# Help me be a stay at home mum



## hiagain (4 May 2011)

*Age:*
34
*Spouse’s/Partner's age:*
39

*Annual gross income from employment or profession:*
0
*Annual gross income spouse:*
€42,000

*Type of employment:*
Private sector

*Rough estimate of value of home*
Renting at €700 per month, but have investment property (see below)

*Other borrowings – car loans/personal loans etc*
None
*
Do you pay off your full credit card balance each month? 
*No
*
If not, what is the balance on your credit card?* 
€1600 on other

*Savings and investments:*
€128,000 earning approx 2.1% with Ulster Bank

*Do you have a pension scheme?*
Yes, partner pays approx €115 per month

*Do you own any investment or other property?*
Yes.  Value approx €130,000.  Mortgage approx €95,000.  Interest rate 1.95%

*Ages of children:*
3 and 6 months

*Life insurance:*
Yes on property only

*What specific question do you have or what issues are of concern to you?
*How realistic is the budget below?  I was working part-time and then on maternity benefit.  I would like to stay at home with the kids for the next two years.  We have been spending all of our excess income on luxuries such as eating out.

*Budget*
                    700    Rent/Mortgage       
100  UPC       
40      Bord Gais       
20      Bins       
136  VHI       
120  Medicine       
50     Doctor       
195  Playschool       
50      Presents 
      167  Holidays       
53    Road Tax       
140   Diesel 
      67      Car Insurance       
25     Mobile phone       
115   Pension       
866   Food, entertainment,   clothes, hair       
13     Life assurance       
583  Mortgage repayments          

*Income*
2700 Salary
280   Children's allowance
700  Rental income


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## Ann1 (4 May 2011)

Hiagain.....does the bord gais amount include home heating or would that be extra. Also the credit card payments don't seem to be there....


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## hiagain (4 May 2011)

It would include the heating.  As regards the cc payments, we won't be paying for playschool until september, so that would cover some of it and we could also use savings.  I don't intend to spend any more on them.


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## DrMoriarty (4 May 2011)

It would make sense to clear that debt asap, when you have savings sitting there.

Re the savings - you could do better than 2.1% - have you checked the best buys?

Otherwise, the figures seem feasible, if a little arbitrary/optimistic in places - €100 on UPC, but only €50 on doctors' fees? (one GP visit per month between four of you?)

Finally, with two young kids, I'd have to suggest your partner buy some basic term life insurance - it'll be cheaper if he does it before he turns 40.


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## Ann1 (4 May 2011)

Hiagain.........That's a good budget and I am sure you will keep to  it....I like that you considered the small things like presents as they  are things that can throw a budget if not accounted for. I am a lot  older than you....over the years sometimes as a working mum and  sometimes as a stay at home mum I have always worked with a budget. Back  in the day I used a small notebook eventually working my way up to the  old laptop. I found what worked best for me was staying away from the  ATM. I withdrew in cash what I needed for groceries...daycare..petrol  etc.  Another thing I did while being a stay at home mum was I paid  myself a small amount into a post office account each month.....just for  me. It was never a big amount... sometimes only $20 (we lived in OZ  then)but it was important to me that I was rewarded for my hard work. My  hubby thought this was hilarious and always joked about my big stash of  cash. He got a big surprise many years later when he saw the  balance.....lol


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## Greta (5 May 2011)

Is the rental income of 470 net after tax and all rental expenses (management fees if any, NPPR tax, PRTB fee, insurance, repairs etc)?

Clear the credit card balances with your savings - what's the point of earning 2.1% while paying credit card interest many times as much? Unless your cards are on 0% at the moment, of course.


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## goingforgold (5 May 2011)

Again have to agree with other posters, no point in having very large savings and also having a few grand of credit card debt. Clear it all off now. You would appear to be in a strong position to become a stay at home mom given your financial circumstances, ie no debt and large savings. You just need to budget for it so that you are not eating into your savings too much as a result of it.

Do you intend to keep renting or to buy a house in time?

Also, you seem to be a bit of a miracle worker with your age. You were 34 two years ago also according to another makeover post, and your partner is making up for it as he has gone up 4 years of age in 2 years


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## sadie (5 May 2011)

I am a SAHM on one income. Husband's salary is 42,000. Net take home is around 2900 or something. Rent is 620. 
To be honest we are in the overdraft the last week of most months. However, we have substantial savings like yourselves. 
But we are also affording health insurance 213 a month. And another life insurance policy of 80 a month. And the children do swimming lessons, drama and sometimes another activity during the year. 
Our dippings into the savings to cover big spends (car insurance we pay as a lump sum) NEVER exceeds  the interest earned on the savings though. 
We could have opted to pay the health insurance this year as a lump sum out of savings but didn't. 
So health insurance say 2500 a year and car insurance for two cars say 1500 could be paid for as lump sums out of savings if you needed the cash flow. 
When we were living rent free a couple of years ago on same salary we never went overdrawn.
Its very doable and your children and family  will reap the benefit of having you at home while they are small.


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## hiagain (5 May 2011)

Thanks for the comments.  It seemed like it was going to be harder to do, but now seems quite positive.

I under estimated the rental income, it's actually 700 after management but that's before tax, PRTB fee and repairs.

Have just paid off one credit card and 900 off the other.  Will pay the rest in the next couple of days.

I hadn't considered that I could use the interest on the lump sum for rainy days!  As regards that, I am thinking of Nationwide UK Ireland which would give 3%

UPC includes phone, broadband and tv.

On the gp bills, I think that is a bit optimistic alright, but it is actually based on 2 gp visits a month, as I get a refund of 50% from Vhi.  I have to keep up those visits if I want to keep reducing my age!!

I did start taking out cash this week and only using laser for things like doctor, medicine etc.

We would like to buy a house for approximately €220,000 using most of our lump sum to ensure that the mortgage would be fairly similar to the rent


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## Bronte (6 May 2011)

You are going to have to do the rental property separately.  That's a business.  Do the income and outgoings on that out and see whether there is an income or a tax liability.  Then you add that figure to your household income/expenditure.


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## sadie (6 May 2011)

We are hoping to buy a house also for around 200-250k. Less if we are lucky and things go our way in the coming months. 
Unlike yourselves, we don't own any other property.
However, with interest rate rises etc. a 100k mortgage over 25yrs, repayments (incl. insurance) near enough equal the 600pm rent we are paying now. Banks will only offer a mortgage of about 100-140k max mortgage on one salary of 40k if you have kids (from my experience, that was a year ago we last checked).
So its a balancing act for us to keep a biggish chunk of savings as a safety net.
For example if one of our cars packs it in and all the savings gone on the house, we'd then have to borrow a car loan and that would impact the cash flow.

If you spend your whole lump sum, and still have a mortgage equating to your current rent, you won't have the interest on savings for the extra big spends. 
So sometimes it might be better for the next few years to try and keep mortgage repayments small by other ways (like taking the longest term possible depending on your age), to keep a chunk of savings. So that in your eagerness to be prudent and reduce debt, that you don't end up living a penny-pinching existence. Leave as many options and as much flexibility in it as you can. 

I'd be slightly worried about the investment property - the value of house and the mortgage owed are only about 35k in the difference. 
Have you applied for another mortgage recently or spoken to your bank's mortgage advisor, do you know how much they would allow you to have considering you have another house as well? 
Banks don't take much heed of how much savings you have because, like, you could put it all on a horse tomorrow. They just look at salary, how much you want, ability to repay, and long-term debt that could impact ability to repay.


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## hiagain (8 May 2011)

You've made a very good point Sadie and I will definitely look to hold on to a large chunk of the cash based on what you have said.


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## Complainer (21 May 2011)

hiagain said:


> UPC includes phone, broadband and tv.



That must be one of the top TV packages. I get phone/broadband/TV from UPC for under €60.


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## hiagain (24 May 2011)

Thanks Complainer.  Looks like we are on an old package and new lower priced ones are cheaper!  We'll see what we can do


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## michaelm (26 May 2011)

hiagain said:


> we won't be paying for playschool until september


Can you not just avail of the free pre-school year provided by the government scheme?


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## Retail Mngr (17 Oct 2011)

*How is the staying at home going?*

Hi Hiagain.

We are in the same position you were in in May and seriously considering. 
Our figures are very close to uours too.
So would be very interested to know how you are getting on?
Did you do it?
How is it working out?
Are you happy or regretting the change?
Thanks
Paul


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## kennyb3 (18 Oct 2011)

A couple of points on your overall situation (not the day to day stuff):

1. Interest rates - the ECB rate is extremely low at present. If you are factoring in buying a house, consider affordibility when they are 2-3% higher. Most people ignore this.

This also has to be consider in relation to your rental property.

2. The rental property - you need to do some serious calculations on this. 

You need to calculate the surplus you make on this. (make sure you only allow 75% interest only). Apply paye, prsi and usc to same and deduct this. Then deduct the NPPR (as its not tax deductible when working out the surplus).

My guess is this net figure is well below the mortgage repayment required. Which mean the rental property is eating your cash.

Then factor in #1 above and you can see where this will lead in 3/4 years.

Unfortunately you've missed the boat on the time to sell, and ideally if you had plenty of cash (extra to what you want to put down as a deposit) you'd hold onto it for 25years + until things rebound, but i would seriously look at selling while your not in negative equity. 

I really think this investment property will begin to cut through your cash. The government are penalising people with investment properties and will continue to do so.


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## Complainer (18 Oct 2011)

kennyb3 said:


> The government are penalising people with investment properties and will continue to do so.


Or to put it another way, the Govt are reducing the subsidies to investment properties that have been in place for years and led us by the nose into this property bubble.


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