# Saving too much?



## YoYo (29 Jul 2008)

Age: 32
Spouse’s/Partner's age: 34

Annual gross income from employment or profession: €65K+ (Private)
Annual gross income of spouse:€30K (Self Employed)

In general are you spending more than you earn or are you saving? Yes

Rough estimate of value of home €265K
Amount outstanding on your mortgage: €135K
What interest rate are you paying? 5.94% Variable (Also over pay mortgage by €500pm)

Other borrowings – car loans/personal loans etc - None

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:
€41K Savings (4 Accounts)
€15K Bond
€6.5K Shares
€12K Quinn Life

Do you have a pension scheme? Yes - Contributing €500 pm

Do you own any investment or other property? No

Ages of children: 1 Child Aged 2

Life insurance: Yes


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

We feel that we are squirling away a huge chunk of our income (around 30%) on savings, pensions and the mortgage overpayment. Our financial plan is very longterm - mortgage freedom and having enough put aside for our child. Short-term this leaves us very little room for luxuries / lifestyle. We are feeling very constrained. We would appreciate the perspective of those 10-15 years ahead of us, perhaps with teenage children who could give us the benefit of hindsight. We are in the creche paying phase of our lives, four years into our mortgage. Are we trying to do too much too soon or are we just being sensible giving the changing climate. We have both been through redundancy in the past and need a safety net should it happen again.


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## SarahMc (29 Jul 2008)

Personally I think you are being too frugal, but its all subjective.  

If you are feeling constrained, even though your mortgage is under control, you have a safety net and can meet your monthly obligations and some, its time to free some of that money for luxuries.


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## Newbie! (30 Jul 2008)

I think you are being very sensible about the future and you're already in a financial place where alot of us would love to be. BUT remember to try and live for the now as well. Who knows how long we'll all be on this planet, so enjoy life. If there is a gig you really want to go to..go! If there is a holiday you really want, take it! You probably wouldnt need to change your savings plan too dramatically to enjoy your life in the here and now.


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## Mpsox (30 Jul 2008)

It's difficult to say when we don't know how much you are saving a month. However, you are in a good position, and have savings which are more then half your mortgage

Why not put 10% of what you save into a "luxury" fund and rather the flittering it away, save for something good every year. Alternatively, why not simply reduce your savings by a few bob and go to a gig or a match or out to dinner a couple of times a month

Whilst you are right to think long term, you can't take it with you


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## mell61 (30 Jul 2008)

I think you are being very sensible, but I do think you might want to review your current mortgage set up, as you appear to have a good 'loan to value' balance.    So you could continue to pay the same basic amount(excluding over payments) and cut some time off, NIB are currently offering approc 4.88% on their website tracker, ECB + xx%.    We moved to them a year ago and kept our same level of repayments, but managed to cut 4 years off the term.
You seem to have a good nest of funds easily available, if you needed it (ie living expenses can be covered for a good period of time), so perhaps its time to investigate investing in equities for the longer term (usual mantra on equities is don't use money you won't need for next 3-5 years).
You advise that you are insured, but maybe you should recheck your level of coverage in case anything has changed since you set it up (is the self employed reent, have you factored in your child and his/her needs, has your coverage grown in line with your salaries...).
What about checking into setting up saving plan for your child, for future educational needs, who knows if 3rd level will be free or not in 15-20 years time!
Best of luck.


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## anon473 (30 Jul 2008)

Its nice to see people on the other end of the makeover scale occasionally!

I agree with the other posters that while your long term goals are very sensible, it might be nice to spend a little bit more on the short term things (you obviously feel something like this otherwise you woulndt have posted the question)

The only thing that i would add is that you have said that you have 41k in savings accounts. Given that we dont have enough information to advise properly and that you also have some diversity (Good thing!) with the bonds and shares etc. You still have a large amount in savings accounts which may not be ideal for long term savings
Look at the key posts in the savings and investments section http://www.askaboutmoney.com//showthread.php?t=6606
and in particular the guide to investement http://www.askaboutmoney.com/guide/index.htm
The savings accounts seem to me to be for the short term safety net (which is understandable) while the bonds and shares are long term investments. 41k in short(ish) term savings seems high to me and if i had those levels of savings I would probably want to change the ratio of short to long term savings (My kids are 3 and 1 so we are no further on than you with considerably less savings)

Still - congratulations on being in a financially sound state of mind!
Anon473


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## annR (30 Jul 2008)

We're in a similar type position - happy with our finances and savings - except have an even bigger proportion of our savings in deposit accounts.  This is mostly because despite my efforts I still don't understand how it works or where to start with investments    In the meantime we decided to leave it be until after I give birth to our first (soon).  Also we will want to trade up in next 5-10 years and thought we should have a decent wodge of cash available for that.
We have been aggressively overpaying our mortgage as well and I also think you should be able to get a better rate - you should do it quickly in case NIB withdraw their LTV offerings as AIB did for new customers.

Otherwise all I can suggest is what we are currently doing - looking into life assurance and also reviewing mortgage protection insurance in light of the reduced capital.



> Short-term this leaves us very little room for luxuries / lifestyle. We are feeling very constrained.



I presume you're both in good health.  I don't mean to sound morbid, but you never know what will happen from a health point of view and if that happens you will feel really constrained and with no control over it either.   You can afford to live a little (get a better mortgage rate and it won't even cost you).  Take that holiday, enjoy yourself.  You sound pretty frugal so it probably wouldn't cost the earth for you to treat yourself a little


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## ClubMan (30 Jul 2008)

annR said:


> despite my efforts I still don't understand how it works or where to start with investments


If you mean after reading material here and on www.itsyourmoney.ie etc. then you should probably consider getting professional advice.


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## YoYo (30 Jul 2008)

Thank you all for taking the time to reply.
The trigger for our post was that we looked this week at maybe buying ourselves a new car and had the shocking realisation that we could probably not afford it if we were to pay for it (over 3-5 years) out of our monthly income. 
We have a modest lifestyle, but do manage to eat out, have a holiday etc. It was just that we thought that by living within/below our means that if we ever wanted to buy a bigger house, get a new car etc. that we could do so easily. The reality of it was a bit hard to get our heads around.

Mell61 - that is very interesting about the tracker mortgage. I will investigate this. Our insurance is appropriate. We revisited this recently.
We have two savings schemes in place for our child - A Quinn Life Fund - to cover us for college etc. and short-term a high interest savings account.

We will take on board advice received from a number of you regarding rejuggling our savings into perhaps more longterm schemes.


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## mell61 (31 Jul 2008)

YoYo,
if you do move mortgages and this frees up some cash (if you stay on current mortgage term), why not open a small 'fun money' account, one for weekends away, special meals out, redecorating, etc....  YOu don't have to spend it every month, but if something comes up you have this money available and not biting into your other savings and commitments.
I think you are being very sensible, but build yourself a small degree of flexability.    
The past decade moved the bar for a lot of people, we're all expected to have it all, without ever looking at the consequences - Generation _'cause we're worth it!_
Maybe you can't commit to that new car this year, but looking at your finances as per your posting, you're miles / kilometers ahead of a lot of people who are in their fab new '08!


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## theoneill (31 Jul 2008)

I agree and I would love to be in your position. Regarding the car why not wait a year and buy a newsed 08 that will avail of the new motor tax regime? The fun money account is a great idea; maybe move 5 or 10% from your savings to an account with high interest yet is easy to access.


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## Mumha (12 Aug 2008)

I can't understand why people feel the need to buy a new car anyway. I do buy a new car but only because I qualify for the Ford "docket" (discount) through my uncle. Otherwise I would be buying a 2 or 3 year old car.

I should add that there is massive value in buying 2nd hand cars at the moment.


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## YoYo (19 Jan 2012)

Wow - I am gobsmacked!
I just logged in today to ask a question on a completely different topic and found that this was my last post.
If I only had a crystal ball back in 2008.  Just to update and as a cautionary tale - 6 months after I posted this I lost my job.  I was out of work for nearly 2 years.
Working again but our income is 1/3 of what it was 4 years ago.  Still the cushion of savings is what got us through and continues to get us through.
Glad we didn't buy the new car!


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## Knuttell (19 Jan 2012)

YoYo said:


> Mell61 - that is very interesting about the tracker mortgage. I will investigate this.



Did you change from a SVR to a Tracker?


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## Jim2007 (19 Jan 2012)

YoYo said:


> Still the cushion of savings is what got us through and continues to get us through.
> Glad we didn't buy the new car!



As the Swiss always say: "You can never have too much savings" and "Why buy it new if you can get it at the second hand shop"!!!!!


Jim2007 (Switzerland)


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## YoYo (19 Jan 2012)

Knuttel  - we made no change to our mortgage, on a SVR with PermTSB - 5.19%


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## Newbie! (27 Jan 2012)

It's nice to see someone report back on their financial situation after a 3.5yr period. Good to hear you're back working again!


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## Bronte (27 Jan 2012)

YoYo said:


> Wow - I am gobsmacked!
> I just logged in today to ask a question on a completely different topic and found that this was my last post.
> If I only had a crystal ball back in 2008. Just to update and as a cautionary tale - 6 months after I posted this I lost my job. I was out of work for nearly 2 years.
> Working again but our income is 1/3 of what it was 4 years ago. Still the cushion of savings is what got us through and continues to get us through.
> Glad we didn't buy the new car!


 
You are one of poster boys of how to do it right.  Very interesting to see how you got on.  Interesting that the original redundancies had given you the life experience to save knowing what can come down the road and how voila you're doing great.   And no you were not doing too much too soon.  But you must learn later in life when things get easier to let go a bit more.  

In relation to cars, you were so right, I've only had one new car (current one 6 years old now) but it was cheaper than second hand and came with a zero interest loan so it made financial sense.  

Jim from Switzerland sum's it up quite well.  But nobody was listening during the boom.


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## mark1 (27 Jan 2012)

Jim2007 said:


> As the Swiss always say: "You can never have too much savings" and "Why buy it new if you can get it at the second hand shop"!!!!!
> 
> 
> Jim2007 (Switzerland)



I love it, maybe we should all move there,I was just chatting to a friend yesterday who has a second hand catering equipment business he started 3yrs ago and he is run off his feet and I was saying to him if he had been in business 5 or 6 yes ago nobody would have looked at it


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