# Money makeover advice



## SharkT (25 Nov 2021)

Age:
47
Spouse’s/Partner's age:
45

Annual gross income from employment or profession:
€93,000 + 10,000 Bonus

Annual gross income spouse:
85,000 + 15,000 Bonus

Monthly take-home pay:
€7,500 approx (after pension contributions etc. We have company health insurance and death cover).

Type of employment:
Private sector

Expenditure pattern:
Largest outgoing is childcare at 1,400 per month.(after ECCE).
Mortgage on PPR is approx 950 per month.
Mortgage on rental property is approx 1,000 per month.
We are saving between 1,000 and 1,500 per month which, once built up, we use to pay off PPR mortgage. 

Rough estimate of value of home
€600,000

Mortgage on home
€140,000 remaining and approx 16 years left on mortgage. We have been overpaying in lump sums ad hoc when we build up savings in order to reduce the monthly payment. 

Mortgage provider:
Haven

Type of mortgage: 
Variable

Interest rate
2.78%

Other borrowings – car loans/personal loans etc
None

Do you pay off your full credit card balance each month?
Yes

Savings and investments:
€65,000 Cash savings.

Do you have a pension scheme?
Me €335,000 previous pension (Aviva. 57% My future consolidation fund. 43% My future growth fund.)
Me €100,000 new pension
Wife pension €200,000 

My company pays 10% and I pay 25% (max for tax relief).
Wife's company pays 12% and she pays 15%.

Do you own any investment or other property?
Yes. Value €320,000. Mortgage tracker ECB+1.15% €180,000 remaining (17 years). Rented for €2100 a month gross. Agency looking after it. 

Ages of children: 2 children - ages 7 and 5. 

Life insurance:
Mortgage protection on both properties. 
Health insurance thought jobs. 
Death in benefit through jobs. 

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

The pending sale of inherited family home will net me approx 200k after CGT.

My thoughts are to clear the mortgage on our PPR. We also have mortgage protection on our PPR costing 63 euro per month currently for value of 400,000. One question is should I cancel this mortgage protection once I clear the mortgage? We have mortgage protection on the rental property for 220k currently which we will keep as can write off against tax bill. 

I will suggest that my wife begin to max her pension contributions then also.

The other issue is that I would like to retire as soon as I comfortably can. I'm not enjoying the rat race and find it stressful, bad for my health (physical and mental)
I'm planning on taking a break for a few months over the summer to spend time with my family and start looking for a new job after the summer.  Ideally if possible I would like to get a position with reduced hours and less responsibility and be able to spend more time with the family. Appreciate any thoughts or advice here.

I realise with small kids retirement may be a while away but I'm trying to assess how far away. So any thoughts on that welcome. 

My wife would like to continue working until she is 60. I would like to be finished well before that if possible. Lockdown has made me reassess my priorities. I want to spend more time with my kids, I have hobbies that I would like to pursue if time allowed also. I don't enjoy the job and don't think there is any job in this area that to I would enjoy. I don't have any career ambition. A job for me is really just to earn money. There is little satisfaction in it. I'm good enough at the job and am conscientious which has probably gotten me to where I am.

Any thoughts, suggestions advice welcome.


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## elcato (25 Nov 2021)

My first thought is by giving up work you will save childcare (15k) and at least halve you property rental tax bill (5k to 10k). Not a bad start. But _who _owns the property ?


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## SharkT (25 Nov 2021)

elcato said:


> My first thought is by giving up work you will save childcare (15k) and at least halve you property rental tax bill (5k to 10k). Not a bad start. But _who _owns the property ?


The property is jointly owned by my wife and I.


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## fayf (25 Nov 2021)

Thats a healthy overview you have.

One thing I would certainly do immediately, is increase your partners pension contributions up to the max, and remember, you can include bonusses when calculating the max pension contribution.


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## SharkT (25 Nov 2021)

fayf said:


> Thats a healthy overview you have.
> 
> One thing I would certainly do immediately, is increase your partners pension contributions up to the max, and remember, you can include bonusses when calculating the max pension contribution.


Thanks. Yes I'm trying to get my wife to do that. She needs some persuasion!! We have in recent years made one-off avc for the previous be year to account for bonus for me and to increase my wife's avc contribution. But defo makes sense for my wife to max avc at source.


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## cremeegg (25 Nov 2021)

Your children are likely to be financially dependent for nearly 20 years. The expensive part of that time will be at the end.


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## fayf (25 Nov 2021)

Also, you have a Mortage LTV of less than 50%, which would mean you should qualify for the very best rates on the market, which are lower than 2.78%, Avant have one at 1.95 %, and other banks have just over 2%, with cashback which would cover all legal fees etc.

I would certainly be prioritising maxing pension for both of yee,(ahead of mortgage pay off as thats less of a benefit) yee are paying 40 % PAYE on a slice of income, which can be 100 % easily avoided, and it is growing overtime, for me that's a total no brainer, you could hold onto the inheritance, to cover the college fees etc, maybe An Post 10 year bond, its low interest, no DIRT, no fees and its totally guaranteed. There are also things that will come up, like changing cars, big one off holidays, kitchen/home renovations.


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## RedOnion (25 Nov 2021)

fayf said:


> you could hold onto the inheritance, to cover the college fees etc, maybe An Post 10 year bond, its low interest, no DIRT, no fees and its totally guaranteed.


What am I missing here? Why would you recommend someone invest in state savings while holding mortgage debt?
They'll have enough cash to completely pay off PPR mortgage, have 120k left over, and saving 2k+ per month.


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## fayf (26 Nov 2021)

Its in the context of retiring early & or college fund, both alluded to by the poster. 

It can work better for some, to keep paying, a relatively low interest debt amount, keep the discipline of paying off that mortgage, while retaining that lump sum, for enjoyment in retirement/ college fund etc.

Agreed, its not always the best option, but many people like to have a large reserve, and while it may not always make financial sense, there is a sense of a safety net. And there is also a psychological value. However, if the extra savings will not just go into extra lifestyle spending, then agreed, better to clear the mortgage.


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## RedOnion (26 Nov 2021)

fayf said:


> Agreed, its not always the best option, but many people like to have a large reserve, and while it may not always make financial sense


It makes absolutely no sense in this scenario. You cannot justify it in the OPs circumstances.


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## SharkT (26 Nov 2021)

Any thoughts on whether we should continue with the mortgage protection after clearing the PPR mortgage. it would save us 756 euro a year if we cancelled.


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## DublinHead54 (26 Nov 2021)

SharkT said:


> Any thoughts on whether we should continue with the mortgage protection after clearing the PPR mortgage. it would save us 756 euro a year if we cancelled.



As far as I am aware mortgage protection is insurance so the lender gets reimbursed for the mortgage should something happen to the borrower. So no mortgage, no need to have mortgage protection. 

Out of interest what is your line of work? Whilst your finances are in great shape, it does look like you would need some level of income over the next 10 years to support the children and general living. However, it doesn't look like you would need the same level of earning, so perhaps you can find something that strikes a happy balance?


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## RedOnion (26 Nov 2021)

SharkT said:


> Any thoughts on whether we should continue with the mortgage protection after clearing the PPR mortgage. it would save us 756 euro a year if we cancelled.


What's the value of death in service benefits through your work schemes?
Remember you both also have pensions that will provide money for the other, some on death and some as a pension later. 

Do either of you have income protection?

It's a bit morbid, but I think you need to sit down and work out what the financial position of the family would be if one of you were to pass away, particularly before the children are independent. And similarly if one of you couldn't work for an extended period with the possibility of extra medical bills.

There's an example in the following:





						Do I have enough life insurance or am I underinsured?
					

I may have posted the below in the wrong section but I'm looking for advice on my level of insurance cover  I currently pay €80 per month PPI through AXA. It's a 100 % joint cover with my wife. Our circumstances changed so although my wife is on the policy it doesnt actually cover her now as...



					www.askaboutmoney.com


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## SharkT (26 Nov 2021)

Dublinbay12 said:


> As far as I am aware mortgage protection is insurance so the lender gets reimbursed for the mortgage should something happen to the borrower. So no mortgage, no need to have mortgage protection.
> 
> Out of interest what is your line of work? Whilst your finances are in great shape, it does look like you would need some level of income over the next 10 years to support the children and general living. However, it doesn't look like you would need the same level of earning, so perhaps you can find something that strikes a happy balance?


Thanks. I'm pretty sure that if I paid off the mortgage, the mortgage protection would still pay out the balance left on the policy if one of us were to pass away. So it still has value. Question is should I keep it, cancel it or replace with some income protection policy.


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## Baby boomer (26 Nov 2021)

I firmly believe that most people have their lives over-insured and their health under-insured.


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## SharkT (27 Nov 2021)

Baby boomer said:


> I firmly believe that most people have their lives over-insured and their health under-insured.


Do you mean a lack of health insurance or lack of income protection?

I think our death in benefit is 4 times salary each. I work in financial services. 
We don't have any income protection insurance. 

We prob need to take renonions advice and look at our financial situation if one of us died or got very ill and couldn't work.


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## Baby boomer (27 Nov 2021)

SharkT said:


> Do you mean a lack of health insurance or lack of income protection?


Sorry, I meant lack of income protection.



SharkT said:


> I think our death in benefit is 4 times salary each. I work in financial services.


Yes, that's quite generous, especially with mortgage protection in place too.  Plus either of you would.qualify for the State Widow(er)s pension with additional payments for dependent children.  



SharkT said:


> We don't have any income protection insurance.


Exactly.  That's where I'd identify the shortfall.  Think (worst case scenario) medical costs, in-home care, house and car adaptations on top of the loss of income.  And maybe a loss of the second income also if caring responsibilities increase.  



SharkT said:


> We prob need to take renonions advice and look at our financial situation if one of us died or got very ill and couldn't work.


Indeed.  It's ironic, perhaps, but most families are better provided for in the event of death rather than serious illness/disability.


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## cremeegg (1 Dec 2021)

SharkT said:


> Thanks. I'm pretty sure that if I paid off the mortgage, the mortgage protection would still pay out the balance left on the policy if one of us were to pass away. So it still has value. Question is should I keep it, cancel it or replace with some income protection policy.


The mortgage protection policy would still pay out, but the policy may be assigned to the Bank. If so the bank would have to release the proceeds to your heirs. They can be asked to release the assignation when the mortgage is cleared, this does not necessarily happen automatically.

This policy is probably much cheaper than anything you could buy now if you wanted to replace it. Wether you are over-insured is of course relevant also.


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## SharkT (18 Dec 2021)

Thanks folks for the replies. Appreciate the feedback. I'm going to hang on to the additional mortgage protection policy for now. 

A further question please based on some info I saw on another thread. If I was to finish up my job next year and had a surplus of cash, would it make sense to make an avc above the tax relief threshold in order to boost my pension fund. As opposed to trying to open up my own account and investing in some equity funds etc. Appreciate the avc option would not offer as much flexibility in terms of liquidity but I'm not too concerned about that aspect.


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