Steering / guidance

L

Lurkker

New Member
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4
Personal details

Age: 42
Spouse’s/Partner's age: 39

Number and age of children: 2 (9 & 12)


Income and expenditure
Annual gross income from employment or profession: 89k
Annual gross income of spouse: 46k

Monthly take-home pay 7200

Type of employment: e.g. both full time private industry

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

We are not solid savers, We put away €800 p/m let it grow then its goes on something


Summary of Assets and Liabilities
Family home worth €800k with a €240k mortgage
Cash of €5k
Defined Contribution pension fund: €80k


Family home mortgage information
Lender AIB
Interest rate 2.35%
If fixed, what is the term remaining of the fixed rate? Fixed rate until Feb 24


22 years left

Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? yes
2 personal loans
10k car 1
6k car 2


Buy to let properties
N/A

Other savings and investments:

Do you have a pension scheme? yes, we both have
him - 720 employee contribution PM matched by employer
her- 190 employee contribution PM matched by employer

Do you own any investment or other property?
no


What specific question do you have or what issues are of concern to you?

We are really only getting comfortable and on top of things (the last 18month) and are looking to see if we should look to overpay our mortgage or possibly ceasing pensions contributions and putting those sums + more in a 2nd property or other investment
 
In your shoes, I would pay off the car loans as soon as possible.

When they're gone, I would double your pension contributions.

Otherwise, it looks like you are doing fine.
 
Lurkker said:
Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? yes
2 personal loans
10k car 1
6k car 2


are looking to see if we should look to overpay our mortgage or possibly ceasing pensions contributions and putting those sums + more in a 2nd property or other investment
Click to expand...
The personal loans are almost certainly much more expensive than your mortgage so you should be prioritising these for repayment first.

After that, once your mortgage is at a comfortable level (and it looks like it may be already) you should maximise your pension contributions.

Diverting erstwhile pension contributions into an investment property doesn't sound like a good idea at all. And further investing in property when you have an €800k home sounds like concentrating risk in one asset class. You should be looking to diversify - e.g. equities.

Also, with two young kids, you should consider the worst case scenario of either/both of you dieing and have wills and suitable life insurance cover in place.
 
If you clear the car loans before February 2024 or at least one of them... it will make the new mortgage repayments easier when the new rate kicks in
 
Car loans first, build up savings next, and you should have 2 types of savings, a) rainy day fund b) fun fund . I suspect there is a spending issue here as regards holidays/meals out etc

You should find both your in service benefits in the event of illness or death. Loss of employment insurance should be considered.

And yes I think a property investment is a good idea. (I don't know anything about equities) Right now that's a pipe dream as you've no money.

You may be in for a shock in February unless you pay down those car loans as advised by another poster.
 
Ceasing pension contributions to invest in property is simply not a good idea. Your employer is matching your contribution. So basically you are getting free money you wouldn't get otherwise. (On top of the tax benefits). Even if I was in a position to invest in property, cutting these matched contributions would be the last thing I would do.
 
Some basic things you should do first, including a full tax review, have you claimed for everything you can claim for, are your tax credits being used to their full advantage etc. ?

Secondly, your rainy day fund needs building up, good that you are saving 800pm but ring fence some of that away in it's own account, perhaps in the Credit Union so you are not tempted to use it.
 
Are you going to be paying fees for secondary school and how will this be funded if so?
What is your plan to replace the cars and how would you plan to fund that? How would you aim to pay down the existing car loans with your current cash savings?
 
I would also review your day to day expenditure and lifestyle (At a time, I found a money diary great). With your income and your relatively low mortgage, 5k cash saving seems really low considering you also have personal loans. Of course, you might have had very big expenses in the last couple of years that might explain your situation.
 
thedaddyman said:
Some basic things you should do first, including a full tax review, have you claimed for everything you can claim for, are your tax credits being used to their full advantage etc. ?

Secondly, your rainy day fund needs building up, good that you are saving 800pm but ring fence some of that away in it's own account, perhaps in the Credit Union so you are not tempted to use it.
Click to expand...

Any tips on how the Op or others can do a full tax review themselves?

I thought as a married couple, paye earners, that tax claims and credits sort themselves out?
 
Wow - some great advise in there and thanks everyone for their time,

Yes, we have had some expenses the past 5 years (over now) hence the low savings - its only recently that we are feeling more "comfortable"
We have 2020-current work from home relief to claim (x2) all other tax is compliant (clue to expenses referred to above)
both pensions are max'd out (employer contributions are exactly that - free money, so thanks for the advise there, no change)

We are expecting a jump to 3.75% (AIB Green) in Feb - So about +€200 in our mortgage repayment. Paying off loan "2" will need an overpayment of c550 to have it cleared before that jump, that spend was in the region of our intended mortgage overpayment, so deferring it to loan "2"will mean no change to cashflow come Feb.

Seems a good simple solution :)
 
DublinHead54 said:
Any tips on how the Op or others can do a full tax review themselves?

I thought as a married couple, paye earners, that tax claims and credits sort themselves out?
Click to expand...
there are a number of options here, one is to go to someone like Taxback (No connection) and they will do all the donkey work for you in terms of claiming back, however they will take a cut themselves but it can be easier. You can do a self assessment but if you've not done it before, it can seem daunting
 
Lurkker said:
both pensions are max'd out (employer contributions are exactly that - free money, so thanks for the advise there, no change)
Click to expand...
Not really.

At your age you would get tax relief on contributions of up to 25% of your salary, regardless of your employer’s contribution.

Once you clear the personal loans, I really think you should look at increasing your pension contributions.

In the meantime, just contribute up to the employer match.

But clear the personal loans ASAP!

And forget about investing in a second property - that’s a bad idea.
 
Sarenco said:
And forget about investing in a second property
Click to expand...
Agreed and an easy decision to make here. How would fund a deposit ? Legal fees to buy ? Initial fit out for letting ? When you have no loans, a rainyday fund and college fees for the kids sorted maybe come back and think about it again. See you in 3 years ;)
 
Fast forwards 3 weeks.
Personal loan #1 bought out
Personal loan #2 tripled repayment - should be closed come mortgage hike in Feb
Will review cashflow at that point and set monthly overpayment into mortgage - knock a few years off (hopefully)

thanks all contributors for helpful advise.
 
thedaddyman said:
there are a number of options here, one is to go to someone like Taxback (No connection) and they will do all the donkey work for you in terms of claiming back, however they will take a cut themselves but it can be easier. You can do a self assessment but if you've not done it before, it can seem daunting
Click to expand...
Would strongly advise against using a service like Taxback. My partner has accidently signed up to them one year and found the service poor and it hard to cancel them as her tax advisers. Their commission is sizeable and once used they set themselves up for future years automatically and even change the bank details Revenue hold for you on MyAccount on Revenue.ie to their company bank details. They didnt seem to even do due diligence on the return they submitted (such as asking for your medical expenses for the year, other income sources etc.) so they are not even claiming back all of your entitlements.

Easier to do yourself on MyAccount.
 
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