# Advice needed - how to prepare for starting a family / surviving on one income



## kopq (6 Aug 2008)

Age: 27
Spouse’s/Partner's age: 27

Annual gross income from employment or profession: €31,000
Annual gross income of spouse: €32,000

Type of employment: I’m in the voluntary sector. Spouse is in private sector.

In general are you spending more than you earn or are you saving? Saving.

Rough estimate of value of home: €300k
Amount outstanding on your mortgage: €198k
*What interest rate are you paying? 4.75% fixed rate with EBS. Fixed rate due to expire in January 2010 in which case it will rise significantly.*
Term remaining, 16 years
Monthly repayment: €1295

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? n/a

Savings and investments: €4,800 in Rabo savings account. After a busy few years buying a house and getting married, we’ve just gotten into the saving habit in the last 6 months or so. Saving about €600pm between us.

Do you have a pension scheme? Yes – contribute 5%, employer contributes 5%. Spouse also has pension through work though I’m not sure of the details.

Do you own any investment or other property? No.

Ages of children: None yet.

Life insurance: Basic insurance with mortgage.

Other outgoings: Nothing too extravagant. 
ESB: €40 pm 
Gas: €40 pm 
Sky: €35pm 
Broadband and phone: €45pm 
Travel (petrol and buses): €250pm I realise this seems high but as we work in Dublin and live in an area serviced only by Bus Eireann, there isn't much wiggle room on this.
Food and other household stuff (ie, lunches during work – something I’ve cut back on but seems to be a hard habit for spouse to break! ): €400pm


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

I feel we’re quite comfortable at the moment – saving, pensions, no unsecured debt, etc. My main worry is what will happen to us in a few years time. We’d both like to start a family in the next couple of years and the ideal situation would be for one of us to give up work for a few years to stay at home and look after the sprogs. Based on our current situation, it’s just not possible for us to do this and survive on one income. So I’m just looking for a bit of advice on any things we could be doing in the next 2-3 years to make our ideal situation more of a possibility.

We’ve recently cleared a small loan and can increase our savings to about €8-900 pm and still be comfortable. It’s in a Rabo account at the moment earning 5% interest. Investment-wise we’d rather not get involved in anything too risky or lock our money away for too long a time so this situation suits us at the moment. Are we better off to keep saving at this rate? 

In a few years time, would we be better off using any lump sum we’ve built up to pay a chunk off our mortgage and bring the term down further, or should we keep our savings as more of a rainy day fund? I know it makes more sense to keep it as savings, as if we’re hoping to live off one salary, we’re going to need a bit of a cushion. I just have a bit of a thing with mortgages though. Even thinking about how much interest we’re paying each month makes me mad. 

That’s why I wouldn’t be too keen to go for another option – once the family starts, increasing the term of our mortgage, thus reducing the repayments to give us a bit more breathing space. I know that will make the mortgage more expensive in the long run, but it might be necessary. 

I’ve been a long-time lurker on AAM and I’ve picked up some great tips here so I’d really appreciate any advice from all you wise ones!


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## legallady (6 Aug 2008)

I would suggest that maybe you or your partner could do some further education or training now to increase your salary in the future as I reckon 32k would be pretty tight if its to cover 2 adults and a kid


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## kopq (7 Aug 2008)

Further education is something we're thinking about all right, especially my husband. He works in marketing and sort of fell into that line of work. He's great at his job and has fantastic experience but I think he's at the stage now where the lack of formal qualifications might start to hold him back. 

Thanks for the advice. Any input from anyone else?


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## Snork Maiden (8 Aug 2008)

Why dont you use the extra 800 pm to make extra payments off your mortgage?
If you do this for the next 2 years you could potentially reduce your term by two years or more.

Then when the sprogs arrive and you need to re-negotiate your terms your in a much better position.  In my experience its harder to get longer terms on your mortgage when you are 30+ which you may be by the time you are ready for a family......

This calculator is helpful to show how effects extra payments have on your overall mortgage balance and terms.

http://www.jeacle.ie/mortgage/


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