# Any improvements I could make to protect and prepare for future



## Faointeach (7 Nov 2020)

Age: 41
Spouse’s/Partner's age: 40
Annual gross income from employment or profession: 110,000
Annual gross income of spouse,  varies, affected by covid so conservatively saying: 40,000
Monthly take-home pay 5300 (me) 2,500 (partner)
Type of employment:
Me, Public sector , spouse self employed 

In general are you, (a) spending more than you earn, or (b) saving?
Saving but without a focus and not particularly strict, just living a quiet life!
Rough estimate of value of home 500,000
Amount outstanding on your mortgage: 168,000
What interest rate are you paying? 2.75
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:
90,000 cash savings 
20,000 in kids names saved from child benefit and gifts they have received from grandparents.
Do you have a pension scheme? Yes, defined benefit with death in service benefit for husband.  partner no
Do you own any investment or other property? No 
Ages of children: 6 and 3 
Life insurance:  yes for mortgage value  and income protection, partner none and not on mortgage

What specific question do you have or what issues are of concern to you?
1)Children’s savings are in an post state savings, should I move this lump sum somewhere? 

2)We either need to extend house or buy a bigger one.  To do extension would be about 150,00 and to move would need to buy a house with about a 750,000 value. Any advice on how to bridge gap of current savings and money needed for either of these options? 

3)Pie in the sky stuff possibly, but was wondering should we aim to pay off mortgage ( that would serve as spouse’s pension in the future (college area/near centre so think will always be able to rent out) and save up over next 5 - 10 years for new house....

4) think as I write this, obvious that I  need to sort out life insurance for spouse for mortgage.


----------



## Pinoy adventure (7 Nov 2020)

#1 -its the best low risk return you can get on it and safe.
#3- you won't get 2.75 return on your 90,000 cash so perhaps a lump of the mortgage


----------



## Bronte (8 Nov 2020)

Why do you need income protection if you are a civil servant.

How much will the house be worth if you put 150k into it. What kind of work needs to be done. I’m amazed a half million home is not suitable for 2 adults and 2 children?

One would imagine renting out your home at that value wouldn’t get you a good enough return.


----------



## Brendan Burgess (8 Nov 2020)

You are making the classic mistake, and Pinoy is reinforcing it, of silo thinking about your finances. 

It makes no sense to have money on deposit at very low rates while you are paying 2.75% interest on your mortgage. Putting a label "children's education fund" on it, does not magically turn this wrong strategy into the correct strategy. 

What you should do depends on whether you buy or extend. 

1) If you decide to buy for €700k, you will need a deposit of €140k and a mortgage of €560k.  You won't be able to get this if you want to keep your own home.  

So if you decide to buy, then you should set all your savings, whatever labels you have on the jars, against your mortgage.    The small exception to this is that you might want to keep the booking deposit in cash if you are about to trade up soon.

2) If you decide to extend, it will cost you €150k and you have €110k.   With your income, the shortfall of €40k should be easy to bridge and repay fairly quickly.    Given that you don't appear to be doing it imminently, it gives you some time to save a bit more aggressively towards it. 

Your options for the shortfall when you need it are 
1)  Ask your lender for a top-up.  You should get it easily enough. Not sure if there are any costs associated with setting this up.
2) A credit union loan over 7 years.  But you will probably pay it off quicker.  The Civil Service Credit Union charges 6.9%. 
3) A family loan - probably by far the simplest.  And it would be interest-free.


----------



## Brendan Burgess (8 Nov 2020)

Faointeach said:


> 3)Pie in the sky stuff possibly, but was wondering should we aim to pay off mortgage ( that would serve as spouse’s pension in the future (college area/near centre so think will always be able to rent out) and save up over next 5 - 10 years for new house....



No idea what you are asking here. Are you saying that the house your spouse had before you got married is now rented?  Or is the fact that would not have a mortgage equivalent to your spouse having a pension? 

Maybe edit the post to clarify what you mean. The brackets are confusing.


----------



## Brendan Burgess (8 Nov 2020)

Faointeach said:


> 4) think as I write this, obvious that I need to sort out life insurance for spouse for mortgage.



If you die, the mortgage will be paid off because you have mortgage protection in place.

If your spouse dies, you will lose an income of €2,500 a month.  If you want to take out life insurance for this fine. But it's not directly related to the mortgage and should not be.   It should be cheap enough, but if your spouse is in good health, then maybe you don't need to insure their life. 


Use the premium to pay down the mortgage or to max out the tax-efficient pension contributions.

Brendan


----------



## Bronte (8 Nov 2020)

OP needs to be strict on savings, I suspect that comment means lackadaisical overall financially. Savings should go out directly the salary comes in.


----------



## goingforgold (8 Nov 2020)

Bronte said:


> OP needs to be strict on savings, I suspect that comment means lackadaisical overall financially. Savings should go out directly the salary comes in.


Yet they have 110k savings and positive equity to tune of 330k in property, gold plated and very valuable PS pension... I think a lot of people would accept that level of lackadaisical. They're in their early forties with young kids and yes on decent salaries, but not a mind blowing combined salary...


----------



## Brendan Burgess (8 Nov 2020)

goingforgold said:


> I think a lot of people would accept that level of lackadaisical.



That is what I thought, but couldn't articulate as well as you. 

Brendan


----------



## gianni (8 Nov 2020)

Bronte said:


> Why do you need income protection if you are a civil servant..



Income protection provides a proportion of your income should you become incapacitated and be unable to work. I wouldn't think civil servants are immune from career ending illness!


----------



## Faointeach (9 Nov 2020)

gianni said:


> Income protection provides a proportion of your income should you become incapacitated and be unable to work. I wouldn't think civil servants are immune from career ending illness!


That’s right, means could get 75% of income if become sick. it’s not costing much more than a coffee a week so seemed to make sense.


----------



## Faointeach (9 Nov 2020)

Brendan Burgess said:


> If you die, the mortgage will be paid off because you have mortgage protection in place.
> 
> If your spouse dies, you will lose an income of €2,500 a month.  If you want to take out life insurance for this fine. But it's not directly related to the mortgage and should not be.   It should be cheap enough, but if your spouse is in good health, then maybe you don't need to insure their life.
> 
> ...


Thank you Brendan that’s really helpful


----------



## Faointeach (9 Nov 2020)

Faointeach said:


> Age: 41
> Spouse’s/Partner's age: 40
> Annual gross income from employment or profession: 110,000
> Annual gross income of spouse,  varies, affected by covid so conservatively saying: 40,000
> ...





Brendan Burgess said:


> No idea what you are asking here. Are you saying that the house your spouse had before you got married is now rented?  Or is the fact that would not have a mortgage equivalent to your spouse having a pension?
> 
> Maybe edit the post to clarify what you mean. The brackets are confusing.


thank you , yes can see that is confusing! I think you have crystallised the issues for me, need to decide if extending or buying.  Apart from these two options,  I was trying in question 3)  to see if we could pay off mortgage, save up again and get a mortgage for a new place and use rental income from the old house instead of pension for husband who is self employed.


----------



## Bronte (10 Nov 2020)

Would your husband not be advised to start his own pension.


----------



## _OkGo_ (10 Nov 2020)

Faointeach said:


> That’s right, means could get 75% of income if become sick. it’s not costing much more than a coffee a week so seemed to make sense.



Really?? I highly doubt you are getting income protection for €75/80k for €3/wk


----------



## joemarancheta (23 Dec 2020)

Faointeach said:


> Age: 41
> Spouse’s/Partner's age: 40
> Annual gross income from employment or profession: 110,000
> Annual gross income of spouse,  varies, affected by covid so conservatively saying: 40,000
> ...


I suggest that if you are moving into a new house, have your previous house/new house rented so any mortgage you'll have to pay will be paid by your tenants. Since your interest rate is quite low at 2.75%, it's ok not to pay off your mortgage right away and instead invest in on a fund higher than the interest rate of your mortgage. If you are interested on being financially free, watch this video also, tips from the best, it's not too late my friend.


----------



## Thirsty (23 Dec 2020)

_OkGo_ said:


> Really?? I highly doubt you are getting income protection for €75/80k for €3/wk


Public sector is significantly cheaper; some unions / staff associations offer very good deals.

For what its worth re buying / extending; you are almost always better to buy.  You'll rarely get the cost of your extension back.

@Bronte - it depends where the property is - €500k for (say) 3 bed in a central location isn't that hard to imagine.


----------



## Blackrock1 (23 Dec 2020)

are you sure 150k will cover the extension you have planned, costs of refurbs / extensions have increased. Might be something look into in detail when making the refurb or move decision.


----------



## tom_tom (4 Jan 2021)

Just curious.. what would be considered a mind blowing combined salary?



goingforgold said:


> Yet they have 110k savings and positive equity to tune of 330k in property, gold plated and very valuable PS pension... I think a lot of people would accept that level of lackadaisical. They're in their early forties with young kids and yes on decent salaries, but not a mind blowing combined salary...


----------



## NoRegretsCoyote (4 Jan 2021)

tom_tom said:


> Just curious.. what would be considered a mind blowing combined salary?


I would have to check the Revenue statistics, but 150k for a couple wouldn't put you in the top 1%.

"Mind-blowing" is pretty subjective I guess.


----------



## tom_tom (4 Jan 2021)

I saw a distribution of Irish household income only a couple of years ago  ...north of 200K it really flattens out (not mind blowing I admit ..but as you say subjective)



NoRegretsCoyote said:


> I would have to check the Revenue statistics, but 150k for a couple wouldn't put you in the top 1%.
> 
> "Mind-blowing" is pretty subjective I guess.


----------



## PebbleBeach2020 (4 Jan 2021)

Two people on industrial wage is the guts of 80k combined.

100k is just above average.

125k I'd consider comfortable.
150k I'd consider very comfortable.
200k I'd consider mind blowing.


----------



## tom_tom (4 Jan 2021)

from direct experience ..it's not ...having moved through the buckets here over the years ..after pension, tax and numerous other variables ..difference between 150 and 200K is not much in terms of lifestyle or any type of wealth effect...you turn around one day and say yeah you've done ok ..but you don't really consider yourself ..up there! .....if I was to go out and start obtaining a few 'mind blowers' ...800K house, a 100K car , a holiday home ..plus a nice day-day lifestyle and maintain good financial housekeeping (pension, rainy day, insurances etc) what was once very comfortable starts to feel uncomfortable ...again all relative




PebbleBeach2020 said:


> Two people on industrial wage is the guts of 80k combined.
> 
> 100k is just above average.
> 
> ...


----------



## PebbleBeach2020 (4 Jan 2021)

tom_tom said:


> from direct experience ..it's not ...having moved through the buckets here over the years ..after pension, tax and numerous other variables ..difference between 150 and 200K is not much in terms of lifestyle or any type of wealth effect...you turn around one day and say yeah you've done ok ..but you don't really consider yourself ..up there! .....if I was to go out and start obtaining a few 'mind blowers' ...800K house, a 100K car , a holiday home ..plus a nice day-day lifestyle and maintain good financial housekeeping (pension, rainy day, insurances etc) what was once very comfortable starts to feel uncomfortable ...again all relative



By that logic the difference between 125k and 150k or most arbitrary amount are much in terms of lifestyle etc

Do you know many couples earning 200,k or more?


----------



## tom_tom (4 Jan 2021)

Well myself and the OH do .....the OH makes 200k pa for a start
Pension Max'd out , by choice a modest house and cars (never stressing when unexpected bills hit), building wealth for maybe early retirement or holiday home, kids education etc ..very nice day-day lifestyle , holidays etc which we value ...on the outside Mr and Mrs Average .......my definition of afford ..is  being able to obtain and maintain without compromising medium and longer term wealth and security ...to be able to afford the 'mind blower' items  and associated lifestyle is a big big number....defo not 200K



PebbleBeach2020 said:


> By that logic the difference between 125k and 150k or most arbitrary amount are much in terms of lifestyle etc
> 
> Do you know many couples earning 200,k or more?


----------



## PebbleBeach2020 (4 Jan 2021)

Bully for you. Revenue figures would suggest 200k is fairly low occurring .


----------



## tom_tom (4 Jan 2021)

OH and myself both in high grade tech jobs and that type of overall  income is common (base, stock, car allowance , bonus).
now ..base pay is not 200K ..so maybe that's part of the disconnect to revenue stats
As I said ....we don't lean into our incomes ...try doing good financial housekeeping , pay all your taxes, value some security and a few perks without stressing ... it doesn't give you breakthrough you think.

Each move up brings new issues ..flash car, house , watch whatever ..the cost of ownership is exponential

I think the household buckets need to be wider in increments of 100K to see any type of wow factor inbetween.




PebbleBeach2020 said:


> Bully for you. Revenue figures would suggest 200k is fairly low occurring .


----------



## NoRegretsCoyote (5 Jan 2021)

I was wrong.

These are the Revenue gross income numbers for *married couples with two incomes* from 2018.


Percentage of the Total Number of Income Cases2018100,000 to 150,000Married couples or civil partners - both earning%14.66Percentage of the Total Number of Income Cases2018150,000 to 200,000Married couples or civil partners - both earning%3.95Percentage of the Total Number of Income Cases2018200,000 to 275,000Married couples or civil partners - both earning%1.90Percentage of the Total Number of Income Cases2018275,000 and overMarried couples or civil partners - both earning%1.60

*6.5% have a gross taxable income of >€150k.*


----------



## tom_tom (5 Jan 2021)

wow we must be in the top 1% so ...I must upgrade the 10yo hatchback this year..im getting
too many snooty looks on the school run these days ..based on the large number of 5 Series at the gate
I thought they all on 275k+ 




NoRegretsCoyote said:


> I was wrong.
> 
> These are the Revenue gross income numbers for *married couples with two incomes* from 2018.
> 
> ...


----------



## goingforgold (5 Jan 2021)

And gross taxable pay is pay less pension and other deductions so not full salary... Just worth remembering that also


----------

