# How to start saving



## Zaraa1 (17 Feb 2019)

Age: 38
Spouse: 42

Annual gross income : self €43,000
spouse: €41,500

Monthly take home pay self €2800
Spouse: €2500

Both private sector employees.

Breaking even every month but very little savings 

value of home: €250,000
Mortgage left €115,000
Mortgage was low tracker with NIB 0.5% over ECB, now with Pepper Finance 
Approx 12 years left
Repay €700 per month

Other Borrowings: €7000 loan left with credit union  (approx 3 years left)
Repayments €195 a month 

Pay Credit card off every month. 

Savings - Approx €2200 in credit union but held as security on loan.

We have been saving our child benefit last few years in post office childcare savings account / think about €15,000 in it at the moment. 

Both have small pensions. 
I contribute 5% per month. My employer contributes 2.5%
Spouse has no company pension scheme but pays approx €100 per month into private pension 

Life assurance -with Zurich life pay 485 per year 

2 children - 9 & 7

No other savings/investments

Other monthly expenses: 
Groceries €650
Health ins €180
Phone broadband €85
Electricity €130 per month
Cleaner €72
Childminder €120 
sky €60
Other yearly bills work out at approx €400 per month

I feel like we have been waisting a lot of our money the last few years. Treating ourselves a lot too much (spent approx €9k on holidays last year). I know this is excessive & I have been trying to take more control of our finances the last few months. 
Really want to increase our savings & pensions & not sure where to start. should we increase pension or pay of credit union first or just try to save for a rainy day? Also I know post office not the best place to save child benefit but we are a bit clueless of other alternatives? 

Any advise greatly appreciated. 

Thanks


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## Sarenco (17 Feb 2019)

Hi @Shellzey 

I think if I was in your position, I would withdraw €7,000 from your post office savings account and would pay off the credit union loan straight away.  

I would also at least triple the amount you are each contributing to your respective pensions - that's really the area that needs most attention.

Beyond that, I wouldn't be in any particular hurry to pay down your mortgage ahead of schedule (that's a really fantastic rate).  You could also look at the "Best Buys" section for regular savings accounts and maybe set up a direct debit from your current account to maintain discipline.

Hope that helps.


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## Laughahalla (17 Feb 2019)

You need to try and get debt free( and stay debt free)  before you start saving.

You are probably correct in your analysis that you are wasting money. You are wasting alot of money. If you control the wastage then you will be able to save easily.


  First thing I would do (as in tomorrow) is to pay off 7000 euro loan with the kids savings. And promise yourself you will never borrow again. Stop using the credit card. You don't need to use it.

Next to go is the cleaner. €864 euro a year .
Alot of people started doing this in the Celtic tiger years when we all thought we were "rich". Having a cleaner is a total luxury.
There is four of you in the house now and the children could take on chores to earn their pocket money. This will also teach them an appreciation of how money is earned.


I would also cut sky. Sky is overrated. 90% of the channels on sky are free to air. Buy a Humax free sat box. You are paying 60 euro for the privilege of watching a handful of channels not available on freesat. Humax freesat box is as simple as plugging in the cable at the box and is easy to operate like the sky box and hey presto. You've just save an additional €720 per year. You can pause rewind record with this. There is about 160 freesat Channels.

That's €327 freed up in a month without breaking a sweat.

Do you shop in the German supermarket. You can save approx 25% of your grocery bill by shopping with them. Assuming you don't that would save your family about 2k per year.
Spending 14% of your net income on holidays is excessive by anybody's standards. Set a budget of approx 4k for holidays if you must but 9k is excessive compared to your income.
From the details you are giving you are living beyond your means but on the positive side with some modifications to spending behavior you could turn it around and actually be in a position to be totally debt free including your mortgage in a short period of time if you really wanted to be. You just need to want it.

My advice for what it's worth.. (Believe me it works but only if you get serious about money management)

Stop saving childrens allowance until you get to step 6 below.

1.Make a monthly budget each month, you must know where every euro of your take home pay is going each month "BEFORE" you spend it. Spend it on paper first. If it's not planned then don't buy it or spend it until next months budget.
2. Save 1000 euro as a small basic emergency fund and do not use the credit card for little emergencies use the cash. Build it back up if you use it Get the mindset that you will never use a credit card or borrow ever again.
3. Pay off debts smallest to largest apart from mortgage
4. When debts paid off( excluding mortgage) build up approx 3 months emergency fund.
5. Put 15% of gross household income into pensions
6. Put some money away to pay for childrens college ( assuming they might want to go)
7. Pay off your mortgage.

If you cut out some of the things I suggested ( I'm sure you could think of more) you could have your house paid off much quicker than 12  years. You could probably do it by your 45th birthday without much effort.
Wouldn't that be nice target to aim for


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## Khublei (17 Feb 2019)

I would agree, get rid of Sky. I made the move a few years ago and never regretted it. We have a box we paid €150 for about  5 years ago and no bills since. We share a Netflix account with friends so between that and the free to air channels we've more than enough. 

The grocery bill could also be smaller. 

€130 a month on electricity seems excessive as well. Do you plug things out at night etc? Leave lights on? 

The holidays is a major one. If you held off on them a year or two you could clear the loan and have savings.


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## so-crates (18 Feb 2019)

Shellzey said:


> Really want to increase our savings & pensions & not sure where to start. should we increase pension or pay of credit union first or just try to save for a rainy day? Also I know post office not the best place to save child benefit but we are a bit clueless of other alternatives?


The money in the post office is attracting a risible interest rate, considerably less than you are paying for your CU loan. First job would be to clear the CU loan from the fund you have built up. I am sure that was earmarked for college etc but you have time yet to build that up again.

If it were me, I would not be inclined to stop your prudent behaviour in saving the child benefit. Once the CU loan is paid off, you have €195 pm you have freed up and can immediately use for savings/pension contributions (on top of any budgetary savings you could make). I would think that having a rainy day fund would be wise, so I would start using the €195pm immediately in building up that to a target level that you are comfortable gives you breathing space - €1000 might be a bit too low, but you could save that in 5 months and then perhaps reduce the contribution to your emergency fund and start using it to improve your pension contributions. As others have said, you have an excellent rate on your mortgage so I would not prioritise paying that down just yet.


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## Zaraa1 (18 Feb 2019)

Thanks so much everyone for your advise. I honestly didn’t know where to even start but am very motivated now! 

Going to take all your suggestions on board.(Think I will find getting rid of our cleaner the hardest to take!)

I rang the credit union today and if we use our shares with them only need €4800 to repay the loan. Going to do this straight away. 

Going to go through all our direct debits and see where we can reduce further. I know I can get grocery down if put my mind to it. Electricity is very high, we are with board gais with years, going to look at switching.

Will set up direct debit at start of month to start emergency fund & after this will look at pensions. 

Thanks again


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## RedOnion (18 Feb 2019)

You also need to start analysing exactly how much you're spending.
I find easiest way is stop using cash, pay everything with debit card, and then analyse your statement in Excel at end of month.
Some people prefer to use cash, and keep a money diary.

Based on your expenses provided, you should be able to save a lot each month, so you're spending money you haven't included.


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## PaddyBloggit (18 Feb 2019)

Shellzey said:


> Think I will find getting rid of our cleaner the hardest to take!



If you give up the expensive holidays, surely you could give yourself the perk of continuing to hold onto the cleaner. You both work full time - keep the cleaner by saving the money elsewhere.


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## Laughahalla (18 Feb 2019)

PaddyBloggit said:


> If you give up the expensive holidays, surely you could give yourself the perk of continuing to hold onto the cleaner. You both work full time - keep the cleaner by saving the money elsewhere.



She can't afford this luxury . It's this type of "I deserve it"  thinking keeps people in debt and poor. There is four of them in the house. Many hands make light work.


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## bleary (18 Feb 2019)

Getting rid of the cleaner is the last thing I'd do, low debts, decent income, 2 jobs and 2 kids.  Compared to 9k on holidays? And interest on loans..
Is the 3-4 hours each week of your time you would spend cleaning up worth 14 euro a week.
Keep the cleaner but start saving !


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## Sarenco (18 Feb 2019)

Boy, it's a tough crowd around here!

Let's look at the big picture -

The OP is in her late 30's and her husband is in his early 40's.  They've two 2 kids - that's an expensive time in anybody's life.
They have a mortgage with an LTI ratio of only 1.35, at a super, super-low rate.
If they paid off their Credit Union loan in the morning (which I certainly agree they should) they would still have over €10k in liquid savings to meet any emergencies that might arise.
They have at least started making some provision for their retirement (although I agree that now is the time to start seriously ramping up their pension contributions).
Perhaps the OP does need to rein in her family's spending somewhat but it hardly requires major surgery.  They are by no means "poor"; not by any standards.


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## mugsymugsy (18 Feb 2019)

I had a post mention cleaner and sky etc but I didn't post as felt people need some luxuries. 

As others have said sort out the loan, cut back on the big holiday and start saving the money that you would normally put towards this into pensions / savings.

Well done on the mortgage and pot of savings you do have.


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## iamaspinner (18 Feb 2019)

Sometimes a cleaner doesn't do the cleaning only! And I don't mean that... House chores are one of the most contentious issues particularly for young couples. It could well be seen as an investment!


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## PaddyBloggit (18 Feb 2019)

Laughahalla said:


> She can't afford this luxury



She/They can by cutting back elsewhere. I'd pay €72 a month for a cleaner by cutting back on something else.

Reigning in on the holiday spending would go a long way to solving the OP's saving dilemma.

I echo Sarenco's sentiments - they aren't poor (just disorganised financially).

Keep the cleaner OP ....


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## Laughahalla (19 Feb 2019)

The cost of a cleaner alone would pay for their childrens college education if that money was invested in a good mutual fund for the past few years until they are at college age.
They may or may not be working in a few years. Now , while they are in employment they should be securing their future not spending it like they are wealthy already employing a cleaner.

The goal should be to be debt free as soon as possible, once debt free invest so that their wealth grows so they are comfortable in retirement and not dependent on the state pension. ( Assuming it's still there by the time they retire)

A couple of years forgoing some luxuries would really fix their family future financial situation for the better.


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## Sarenco (19 Feb 2019)

Laughahalla said:


> The goal should be to be debt free as soon as possible, once debt free invest so that their wealth grows so they are comfortable in retirement


I disagree - it makes no sense to prioritise paying down a mortgage @ECB+0.5% over maximising all available pension relief.

In this case, the annual cost of the cleaner only represents 1% of the OP's gross household income.  That may well be a worthwhile expense if it frees up time to earn a higher income elsewhere, help kids with homework, pursue hobbies, etc. 

The real goal, IMO, should be enjoying a reasonable lifestyle today, while also adequately providing for the future.


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## huskerdu (19 Feb 2019)

Lads, lads, lads. No need to disagree here. 

We are all agreed that the OP needs to cut excessive spending. 
I think they know this themselves. 

Once they have organised their spending, and being sensible about spending/saving and pension contributions, if they want to spend some money on luxuries, they are entitled to. 

Its completely a personal decision if a cleaner is worth the money or not ( For some people its an appalling extravagance, for some its worth the money as frees up time in the evenings for important things like spending time with kids and avoid rows between tired, cranky parents). 

(We all know people who would scoff at the extravagance of having a cleaner but have expensive car loans for unnecessary new cars).


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## cremeegg (19 Feb 2019)

Shellzey said:


> value of home: €250,000
> Mortgage left €115,000
> Mortgage was low tracker with NIB 0.5% over ECB, *now with Pepper Finance *
> Approx 12 years left
> Repay €700 per month



What does this mean. Other posters seem to have taken it that you are on an ECB +0.5% rate, but is this still the case. Unlikely with Pepper.


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## so-crates (19 Feb 2019)

cremeegg said:


> What does this mean. Other posters seem to have taken it that you are on an ECB +0.5% rate, but is this still the case. Unlikely with Pepper.


Well spotted! Hadn't considered that sentence fully.


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## MangoJoe (19 Feb 2019)

They should rip out all of their carpets as they are also an unnecessary luxury.

They should then use the more easily maintained bare concrete floors to negotiate a 10% discount with the Cleaner.....

Also where did the 9k take ye? - Was it one mega trip or 52 weekends away?!

Best of luck with the financial planning - As others have said you are not in a bad place at all.


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## RedOnion (19 Feb 2019)

cremeegg said:


> What does this mean. Other posters seem to have taken it that you are on an ECB +0.5% rate, but is this still the case. Unlikely with Pepper.


Pepper are just a loan servicer for the Danske portfolio that was sold. There is no change to the mortgage contract. So it would still be +.5%


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