and exactly for how much. Hence, whilst it is nice to be aware of it, you should plan without it for now.

make sure you have other aspects like wills etc sorted.
 
thedaddyman said:
The fact that the OP is on an interest only mortgage of this size with rental properties is unusual.
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Not really.

Bank of Scotland handed out interest-only mortgages for the full-term at ECB + 0.5% on the family home.

They are causing some problems now because people did not plan how to clear the mortgage.

Brendan
 
Let's assume in the current situation that there is no €400k inheritance on the horizon. It's not clear to me that they should access their tax-free lump sum or sell their house now. They can always do that later.

So with the expectation of an inheritance, they definitely should not trade down or take their tax-free lump sum now.

Brendan
 
Brendan Burgess said:
Let's assume in the current situation that there is no €400k inheritance on the horizon. It's not clear to me that they should access their tax-free lump sum or sell their house now. They can always do that later.

So with the expectation of an inheritance, they definitely should not trade down or take their tax-free lump sum now.

Brendan
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Hi Brendan,

I just think that the 5% per annum interest saving that can be gleaned by using the tax-free pension cash to pay down some of the mortgage more than trumps the potential upside of keeping the pension lump sum invested. There’s a guaranteed 5% saving available and it’s not like the €115k is taxable on the way out; it’s entirely tax-free.

Gordon
 
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Why won't your wife sell the PPR? Does she understand that in 11 years time you may be forced to sell it?

I agree with @Ceist Beag that you need to review your monthly spending. Rising interest rates has happened over the last 18 months but it would seem you weren't saving prior to this?

Have you actually lost 500k+ in shares or was that just what your portfolio grew to? What was your initial investment?
 
OP has dealt with a serious illness over the last 1-2 years - this changes your outlook.

In OPs shoes, I'd consider what finances would look like for the family if either he gets sick again or worst case he's gone before being able to re-build up pension. I'm not trying to be morbid but practical. I do this exercise for myself, could myself/partner both maintain our lifestyle if one of us passed earlier. Looking at this may change both your/your wifes opinion on next steps.

Looking at expenditure can be done immediately. Selling the rental properties, or at least starting that process and selling stocks seem like sensible things to start now.
 
@Brendan Burgess , I 100% understand your argument about factoring in inheritance but there are a lot of other factors at play here:

  1. It is causing the OP stress. Relying on an inheritance, something that may not be paid out for a number of years, will not ease this stress.
  2. The OP had stomach cancer (disclosed in tax bill thread). This or another form of cancer may return, limiting his ability to earn and therefore pay down debt.
  3. Short term cash flow. They can't afford to send their children to college. Two of them will be going in the next 18 months.
  4. Living way beyond their means. This has to be addressed. They have €10k credit card balance, owe the Revenue €30k, both high interesting charging bills, as well as €850,000 interest only loan. This has to be addressed now and not later. Using inheritance as the get out of jail card will not address their spending issues which will continue and they will continue to give off the impression that they are wealthy when in fact they are up to their necks in debt and they have spent decades worried about money and the stress that this debt has done to them. And I am sure it has had an impact on their home life too and the feeling around the home.
If he needs to cash in pensions now, he should do so to tackle his debt problem. Future inheritance may replace this as retirement income. Or if there is a chance of getting some of it now, they should ask for it so they can pay down some debt. A parent would prefer to help out a child (even one in their 50's) now if they were in financial trouble rather than wait for their demise.


Steven
www.bluewaterfp.ie
 
What are the true incremental costs of the kids going to college, given that is on your mind and fast approaching? Assuming they can live at home or commute given home value.

Add college fees (2k each for 2024), transport to college (EUR 2 return a day in the Dublin area), books/lab supplies, maybe new IT devices.
Subtract transport to school (do you have a second car for this purpose that could be done without, is the 10yo able to get to and from school by walking/cycling?), school fees?, uniforms, any grind/ Irish college fees, any classes or hobbies that they won't continue once school finishes

Assume kids can now cover the cost of their increased socialising (an important part of the college experience ) by earning it if their course load allows for a part time job - including full time work during the summers and any holiday periods where they don't need to study. Or have them take on jobs that you are currently outsourcing and paying for to contribute in kind eg gardening, cleaning etc How aware are the teens of your financial situation? It might take time to socialise the idea that they need to contribute in this way if they haven't before. Dress it up as a life lesson if you would prefer not to share the ins and outs of your finances. Show them their projected college years budget and ask them to problem solve for how it will be financed.
 
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