# Saving towards big expenses



## Pocket (1 Oct 2009)

Age: *28*
Spouse’s/Partner's age: *30*

Annual gross income from employment or profession: *48,000 + ~20% bonus per annum*
Annual gross income of spouse: *50,000 per annum *
*Take home pay after tax and pensions ~5300 pm between us*

Type of employment: e.g. Civil Servant, self-employed 
*Semi-state (him) and private (me) sector, permanent.*

In general are you:
(a) spending more than you earn, or
(b) saving?
*Saving ~ 1,600 a month between us + my bonus + 150 a month on company share scheme*

*Expenses *
*Rent 1350pm*
*General day to day living (food, car, bills etc) 1,100pm*


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:
*~30,000 + 5,000 in company shares + 50,000 gift from parents for deposit for buying a home*

Do you have a pension scheme? 
*Both of us do through work *

Do you own any investment or other property? 
*No*
Ages of children: 
*None*

Life insurance: 
*Yes, through work*

Question: We are looking at a few big expenses in the coming years. We are considering buying a house next year and we also plan to try for our first child. A 20% deposit on a house would eat up allot of our savings. Our mortgage probably would only be a couple of hundred euro more expensive then our current rent, but I'm guessing interests may go up next year. If we do have a child (probably 2011) I would like to be in a position to take 1 year off work (6 months of this will be on full pay luckily). However, between this and crèche fees (900 to 1200 euro a month apparently!) a child is looking more expensive then a buying house! When I look at these to expenses, I see that we will probably wipe out most of our savings and our ability to save. Not having some savings to fall back on, scares me! Both our jobs look secure but husband may have a pay cut when the budget comes out.

We're careful enough about how we spend our money on a day to day bases (shop in Lidl, don’t go out more then once a week, or buy expensive clothes). However we have had a number of holidays abroad in the last couple of years and we recently paid for our wedding so that ate into our savings.

Could you advice us on how best to prepare ourselves for these big expenditures? Any advice about how to maximise our savings? Also my company provides a share scheme which I have the option to put more money towards, but it means I cant access it for another 2 years. Would I be better off increasing my saving.


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## niceoneted (1 Oct 2009)

Where are you planning to buy? There is a lot of good value out there. Perhaps your looking to buy beyond your means, why not look for somewhere or a house price that will be about the same or less in payments as your current rent. 
You don't necessarily need to use a creche. There are some very good small registered child minders out there that may cost about 700 euro a month.


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## Pocket (1 Oct 2009)

Unfortunately we are both working in South Dublin. We would love to move to the west of Ireland. But it would be our 10 year plan as its unlikely we could even come close earning the same amount of money or opertunities there. House prices in Dublin have obviously dropped but are still high. We have a budget in our heads of about 420,000 but we want at minimum a 2 bed house with a bit of a garden in a nice/reasonable area. Even with the drop in propery houses for less then this in south dublin are hard to find (not impossible I know, but nothing yet that we would want to buy). Neither of us would like to end up spending hours commuting, especially if we have a child.


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## so-crates (1 Oct 2009)

If you are planning in the medium term to move to the West of Ireland is it necessary to buy a house in Dublin? If you were to continue renting it would leave you free to make that move and you'd have a much smaller mortgage. Not saying don't buy, but have you considered it?

In general with savings, if you need a guaranteed amount stick to deposit savings, shares can fluctuate quite a bit in two to three years. Separate out your long-term savings (for house deposit) from short term cushion and medium term savings. It makes it easier to see what is what.


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## goingforgold (1 Oct 2009)

First of all congratulations on the very healthy financial position you are in (Albeit with some help from very generous parents). I wouldn't put anymore money into shares at present, especially as you have pretty short-medium term goals. As you have a susstantial sum of money make sure it is earning highest possible interest (See savings and deposits section). Other than that keep going as you are but be careful not to over stretch yourselves with a big mortgage, especially if you want to move west in time. You don't want to be stuck somewhere because you can't sell a house and have a big mortgage. Good luck.


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## Pocket (2 Oct 2009)

Thanks for the advice! Its very much appericated.

We are very happy in the house we are now renting (after some previous disasters renting) and we would consider staying on there. However there are a couple of concerns I have. 1. If we move down west we maybe in our late 30s before we get a mortgage....even a 25 year mortgage looks scary then 2. Husbands family have made a very generous offer of a gift towards a house. However we will not receive the gift until we're purchasing a house. And I am fully aware that things may change.

I would have thought we are in a good enough financial position (I admit allot due to husbands very generous parents). But we might have to take another look at our budget for a house. Just save hard and review again next year.


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## chlipps (3 Oct 2009)

I'm sure your husbands parents will understand that buying a house is a huge step to make

Need to be careful not to rush. e.g. no one knows what will happen stamp duty... you could buy now but pay considerable stamp duty which will take a large portions of your husbands parents generous contribution,... would be a shame if large portion of that money went on stamp duty due to rushing


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## Pocket (3 Oct 2009)

Chlipps,

We are frist time buyers so as far as I am aware we dont have to pay stamp duty. Unless my husbands parents gift effects our first time buyer status? However, we have been taking into consideration the fact that if we want to move down west in the next time years, we will have to pay stamp duty which may effect the size of our deposit for our next house.


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