Going nowhere fast!

Michael01

Registered User
Messages
5
Age: 32
Spouse’s/Partner's age: 35

Annual gross income from employment or profession:
70,000
Annual gross income of spouse:
28,000

Monthly Take home pay:
Me: €3,965 (after pension contribution)
Spouse: €1,650 (after pension contribution)

Type of employment: e.g. Civil Servant, self-employed
Me: New to Public Sector
Spouse: Private sector

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

I save about €1,250 per month (direct debit to a credit union account where I can’t easily access it) and my wife saves about €750 per month

Mortgage n/a - We are renting apartment for €1000 p/m

Other borrowings – car loans/personal loans etc
None
Credit Cards
Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?

Savings and investments: We have about €45,000 in savings split between a credit union account (€28,000) and a BOI current account (€17,000).

Do you have a pension scheme?
Yes I have recently started a new job and have joined the company DB pension scheme. Previous to this I had a personal pension plan (estimated value €12,000).
My wife has just started one where her company match her contribution up to 5% so she is putting in 5%

Do you own any investment or other property?
No

Ages of children: No children

Life insurance: None
What specific question do you have or what issues are of concern to you?
Background:
During the majority of the past 5 years we have been living on a single salary due to recession/going back to College to change careers, etc. This is the first time since we married that we are both in regular employment and we want to try and put some structure around our finances and hopefully start making sensible plans. My wife and I are not very good at financial planning and feel that we are missing out on something so we are looking for any advice on what we should be doing?
1. Pension Query: should I be looking at continuing to contribute to my personal pension plan – would there be extra tax savings from this and would they be worthwhile?
2. Savings Query: I am fairly sure that we could be getting more from our savings rather than leaving it in CU and BOI accounts. Can anyone give advice on what they would do in our situation?
3. Buying a House: We both live and work in Dublin and are currently renting. Due to expensive nature of property we have not decided whether to try and eventually purchase a house or not. I know we are ‘wasting’ money on rent but not sure yet about going into lots of debt for next 30 years to purchase a place. Leaving personal choices out of this, can anyone give advice on what the best move would be from a financial perspective? Mortgage vs Renting?
4. Investments in general: Should we be looking at starting to invest now or keep saving as we have been doing? I keep reading on articles that the best way to accumulate wealth in by investing long term in the stock market. If so, what is the best way to get started?
5. Any advice on best way to handle decision making process regarding finances with your partner? I have read a lot that this can be very difficult and would appreciate any thoughts that people may have on this.
6. Does anyone have any suggestions on anything else that we should be doing/not doing now? We both are trying hard to get somewhere but have no idea where!
Sorry for long winded post and all the questions. All comments would be greatly appreciated.
 
Your take home pay seems very high for your gross pay after a pension contribution. Are you sure it's correct ?
 
1. Pension Query: should I be looking at continuing to contribute to my personal pension plan – would there be extra tax savings from this and would they be worthwhile?
Positives are that pension investment is tax efficient and will give you opportunity for earlier retirement or reduction in contributions later on in life Negatives are that this will be effectively dead money for many years. Once its invested you have to leave it there until retirement.

2. Savings Query: I am fairly sure that we could be getting more from our savings rather than leaving it in CU and BOI accounts. Can anyone give advice on what they would do in our situation?
Depends on what access you need to savings and what your risk attitude is. At your ages and with no owned property it would make sense to look at saving towards purchase of a PDH. This is likely to be the most tax/inflation efficient way of utilizing your savings.

3. Buying a House: We both live and work in Dublin and are currently renting. Due to expensive nature of property we have not decided whether to try and eventually purchase a house or not. I know we are ‘wasting’ money on rent but not sure yet about going into lots of debt for next 30 years to purchase a place. Leaving personal choices out of this, can anyone give advice on what the best move would be from a financial perspective? Mortgage vs Renting?
Given the situation presented by you I will always come down on the side of buying a property. Property/rent inflation is an unknown factor and purchasing a property is both tax efficient and largely eliminates the rent inflation risk. You have a good combined salary plus a good savings record. Personally I would favour buying a property in the short/medium term.

4. Investments in general: Should we be looking at starting to invest now or keep saving as we have been doing? I keep reading on articles that the best way to accumulate wealth in by investing long term in the stock market. If so, what is the best way to get started?
Plenty of info on this forum about stock market investing. You could look at doing this as a pension based investment. However if you are considering investing in individual stocks rather than a fund you need to make sure that you are well up to speed on the merits and risks involved before risking any funds.

5. Any advice on best way to handle decision making process regarding finances with your partner? I have read a lot that this can be very difficult and would appreciate any thoughts that people may have on this.
I have a number of years on you and found that this issue has likely caused the greatest friction in my married relationship. My personal view is that you both need to trust each other to the extent that the "my money" and "your money" issues are resolved amicably early on. There is a big differential in your salaries and this in itself can cause problems with your partner as in she may have difficulties in accepting a partnership as equal if she is made feel that she is largely living on "your" money. I learnt at an early stage that this topic needs to be discussed openly and frankly and my view was that once we married the my and your element of possessions needed to be changed to "our" (excluding clothing which could lead to some embarrassment :eek:). Ideally open a separate account for housekeeping bills etc and agree a fair level of contributions amongst you. Have regular meetings re finances etc to make sure everything is running smoothly and try to avoid arguments arising over who spent what if at all possible. Somebody needs to be the primary banker in the household particularly when/if little additions arrive!!

6. Does anyone have any suggestions on anything else that we should be doing/not doing now? We both are trying hard to get somewhere but have no idea where!
You're doing well on the savings front but need to decide on long term plans as per your questions above. Whatever you decide make sure that both of you are fully on board with the decision and that it fits in with your longer term goals. If children are in the plans make sure that you start saving early for education. I.e. Don't take on a big mortgage late in life when 3rd level may scupper your finances completely. Better to make your purchase decision ASAP!!
 
Your take home pay seems very high for your gross pay after a pension contribution. Are you sure it's correct ?

Elcato - thank you for the comment. It is correct - I just opened my pay slip to double check! My pension contributions are not that high and I think I am getting most of our tax credits.
 
44Brendan - thank you for the detailed response - much appreciated! All of what you wrote seems very sensible and relatively simple when written down. Unfortunately it did not seem that simple in my head beforehand! :confused:

You have given me a lot to think about and the gentle push I need to take the first step and have the financial conversation with my better half! I think if we can have some discussions around finances and get over any friction, we might finally be in a position to start making some real decisions around what to do next.

With regards to pension I think I will not look at doing anything else for the moment apart from my DB scheme.

I will continue to save as before until we make a decision around whether to buy our own place.

I do not have any knowledge at the moment about investing so stocks are probably not for me yet. I will start reading the Investment section on here and I will purchase some books to try and learn more about it. Can anyone recomend any good sites where I can open a 'dummy' account with virtual money where I would get to familiarise myself with all things investing?

Thanks again Brendan for the great post.
 
Thanks again Brendan for the great post.
:) Nice to be appreciated!
You are currently in a good position Michael and while it may sound a little trite you need to make sure that both of you are on-side with all decisions made. The salary differential between you does have potential to cause strife if not addressed openly and fairly.
Best of luck with your decision making!
 
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