# How to get into a good saving habits?



## SunnyT (5 May 2017)

Age: 37
Spouse’s/Partner's age: N/A

Annual gross income from employment or profession: €62,000
Annual gross income of spouse: N/A

Monthly take-home pay: €3,300  (plus €1000 rental income)

Type of employment: PAYE

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

Rough estimate of value of home €220,000
Amount outstanding on your mortgage: €287,000
What interest rate are you paying? Have a tracker rate of 1.25% above ECB

Other borrowings – car loans/personal loans etc
Overdraft on my current account of €500
Credit Union loan of €12,000 which paid for a mobile holiday home

Do you pay off your full credit card balance each month? 
Don’t have any active credit cards
If not, what is the balance on your credit card? 
I have an outstanding credit card balance with Tesco of €1500, the interest is frozen on it and I have not made any payments in circa 3 years, I get a monthly statement from them but have not had any letters or calls demanding payments so have concentrated on clearing other loans

Savings and investments: €1300 in the credit union where I have my loan

Do you have a pension scheme?  Yes PRSA scheme

Do you own any investment or other property? 
I currently rent out my apartment and live with my parents, net rental income is circa €1000 per month

Ages of children: N/A

Life insurance: Mortgage protection and 4 x times salary through my pension scheme

*Monthly Outgoings*
Mortgage  900
Rent  600
Management Fees  100
Credit Union loan  350
Property Tax  20
Life Assurance  50
Phone  40
Car Tax  36
Car Insurance  41
Site fee  200

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


I moved out of my apartment and back with my parents when the recession hit and I was unemployed for a while, it has taken me a few years but I have now built back up my career and am earning decent money again. I now have much more disposable income than I ever had but am spending pretty much everything I have and having a great time again ha! I have had a couple of unexpected expenses recently (dental work and a new boiler) so that has wiped out the small amount of savings I had built up since last year.

I pay my parents €600 per month which covers bills / food etc so I don’t have any monthly utilities as such. I probably spend about €2k pa on holidays which are important to me.

Within the next 12 - 18 months I would like to be able to change cars and be in a position to move back into my apartment having refurbished it (it has been rented out for 6 years so will be starting from scratch again). I'm not in any immediate hurry to move out of my parents house (for various reasons it suits us all for me to be home at the moment, but don't want to be there forever and my single status doesn't look like changing any time soon!!)

What I would like to know is

-How much should I be aiming to save monthly and where should I save it?

-Should I aim to save money to buy a car outright or put cash into clearing my credit union loan and then organising to buy a car through HP / PCP finance. My current car is over 10 years old and worth about €3k. I am doing a lot more driving in my current role so would like to purchase a 3-5 year old car ideally so I’d imagine I would need circa €15k.

-What should I do about the Tesco credit card – I got an ICB report about 8 months ago and it was showing on that, but they haven’t chased me to pay it so I have spent the past couple of years clearing off other arrears on my mortgage and credit cards.

-While the credit union have lent me money over the past couple of years I do have a bad credit history, would this prevent me from obtaining car finance?

Thanks in advance for any suggestions


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## PaddyBloggit (5 May 2017)

SunnyT said:


> -What should I do about the Tesco credit card



Pay it ... it's not a lot based on what you are earning .... when you pay it I'd pay it off in one lump sum and be done of it.

You owe it ... it won't go away.


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## SirMille (5 May 2017)

When it comes to saving, pay yourself first, i.e. the moment you get your money, carve out the saving piece and move it somewhere else. Transfer it somewhere inconvenient, that would require you to go there physically to get at it, i.e. a safety deposit box.  Then pay your rent and other big items, what's left is yours to spend as you please.

Works for me, your mileage may vary.


Don't waste money on cars, unless your ten year old car is a maintenance issue, keep it until the wheels fall off, cars are a vanity item. They are not an investment, they are not an asset, they are a massively depreciating liability. Definitely don't buy new! All run of the mill makes lose half their value in 3 years


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## Boyd (6 May 2017)

Hi SunnT, welcome to AAM!

I agree with the previous posters, re car and Tesco card.

There is no point having money on deposit at about 1%, and having credit card debt over your head. First thing on Monday, go down to Credit Union and withdraw the E1200 and pay it off the Tesco card, along with E100 quid to clear the Tesco card. Cut up said Tesco card. Priority 1 is that.

In my opinion, priority 2 is clearing the Credit Union Loan.
You're on good money, so we should be able to build up savings, especially when living at home for E600 per month. I'm slightly confused as to what you are trying to being saving for though? You have no emergency fund listed, but are planning on spending E15K on a car, and refurbishing your apartment. Most people on here would suggest you should have 3-6 months savings as emergency fund before buying stuff like that. As I said, agree with previous poster, do not buy a E15K car. Money down the drain.

You currently have E3300 coming in and £2250 going out, so about 1K left over per month. Considering that you have no living expenses after the E600, you basically have E250 per week of purely disposable income, if you spent every penny. Could I make a suggestion of saving E250 of that every month, you'd save E3K per year. That would still leave you with E750 / 4 = 187.50 per week disposable cash. If you did this and used the E3K to reduce loan, along with paying the E350 per month you are currently paying, you'd have your load cleared in under two years. This would free up even more cash, as you would be payment AND interest free.

Regarding your spending, what is "site fee" at E200 per month? This is a huge outlay per month, I have no idea what this mean, can you explain?

I don't see anything listed for where you get E2K for holidays? Is this further eating into the 1K you have per month after bills? I'd be looking to reduce that drastically for the next two years if I were you. Also, do you really need a mobile holiday home? I'd be selling that also.

Life Assurance at E50 per month seems expensive. Is this separate from your mortgage protection? If so, why are you paying life assurance on top of mortgage protection, if you have no dependents? I also think your mobile phone package is expensive. You can easily reduce this by 50% by switching provider. Mine is E10 per month with www.48months.ie (ignore 18-22 year old tagline, its only marketing gimmick).

Finally, having an overdraft facility of E500 on your current account is a bad idea, for two reasons. 1. If you need the overdraft, then you have bigger problems of money management that are not listed here. 2. If you are not using it (which I hope!), then you are most likely paying a fee for same. Call your bank and ask them to cancel this facility.


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## SunnyT (6 May 2017)

Hi thanks for the replies and suggestions so far.

To answer some of your questions

With regard the Tesco credit card I absolutely intend to clear it in full just unsure as to whether I should start paying a smaller sum monthly or wait until my savings have built up and clear it in one go. As previously mentioned the interest is frozen on it and the card itself was cut up years ago. I can't withdraw the money from the Credit Union as I have my loan with them.

The site fee of €200 pm refers to the fees for my mobile holiday home, there is no question of me selling this btw, having somewhere to escape to has kept me and my family sane through some tough years!

The Life assurance for my mortgage of €50 is expensive as I have a pre existing condition.

Username123 I think you missed the part where I have an extra €1000 in rental income per month so my NDI is nearer to €2k per month so i can definitely afford to be saving upwards of €1k per month

I have already changed my mobile phone plan so that will be reducing to circa €25 pm from next month.

The €2k for holidays I just tend to use my monthly salary for, I don't save a specific amount any month and actually I probably spend more than that in reality. Travelling and holidays are really important to me. 

I know I am a spender rather than a saver and I like to enjoy the nice things in life so I'll probably never change that completely, I hear what you are saying about building up an emergency fund, I know that's important as I had started to do that at the beginning of this year and sure it's already had to go on emergencies!! 

I think I need to put my savings somewhere I can't access them, if the money is in my bank account I know I will find something to spend it on, even the thoughts of just having money lying around makes me feel anxious - I prefer the thoughts of saving for something specific. 

It's strange, I've just always been used to having debt so i know I can survive on literally less than half of what I'm earning now. Having debt doesn't scare me as I know I can repay loans but having money/savings does!


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## Boyd (6 May 2017)

Hi,
Yes, I totally missed that! At that rate, at 2K per month you have plenty of disposable cash to handle your situation. Personally I would pay off Tesco immediately, in full, using E1300 from this months NDI, just to get it paid off. Then, I would use similar approach to overpay CU load and be clear of that in about a year.

Once debts are cleared, why dont you increase your pension contributions? That is a very good form of saving, and you cannot access that cash on a whim.

I still wouldnt buy a car for E15K though!


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## Sarenco (6 May 2017)

SunnyT said:


> I have an extra €1000 in rental income per month



Is that an after-tax figure?


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## SunnyT (6 May 2017)

Yes that's net rental income after tax


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## Sarenco (6 May 2017)

Good stuff.  

I really just wanted to make sure you were putting a sufficient amount aside to meet the tax bill on your rental income - it often comes as a shock to "accidental landlords".

More generally, I would agree with other posters that you should focus on clearing your existing consumer debts as soon as possible.


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## Buddyboy (8 May 2017)

SunnyT said:


> I know I am a spender rather than a saver and I like to enjoy the nice things in life so *I'll probably never change that completely*, I hear what you are saying about building up an emergency fund,
> If the money is in my bank account *I know I will find something to spend it on*, even the thoughts of just having *money lying around makes me feel anxious*
> Having debt doesn't scare me as I know I can repay loans *but having money/savings does*!



And there is the answer right there.
Having seen these threads appear on a regular basis, and having  followed them through their convoluted path, here's my prediction.

You will get loads of good advice here, and all of it will be of the same general tone - pay down debt, have an emergency fund, don't buy depreciating assets. Start saving somewhere you can't easily touch it.

But until you address the mind-set above, none of it is going to make a difference.

Please don't think I am being nasty or unhelpful. I want to help, and my advice is if you _really_ want to change, you will have to address your relationship with money, savings and debt (and instant gratification).  Good luck.


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## DeeKie (10 May 2017)

Buddyboy said:


> And there is the answer right there.
> Having seen these threads appear on a regular basis, and having  followed them through their convoluted path, here's my prediction.
> 
> You will get loads of good advice here, and all of it will be of the same general tone - pay down debt, have an emergency fund, don't buy depreciating assets. Start saving somewhere you can't easily touch it.
> ...


Good advice. You ask how you start the habit. Once you have cleared your debts, set up you rainy day fund then open a savings account with a notice period for withdrawal and set up a direct debit. Also don't leave your rainy day fund in your account you use daily. Identify a luxury that you can do without and cut it out.


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## thedaddyman (10 May 2017)

3 things to do here

dd/standing order into a savings account you can access easily in case of emergency
dd/standing order into a savings account you can't access easily so you won't be tempted to spend it
start a "penny jar". Chuck whatever coins are in your pocket at the end of the day into it. I've saved €850 over 2 years doing that. Teller in the branch did hate me when I came in with it all but they accepted it, just check with your branch as sometimes they will only accept large volumes of coins on certain days


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