# Money makeover - best use of cash



## Roll-time (22 Nov 2020)

*Age :* 37, *Partners Age: *38 , no kids or plan to

*Annual gross income from employment or profession:* €116k + bonus (20%) + share grant scheme

*Annual gross income of spouse*: €39k

*Monthly take-home pay : * 5600 net, Partner 2200 net

*Type of employment*: Both Private Sector in technology.

*In general are you (a) spending more than you earn, or (b) saving?*
Saving - I have approx 100k savings, 20k in a bond investment maturing next year and 20k in shares which will increase to 40k next year. Partner 20k savings with 10k in shares.

*Rough estimate of value of home:* 320k

*Amount outstanding on your mortgage*: 190k

*What interest rate are you paying? *2.45% fixed term expires in 3 years. Overpayed max within fixed period

*Mortgage Expiry*: 2044 (23 years)

*Mortgage Repayments:* 1000pm with no ability to overpay for another 3 years.

*Other outgoings : *Nothing else outside standard subscriptions /car insurance etc..

*Other borrowings* –* car loans/personal loans etc.* none

*Do you pay off your full credit card balance each month?* No CC debt

*Savings and investments: C*ash savings in various zero-interest accounts. I have approx 100k savings, 20k in bond investment and 20k in shares which will increase to 40k next year . Partner 20k savings with 10k in shares.

*Do you have a pension scheme?* Yes. Same with partner. Company contributing 7%, me 7%. Partner same.

*Mortgage protection* : covered for death. *Life insurance:* Yes, and my company also has a defined benefit.
No other income protection

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

I'm very fortunate to have the amount of cash I have. It's been a lot of long hours that contributed to where I am now salary wise but I'm not sure I see many further increaes in salary or how much longer I'll maintain this level of pay. Ideally I'd like to try to use the cash I have today to set myself up for the future in a better way and not have to continue on a corporate path indefinitely.

Given the difference in pay I don't think paying off a lot of the mortgage will be an option for us as we share all house expenses (and have already overpaid as much as we can together). Any recommendations on how I could use this cash better in the shorter to medium term ?


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## twofor1 (22 Nov 2020)

Roll-time said:


> Given the difference in pay I don't think paying off a lot of the mortgage will be an option for us as we share all house expenses (and have already overpaid as much as we can together).



Why is it not an option ?

Is this a business partner rather than a life partner ?


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## Sarenco (22 Nov 2020)

Also, why are you not maximising your tax-relieved pension contributions?


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## Roll-time (22 Nov 2020)

twofor1 said:


> Why is it not an option ?
> 
> Is this a business partner rather than a life partner ?


No, it's not that we're business partners it's just our way. Not everyone is comfortable with others paying on their behalf too. 



Sarenco said:


> Also, why are you not maximising your tax-relieved pension contributions?


I should probably do more with this. Might seem like an obvious thing I could Google but is there a maximum amount/tax efficient limit you would set ?


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## Sarenco (22 Nov 2020)

Roll-time said:


> Might seem like an obvious thing I could Google but is there a maximum amount/tax efficient limit you would set ?


At your age you could make a tax-relieved contribution of up to 20% of your earnings (in addition to your employer’s contribution),
subject to a ceiling of €115k.

Bear in mind that you can make an additional contribution for 2019 before 10 December 2020.


Roll-time said:


> No, it's not that we're business partners it's just our way. Not everyone is comfortable with others paying on their behalf too.


Fair enough but this approach is going to cost you a lot of money.


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## Blackrock1 (22 Nov 2020)

Not sure what your situation is but if you are committed to your relationship then it generally works best to split the family income otherwise there is inequality in the relationship. Are you splitting household costs 50/50? Given the difference in earnings that’s a much bigger burden on your partner .


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## NoRegretsCoyote (22 Nov 2020)

You own a house and are in a long-term relationship.

There is no real "my money" and "her money".


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## Roll-time (23 Nov 2020)

Sarenco said:


> At your age you could make a tax-relieved contribution of up to 20% of your earnings (in addition to your employer’s contribution),
> subject to a ceiling of €115k.
> 
> Bear in mind that you can make an additional contribution for 2019 before 10 December 2020.
> ...


Thanks for this - I'm going to dive into this.




NoRegretsCoyote said:


> You own a house and are in a long-term relationship.
> 
> There is no real "my money" and "her money".


 I understand what you're saying, however "he" isn't comfortable with me paying off a large chunk of the mortgage and I have to respect that. While I do appreciate paying it down is probably better than any lower risk investment I can do it's not really an option.


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## NoRegretsCoyote (23 Nov 2020)

Roll-time said:


> Thanks for this - I'm going to dive into this.
> 
> I understand what you're saying, however "he" isn't comfortable with me paying off a large chunk of the mortgage and I have to respect that.



Yes but your finances are already legally intertwined. You own a house together. Under the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 you accumulate rights if you live with someone and are not married.

If you break up the lower-earning party can indeed seek a maintenance order in the courts from the higher-earning party.

I would still focus on what is financially best for you as a couple, not as individuals. @Sarenco is right that you should max tax-relieved pension contributions.

Long term you should think about marriage. There are big benefits when it comes to inheritance and pension rights.


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## Roll-time (28 Nov 2020)

Thanks for the advice all. 

A couple of things - we talk very openly as a couple about money and while I definitely shoulder some of the bigger costs in our lifestyle (nice holidays, car etc..) he's very much the kind of person who wants to keep things 50:50 in our mortgage. Our current level of mortgage debt does not put a much larger burden on him. 

We don't think marriage is something we're looking to do either.


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## Thirsty (28 Nov 2020)

Have you each made a will? You should take advice on that including tax implications.


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## Roll-time (28 Nov 2020)

Thanks Thirsty - that's been on the list but as wiry everything this year has been delayed


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## Itchy (28 Nov 2020)

Roll-time said:


> I understand what you're saying, however "he" isn't comfortable with me paying off a large chunk of the mortgage and I have to respect that. While I do appreciate paying it down is probably better than any lower risk investment I can do it's not really an option.



Why don't you pay off 'your half' of the mortgage? The residual payment just stays with your partner and he owns the debt. I dont see why you need to repay at the same pace, given you already have an asymmetry in your financial situation. It wouldn't make sense to only invest the same amount of money each month, so why keep the debt payment the same. In fact you would be able to switch to Avant and get a lower rate on the loan, helping him payoff 'his half' faster.


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## DeeKie (30 Nov 2020)

You could pay off your bit and leave him tip away at his while you go off and use your money for something else?


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## Roll-time (15 Feb 2022)

Hi all, 

Just wanted to follow up on this thread as I received some great advise from  posters before. 

Currently trying to weigh up paying off mortgage or investing in some kind of fund* (or doing both). *
Nothing majorly different to original pay (10% or so increases on salaries), what I'm really trying to tease out is the best use of current savings. 

I'm currently sitting on -160k across various low interest deposit accounts & current accounts (also have shares worth approximately 70k but want to keep leave these) and inflation is really telling me I need to do something pretty soon. 

The balance on the mortgage is 180k and the latest break funding fee I requested was 1.4k. 
We've overpaid the maximum, so if an overpayment is made it would mean paying something around this amount. 
The fixed rate expires next September and i'm in 2 minds to pay 50% or so or to wait. 
My question is does it makes sense given the current break funding fee ? 

I've looked at various funds/ETFs but the deemed disposable element is off-putting etc.. i'm also maxing pension & AVCs. 

Any advice appreciated.


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## cloughy (15 Feb 2022)

What interest rate are you on? See how much interest you would save until fixed rate is up vs break fee for similar portion, as no point paying 6mts interest and having deposit at 0%, if no other use for the cash.


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## Roll-time (15 Feb 2022)

Hi there -  currently on 2.45%. Using some different calculators (which is complicated given previous overpayments) it looks like during the next 12 months we're paying approximately 4k interest and 6k capital (i could be wrong in this). 

Given we're not going to pay it all off is there an easy way to make that calculation ? thanks for your help


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## Sarenco (15 Feb 2022)

Don't forget that inflation is also reducing the real value of your mortgage so it's pretty much a wash.

Why not give yourself the target of clearing the mortgage in full as soon as the fixed-rate ends?  To be mortgage free at your age would be pretty impressive.

Good to hear that you are maxing out your pension contributions.


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## cloughy (15 Feb 2022)

190k @ 2.45% is approx €4,600 in interest this year, so for every 10k you pay off you will save 245 interest in a year, and you quote the break fee of 1,400 so that for a repayment of 10,000 the break fee would be 73, so even for 6mts the saving in interest would be about 120 and cost 73 for every 10,000 repaid, 

There will also be saving of further interest over the remaining term, and also you can try and bring down the LTV and maybe get a better rate when your fix is you. Your current LTV is about 59%, to get to less than 50% you would need to repay 30k minimum


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## skrooge (15 Feb 2022)

Overpaying looks to make sense.

Revisiting your mortgage agreement. Why don't you lend your partner half of your savings and you jointly payoff a chunk of mortgage. They can treat it like the loan it is and pay you interest  at 2.45%. They will still pay the same amount as they originally would have. You're better off as your money is now earning 2.45%


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## Clamball (16 Feb 2022)

it is great that you both decided to pay off the mortgage.  The break fee is very minor over the life of the mortgage, so go ahead and do it now.
Also good that you are maxing out the AVC, did you and your partner marry, it is so much easier to leave everything to your spouse if one of you died unexpectedly.  Did you and he make wills?   You are both accumulating wealth and it is good to have your affairs all in order.  

You spoke about not working in the corporate world long term. Is you plan to build savings and investments to retire early or start a new business yourself?


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## Roll-time (16 Feb 2022)

@skrooge definitely thinking we'll do something like that. I mean not to charge interest but to have an arrangement as it benefits us both ultimately. 

@Clamball - we do need to make wills as we're not married. 

Overall, I'm just trying to weigh up If i was to put most eggs in just paying down the mortgage what about missing out on other investments (funds/ETF etc..) ? I know that's a "crystal ball" like but I do wonder about trying to get a higher return. It's just when you read about deemed disposable and the general complexity of declaring things like ETFs I do wonder is it worth it. 

I do have other shares which are performing well but want to hold them for now.


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## Roll-time (16 Feb 2022)

@Clamball - I do wonder if the current trajectory/path is sustainable and while i'm doing thinking to retire early I might try to move to something less intense/corporate (which i'm thinking will be significantly lower paying)


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