# Baby due - should we trade up?



## BlueMoo (2 Jun 2009)

*Age:*
34 
*Spouse’s/Partner's age:*
31

*Annual gross income from employment or profession:*
85,000
*Annual gross income of spouse*:
30,000

*Type of employment: e.g.*
Employed, private sector - both of us

*In general are you*: - not spending more but not saving either
(a) spending more than you earn, or
(b) saving?

*Rough estimate of value of home*
300,000
*Amount outstanding on your mortgage*:
278,000
*What interest rate are you paying?*
ecb +.75%

*Other borrowings?*
No

*Do you pay off your full credit card balance each month?*
Yes

*Savings and investments:*
7,000 left over from ssia
Have some Bank shares - not worth much now

*Do you have a pension scheme? *
Paying 30% of salary into PRSA (to maximise tax incentives)
Partner has static one from previous job

*Do you own any investment or other property?*
No

*Ages of children:*
None, but first due in January ‘10

*Life insurance:*
Yes.

*What specific question do you have or what issues are of concern to you? *
General Info:
Partner has new job, contract for a year.
Baby on the way, live in a small 2 bed apartment


Want to maximise our money usage – so?
Pay additional off mortgage?
Increase/decrease pension payments in the short term/long term?
Save outside of pension in accessible account?
Need to start planning for baby related outgoings – initials costs, then schools, colleges etc
Is there a best or recommended approach for dealing with these things?

I appreciate we’re in a good position currently because of my job, but that could change when the baby is born as it is most likely my current company won’t pay maternity leave, which will leave us with quite a shortfall.

Current thinkings:

Continue mortgage payments as are
Reduce PRSA payments to figure such as 500 per month, putting the additional take-home pay straight into savings
Will have extra available every month now, as partner now has income and can assist with bills – again start saving the difference
Partners preference is to trade up/paying extra off mortgage – have no arguments with the latter, although the former makes little sense to me at this time. We can certainly survive as we are and watch the housing market.
There is no guarantee that Partner’s job will be extended beyond the year’s contract or how long he will be looking for another job once that contract is up.


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## so-crates (5 Jun 2009)

*Re: Suggestions appreciated.*

A couple of questions for you:
Just in terms of the trade up question - have you considered the following?
1) Is your apartment large enough for you two +1? Babies tend to generate a huge turnover of clothes and require quite a bit of space to keep all their things (crib, bath, push-chair, perhaps cradle or pram, toys, in a few months play pen, and in the kitchen.. bottles, sterilising units...). Also in an apartment with a baby a dryer would be a god send if you don't already have one. You'll still find you are getting through quite a bit more washing powder than you currently do!
2) Is your apartment ground floor or accessible by a reliable lift? (carrying baby up and down stairs will be hard work!)
Even given these you should be able to survive but it will make things harder on you. I think that should be a big consideration for or against trading up.

Against trading up, would be the stress of moving while (probably) either heavily pregnant or with a small baby. The stress of viewings while pregnant. The potential difficulty of obtaining a new mortgage, given you will not be at that point in time earning, will probably gain less value than a year ago from the sale of your home and the limited contract that your partner has. I'd tend to agree it isn't an optimum time to move but I would give it serious consideration if you are going to find yourself swamped in a small apartment with baby stuff.

On the financial questions... if you believe you won't be paid maternity will you be able to manage on one income or are you planning to delve into savings? You have basically a short-medium term requirement to be able to afford the loss of your income during the maternity leave and longer term aims college fund, trading up, clearing mortgage, etc. I think for the moment your immediate focus should be on ensuring that you are comfortably covered for the duration of your maternity leave, once that is arranged then I would start looking at the longer term plans for money. I'd also look at drawing up a budget for the next year, you are going to find your expenses increase rapidly so it would be wisest to plan as much as you can in advance. (Also, ask people if they are thinking of giving you baby clothes as presents to give you clothes that are not for newborns - they last no time at all and you'll be buying more in a matter of weeks!)

Paying extra off the mortgage would mean capitalised payments off the principal, while this will make your mortgage cheaper in the long run it probably isn't the best use of your money right now. That money would no longer be accessible to you. I'd lay that option aside for a year or two. I think you probably have the best approach in the three ideas you have listed. Keeping your mortgage payments steady, reducing your inaccessible pension savings and increasing your accessible savings will help you keep on a more even keel financially. In a year's time you will be in a position to rethink it. I'd also investigate now the option of taking a mortgage payment holiday for the first few months - you will probably baulk at the idea but it might make things easier in the initial stages.

Best of luck!


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## Ash21 (11 Jun 2009)

We are in a similar position.  Have a 2 bed apt worth about 300K and earning the same amount roughly.  Difference is we had our baby 6 months ago!

We decided last year that we would like to trade up because of the babs, so to do that we have been saving, clearing debts and increased our mortgage repayments (we are on tracker too).  So a bit of a mix.

It is our ambition to move into a decent house (3-4 bed semi) which will do us for the rest of our years and with current prices the way they are that would cost €500-550K in our area (Sth County Dublin).

When we first found out that a babs was due we kinda panicked about living in an apt and about space but there was no need.  We have just focused on turning our finances around and can certainly now say we can afford a lot more in only 12 months.  For example our mortgage was about 280K and is now down to about 245K and paying far less interest, cleared debts and have about 5K in savings and from this month will be able to add over €1k each month with no car loans, credit cards etc. Come Jan '10 the apt is going up for sale and we will have loads more options by waiting and just in time for when the babs starts walking.

From a womans point of view, a 2 bed apt is perfect for a new baby too, no running up and down stairs, everything to hand...much easier than a house!  So what I'm trying to say is you'll have enough to worry about with a pregnancy and baby, enjoy it and you really don't need the stresses of moving house when you don't have to.


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## Ash21 (11 Jun 2009)

BTW, meant to mention most companies don't pay maternity leave these days but you will qualify (unless Cowan doesn't announce a change in this years budget) for €280 a week maternity from the gov plus €166 in CA each month.  This is ample in my view.


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## sean.c (10 Jul 2009)

Most of europe lives in apartments - it's the Irish (and possibly the English) that have this fixation that you can't rear babies unless you've a 3-bed semi with front and back garden.

The most important point here is that you're on an ECB tracker, which you won't get again.  I'm not sure but I think buying a new house would involve closing the current mortgage and getting a new one???  In which case, your repayments will shoot up. 

My advise is to save, save, save.


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## paddyodoors (10 Jul 2009)

BlueMoo said:


> *Do you have a pension scheme? *
> Paying 30% of salary into PRSA (to maximise tax incentives)
> Partner has static one from previous job


 
Isn't max tax saving for 30-40 only 20%


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## so-crates (10 Jul 2009)

sean.c said:


> Most of europe lives in apartments - it's the Irish (and possibly the English) that have this fixation that you can't rear babies unless you've a 3-bed semi with front and back garden.


hmm - you are making an assumption here. All the OP has said is that her partner is in favour of "trading up" not that they are looking for a 3-bed semi in the suburbs. Given that they are living in a *small* 2-bed apartment it isn't unreasonable for them to at least consider a move.


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## Raskolnikov (13 Jul 2009)

so-crates said:


> hmm - you are making an assumption here. All the OP has said is that her partner is in favour of "trading up" not that they are looking for a 3-bed semi in the suburbs. Given that they are living in a *small* 2-bed apartment it isn't unreasonable for them to at least consider a move.


True, but there's no need to make a rash decision just because a baby is about to arrive.

Babies and young children won't even be aware of where they live.


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## annR (13 Jul 2009)

Yeah, the baby will be fine it's the parents who mightn't have room to move.  Obviously you have to plan space for the baby and everything it needs like changing tables / cots / chair etc and I think it's very reasonable for a  couple to wonder whether they have enough space.  It depends on what they are using the 2nd room for at the moment - is it full of stuff which will have to be moved, or is it empty, if so, happy days.


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## Giulia (13 Jul 2009)

Hi,
I agree that if you can afford it you should consider moving. But if you think that would stretch you financially then I'd wait.
I live in an apt and my daughter is 2, our apt is not small but it is an apartment. 
Having said that living in an apt with a child is possible, and especially when the child is small there's no problem at all. As a parent not having a backyard means that you go out a lot, go to the park, go for a walk etc.. but I really enjoy that.


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## Yaffle (13 Jul 2009)

annR said:


> Obviously you have to plan space for the baby and everything it needs like changing tables / cots / chair etc and I think it's very reasonable for a couple to wonder whether they have enough space.


 
Mothercare would like you to think that a baby needs all this stuff but in practice it doesn't. Some things are nice to have and others might turn out to be a complete waste of money. If babies could choose they would prefer to sleep with their parents in the bed and carried in a sling rather than put in a buggy. My kids have all been changed on the floor or bed. 

Initial baby costs can be very low and babies don't care if clothes and equipment are second hand but it's a good idea to save now for other costs such as medical, school and college. 

If you want to trade up for more space I'd wait until the child is older, house prices will have probably fallen further and you'll have a better idea of how much space you'd like and be able to afford.


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## so-crates (13 Jul 2009)

Raskolnikov said:


> True, but there's no need to make a rash decision just because a baby is about to arrive.


 
From what they've posted I think one can safely deduce that the OP is quite far from rash


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## Nige (13 Jul 2009)

Ash21 said:


> BTW, meant to mention most companies don't pay maternity leave these days but you will qualify (unless Cowan doesn't announce a change in this years budget) for €280 a week maternity from the gov plus €166 in CA each month. This is ample in my view.


 
Not if you are used to taking home nearer €1,000 a week and not if you have substantial mortgage and other costs.


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## AlbacoreA (13 Jul 2009)

I wouldn't rush for the babies sake. I would be waiting 12 months to see what happens.


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## Purple (13 Jul 2009)

sean.c said:


> The most important point here is that you're on an ECB tracker, which you won't get again.  I'm not sure but I think buying a new house would involve closing the current mortgage and getting a new one???  In which case, your repayments will shoot up.
> 
> My advise is to save, save, save.




Very important point.
I would think long and hard before I gave up my tracker. Your bank would love it if you did. 
Yaffle is right, small babies are no problem in an apartment.


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