# Financial Advice for a Couple



## mozzer (5 Dec 2019)

Age: 48
Spouse’s/Partner's age: 46

Annual gross income from employment or profession: €83, 000
Annual gross income of spouse: Wife - €48,000

Monthly take-home pay - €7000

Type of employment: Both in Public Service

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving – but not much at this stage.

Rough estimate of value of home - €270,000
Amount outstanding on your mortgage: - Roughly €150,000
*What interest rate are you paying? – *Tracker Rate 0.5%

Other borrowings – car loans/personal loans etc
Spouse has a car loan of €15000

Do you pay off your full credit card balance each month?
Me - Yes
Spouse - No

If not, what is the balance on your credit card?
Spouse – Balance of about €5,000

Savings and investments:
Small Emergency Fund of about €8,000

Do you have a pension scheme?
Yes – Both in Public Service Pension Scheme

Do you own any investment or other property?
No

Ages of children:
One child – 11 years old

Life insurance:
Have Mortgage Payment Protection.
Public Service Death in Benefit of 1.5 times salary for both of us.
Extra Life Insurance Policy for husband of twice salary.
Both have Income Continuance Plan in place.

*What specific question do you have or what issues are of concern to you?*
Wife wants to retire at 60 but won’t have enough service, will need to top up on AVCs unless someone thinks of alternative approaches?
I’m not happy with the amount of money in the emergency fund, and also not happy just having the money sitting in a low interest paying account.  What are the views on amount of money required and how accessible it should be?
How much should we be saving as a % of income?
What short term and medium term improvements do you think we should make to improve finances overall that would allow for early retirement for wife?
What are the views on paying extra on the mortgage and clearing it earlier?
Any particular products that we should look at to save for child's college education?


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## Alkers86 (5 Dec 2019)

Something doesn't add up, where does all your money go?
You've €7k take-home each month, those mortgage repayments are surely very manageable? How long is left on the mortgage?
You need to start keeping track of your spending so that you can assess where your money is going. 
You both have secure jobs so I don't think there's any great need for a emergency fund any bigger than you have, especially as you have income protection, life insurance and mortgage protection in place.
Your immediate priority should be repaying the credit card loan (I would use some of the emergency fund) followed by the car loan.
I'm not familiar with public sector schemes but have you made any AVCs? You could look for advice on here as to what your pension entitlements will be at different ages given your current salaries and careers.
Do you have health insurance?


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## Boyd (5 Dec 2019)

mozzer said:


> What are the views on paying extra on the mortgage and clearing it earlier?


To me this makes little sense with 0.5 percent tracker and combined high interest E20K loans. Pay your loans ASAP.


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## mozzer (5 Dec 2019)

Thanks Alkers86,

Where does the money go?  -  Just to give some background, we foolishly ran up significant credit card debt some years ago.  Our fault and we've learned from it.  The balance now is significantly less than what we owed.

Mortgage repayments are very manageable.  16 years left on the mortgage.  I would like to clear it in 10 but am unsure if that's wise with college to be paid for and also because we have the benefits of the tracker rate.

Re keeping track of spending - one of us is good at that and will work on both of us in the new year.

Thanks for the advice on the emergency fund.

We'll look at knocking a good chunk off the credit card debt.  The car loan has just really been taken out, lst car was on its last legs.  We intend to keep this car for 10 years if possible and clear loan in less than 4 years.

Wife started contributing to AVCs and paused.  She will revisit this soon so she can retire early.  I myself am quite content to continue working and retire in my mid 60s with a full pension.

We have health insurance also.


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## Firefly (5 Dec 2019)

mozzer said:


> Type of employment: Both in Public Service
> Small Emergency Fund of about €8,000
> If not, what is the balance on your credit card?
> Spouse – Balance of about €5,000
> I’m not happy with the amount of money in the emergency fund



Hi mozzer,

You are both in the Public Sector so you're income is more or less guaranteed for life. 

1st thing I would do is pay off the credit card & the 2nd thing is cut it up....you should not need a credit card on your net pay. 

Firefly.


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## michaelm (5 Dec 2019)

mozzer said:


> I myself am quite content to continue working and retire in my mid 60s with a full pension.


But 12 years hence what will you think?  In your position I do out a budget, moderate spending, aggressively tackle non-mortgage debt and pile into AVCs.  I'd want to be in a position such that I could retire at 60 if I wanted too at that time.


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## mozzer (5 Dec 2019)

michaelm said:


> But 12 years hence what will you think?  In your position I do out a budget, moderate spending, aggressively tackle non-mortgage debt and pile into AVCs.  I'd want to be in a position such that I could retire at 60 if I wanted too at that time.



Thanks MichaelM,

Very good point.  I plan to revisit this on an almost annual basis i.e. see if I still have the appetite to work until mid 60s.  I like my work a lot and also appreciate the fact that it's not physically demanding.  I'm aware of the tax relief available on AVCs and if/when the time comes where I'm looking to retire earlier, I will look at making a lump sum AVC contribution.  I'm also quite conscious of the possibility of over contributing on AVCs and basically losing out financially.

On the budget advice, yes you're very much on the money with your advice.  The non-mortgage debt starting with the credit card will be addressed first.


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## KOW (5 Dec 2019)

mozzer said:


> Age: 48
> Spouse’s/Partner's age: 46
> 
> Annual gross income from employment or profession: €83, 000
> ...





mozzer said:


> Age: 48
> Spouse’s/Partner's age: 46
> 
> Annual gross income from employment or profession: €83, 000
> ...





If this is not a wind up.

1. Your spouse could look at buying service in order to get out at sixty. My wife is currently doing this and has been for the past 10 years. Contact HR and they will give you the figures.

2. Say Mortgage is 1250. Car repayment 400. Food and bills 1100. Petrol insurance etc lets just say 1250. Total 4000 and that is not going easy.
Where is the other 3k going.

3. You state one of you is good with money. Both heading towards 50 years of age and you owe 12k.         15+5-8=12 
So in your mid to late 40,s you have not put a penny away. One wage is over double the average industrial wage and the second 6k over the average industrial wage.

4. Unless your leaving something major out how could you not clear credit card balance in two months.?

5. After paying your mortgage your probably are left with 5750 or over 1400 per week.

6. Again if this is not a wind up you Both need to talk to a financial adviser/planner.


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## county (5 Dec 2019)

Can you give us a breakdown of your combined monthly spend as I cannot reconcile your net monthly income to what you have in accumulated savings and racked up in debt.

Get the credit card debt cleared asap and use debit card or prepaid cards in future.


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## Steven Barrett (6 Dec 2019)

From the information provided, I would say that either your wife or both of you are a bit loose with your spending. You earn decent money, you were always in a pension scheme, one child (lots of children are expensive). In today's consumer driven world where online ads are constantly trying to get us to buy stuff, I suspect that the ads are clicked on a bit in your household as the money was there. 

Now here's the thing, you have a combined income of €131,000 and your lifestyle is more or less based on that level of income. Full public service pension will be €65,500 and it will be less if your wife takes early retirement. That's a big drop in income. 

What you have to do is reduce how much your lifestyle costs and save the rest. Putting the money into AVC's will put it out of the way where it can't be accessed. You will then adapt to living on a lower income so when it comes to pension age, the money you get will be enough to pay for your lifestyle. 

On budgeting, know how much it costs to run the house and big ticket items like holidays, expenditure for your 11 year old (school and activity stuff) A lot of the other stuff is discretionary, you can live without a new pair of shoes. Then decided how much you are going to save each month and put that away the day you are paid. It doesn't matter if it's in AVC's or something else, it's a bill like your electricity bill. Once you have your monthly savings done, your household bills paid, you can spend the rest on whatever you want. 


Steven
www.bluewaterfp.ie


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## Protocol (6 Dec 2019)

Ye earn 131k.

We used to earn 56k.

From that I had four mouths to feed, mortgage, car, and I saved 700 pm.  I had 60k-100k built up.

Where did all the money go?


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## mozzer (6 Dec 2019)

KOW said:


> If this is not a wind up.
> 
> 1. Your spouse could look at buying service in order to get out at sixty. My wife is currently doing this and has been for the past 10 years. Contact HR and they will give you the figures.
> 
> ...



Thanks KOW,

I know that it looks strange, but it's not a wind up.

On point 1, I'll ask wife to look into the buying service option and compare it to AVC purchase.

On point 2, you're definitely right.  We need to get a handle on where our money is going. 

On point 3, you're right again.  My thinking is we get a handle on this now and we still have a good solid income coming in every month and we start putting money away properly and consistently every month.

On point 4, again you're right, there's no reason to suggest that we can't suck it up for a few months and clear the credit card.

Point 5, again you're right.

Point 6, we will look at setting up a meeting with a financial adviser in the new year.

I appreciate your feedback and although it makes for uncomfortable home truths, I'm glad to take it on board.  Thank you very much.


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## mozzer (6 Dec 2019)

county said:


> Can you give us a breakdown of your combined monthly spend as I cannot reconcile your net monthly income to what you have in accumulated savings and racked up in debt.
> 
> Get the credit card debt cleared asap and use debit card or prepaid cards in future.



I will endeavour to clear the credit card as soon as possible.

Getting to grips with the reality of the monthly spend can be  a challenge as although one of us is mindful of finances, the other is not.  I don't want to be too critical as my partner is super in everything other way.  But we need to control our finances now.  I will carry out a full breakdown of monthly spend in the coming weeks.

Thank you for your feedback.


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## mozzer (6 Dec 2019)

SBarrett said:


> From the information provided, I would say that either your wife or both of you are a bit loose with your spending. You earn decent money, you were always in a pension scheme, one child (lots of children are expensive). In today's consumer driven world where online ads are constantly trying to get us to buy stuff, I suspect that the ads are clicked on a bit in your household as the money was there.
> 
> Now here's the thing, you have a combined income of €131,000 and your lifestyle is more or less based on that level of income. Full public service pension will be €65,500 and it will be less if your wife takes early retirement. That's a big drop in income.
> 
> ...



Thank you Stephen,

One partner is ok with money, the other is not, that's the reality.  Good point on the significant drop in income when retirement happens.  I agree with the approach you suggest and will encourage my partner to take on board the advice.

Thank you for taking the time to offer advice.


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## mozzer (6 Dec 2019)

Protocol said:


> Ye earn 131k.
> 
> We used to earn 56k.
> 
> ...



Thanks Protocol,

I know looking at your approach, we have no excuse for not being able to build up a significant pot of money.  I intend to tackle this now head on.

On your question where did all the money go, well I'll admit that we got caught up in the "spend money on the never never" during the Celtic Tiger and have spent the last 3 to 4 years chipping away at reducing a very large debt.  

Thanks for the feedback.


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## noproblem (6 Dec 2019)

Hope there's no gambling or similar going on, I know you told us you had previous disasters? As for you going to look into it and see how to get a handle on things? I suggest you get a 3rd party because you 2 are probably lovely people but you're also "for the birds" as they say. There's no way I'd believe there's people like you guys out there, but having watched a few of the money makeover programmes earlier this year on RTE and seen for myself the total absurdity some educated people have of their financial position I'm not a bit shocked anymore.


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## Alkers86 (6 Dec 2019)

A lot of the above reads very critically and while I'm not saying it isn't warranted, don't be too disheartened.
Given your income, you should be able to drastically improve your situation in a matter of months rather than years.
With your credit card and car loans repaid, you should still have sufficient discretionary expenditure remaining to have a very high standard of living, even if you start making AVCs. Your mortgage is very cheap so personally I wouldn't worry about overpaying it particularly until you get a handle on teh rest of your finances.


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## Bronte (6 Dec 2019)

mozzer said:


> Thank you Stephen,
> 
> One partner is ok with money, the other is not, that's the reality.  Good point on the significant drop in income when retirement happens.  I agree with the approach you suggest and will encourage my partner to take on board the advice.
> 
> Thank you for taking the time to offer advice.


I find your response to be a bit blase.  Before you go near a financial advisor you need to get a grip on the finances.  That means listing your monthly outgoings - with your partner.  If this means a row, then by all means have a row.  Because a heck of a lot of money is going somewhere down the drain.  Drastic action like cutting up the credit card is needed.  A family budget must be created.  Savings need to come directly out of the wages the minute they come in.  Initially directly off the credit card debt.   

As to where the money is going, it's anything from gambling to clothes shopping.  Could be outragous holidays too. Or spending an absolute fortune on Christmas.  And I suspect you know exactly what it is.  If it's 'stuff' sell it.  And pay off the credit card.  

If you don't get to grips with this you both are in for a big shock when your incomes drop in retirement.


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## KOW (6 Dec 2019)

After dropping the bomb.

1. When you both qualify for pension say at 65 ( if not before as your spouse hopes to do) you really have full wages for 5 years after retirement.
What I mean by this as public servants you should get tax free lump sum of 1.5 times annually salary. Add that to your pension of half your yearly salary and taking tax into consideration in a effect for the first 5 years of retirements you will have the same income as if you were working. Great.

2. While many might disagree it is great to get rid of any type of Mortgage. If you were to pay an extra 1000euro per month off your mortgage by the time your child goes to college you would not have a mortgage.

3. Save another 1000 per month and in ten years you have at least another 120k added to those great pension. Easily done? Happy days.


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## mozzer (6 Dec 2019)

Bronte said:


> I find your response to be a bit blase.  Before you go near a financial advisor you need to get a grip on the finances.  That means listing your monthly outgoings - with your partner.  If this means a row, then by all means have a row.  Because a heck of a lot of money is going somewhere down the drain.  Drastic action like cutting up the credit card is needed.  A family budget must be created.  Savings need to come directly out of the wages the minute they come in.  Initially directly off the credit card debt.
> 
> As to where the money is going, it's anything from gambling to clothes shopping.  Could be outragous holidays too. Or spending an absolute fortune on Christmas.  And I suspect you know exactly what it is.  If it's 'stuff' sell it.  And pay off the credit card.
> 
> If you don't get to grips with this you both are in for a big shock when your incomes drop in retirement.



I don't mean to across as blase about this at all.  I agree with the points you've made and intend to have them addressed.


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## mozzer (6 Dec 2019)

Deleted - Duplicate Post.


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## mozzer (6 Dec 2019)

KOW said:


> After dropping the bomb.
> 
> 1. When you both qualify for pension say at 65 ( if not before as your spouse hopes to do) you really have full wages for 5 years after retirement.
> What I mean by this as public servants you should get tax free lump sum of 1.5 times annually salary. Add that to your pension of half your yearly salary and taking tax into consideration in a effect for the first 5 years of retirements you will have the same income as if you were working. Great.
> ...



Thanks Kow,

I'm very keen that we both don't  have a major lifestyle change when retirement happens.  Honestly, my partner is super, just not good with finances.  I'm at fault as well with a "sure we'll be grand" approach for too long.  Getting a handle on finances now will mean we can still have a nice comfortable life, prepare for the kid's college journey, build up a fund for later in life.

Having the mortgage cleared by the time our kid goes to college would be a major relief.  Mortgage and college cost at the same time is something we can't sleepwalk into.

Like Bronte said earlier, I intend to encourage both of us to put money into savings as soon as the wages come in.  120K savings fund is worthy of the effort.


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