# Spare monthly cash: overpay mortgage/Save/Pension?  What to do??



## Fostra (10 Mar 2010)

*Age:*
42, no spouse

*Annual gross income from employment or profession:*
E60k

*Type of employment:*
Private sector employee

*Expenditure pattern:*
Previously a fritterer, and it took a long time for me to take life seriously but saving now.  I rarely take holidays, certainly not expensive ones abroad, and I wouldn’t think of myself as having extravagant tastes, though I’m a sucker for luxury food. I haven’t been in debt really for many years but I have tended to spend my full paycheck each month without much thought to the future but as I said, this has changed now.

I have no phone (I use a company phone), I have basic NTL and no other subscriptions really.  Food and ‘Fun’ take up the top two expenses (see figures below).

My second biggest annual expense is clothes (€3600 last for 2009). I have a bit of a weight issue (too much luxury food maybe!) and my size fluctuates hugely so I seem to end up buy a new wardrobe of clothes every year.  I don’t buy designer, just regular, modestly priced stuff on the internet mainly.

So here’s a summary, some are totals for 2009, some are projections for 2010:

All food costs €4300 (am reducing supermarket costs this year)
Entertainment €5400 (all ‘fun’ related stuff: all alcohol, cinema, lunches and dinners out, taxis)
Clothes €3600 (trying to reduce this year)
My apartment management fee per annum is €1250.
Home insurance is €19 pm
Life assurance is €30pm
Bord Gais/ESB in 2009: €755
NTL in 2009 €487 but this will reduce this year as am back to basic package
Last year I had high costs in health (€1486) and home décor/kitchen (€6400) but these will be next to nothing this year.
Travel €500
The rest goes on books €270 (yes I have a library card and use it too but some books you just have to buy)
Gifts €1300
Petrol €573 and car service €1600 in 2009 as I had major problems.  
Bank fees €58 (overdraft facility fee which I never use and govt stamp duty.  The OD fee expires next year)
And approx €500 on silly stuff like family history research, fitness aids etc.
€250 into emergency savings fund.
€1250 mortgage

*Rough estimate of value of home*
Approx €170-180k

*Mortgage on home*
Initially €195,000.  Balance is now €190k.
Term 30 years (from 2006) but I want to pay this off before I retire.
TRS approx €37.50 pm
Monthly payment due is approx €900 but I overpay by €350 so total €1250 pm 
*Mortgage provider:*
KBC
*Type of mortgage: *
Interest only for initial three years, variable since July 2009.  
*Interest rate*
3.24%

*Other borrowings – car loans/personal loans etc*
None

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

*Savings and investments:*
€3k in savings account (@3.5%) (I had planned to have more in this by now but I dipped into it for a new kitchen last year when I realised I couldn’t move this decade!).  I save €250 into this monthly.
I also have €2k in a second current account for annual charges such as car insurance and tax, tv license and Christmas costs.

*Do you have a pension scheme?*
Yes, I pay €156pm into personal pension
My company pays e200.
Current value of fund is €37,100

*Do you own any investment or other property?*
No.

*Ages of children:*
None.

*Life insurance:*
Yes.

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


My life plans are simply to move to a more comfortable place and to retire early.
I currently live in a tiny apartment and would eventually want to move into a larger apartment or a small house.  I can’t at the moment as my loan to value percentage is so low and I’ve no big nest egg to supplement it so I want to either reduce the mortgage rapidly and/or build up a lump sum.
The only other life dream I have is to get out of the rat race early if at all possible so will need to finance that somehow.  
*SO – am I doing the right thing with spare cash at this point?*
NOTE: the overpayment option with my bank is that I can withdraw the overpayments at any time. I chose this since I don’t have any real savings and so might need these funds at some point if made redundant or get seriously ill. The alternative is that the overpayments cannot be withdrawn ever. I believe this actually reduces the capital and so the term but I haven’t quite got my head around this so I’m not sure if it’s the right thing for me.
I would really appreciate any advice here as I am trying to do the right thing.


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## Fostra (10 Mar 2010)

PS:  My take home pay is €2762pm.  Thanks for any advice.


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## kopq (10 Mar 2010)

From what I can gather, that €350 per month that you're overpaying and that you can "withdraw" is just sitting in your mortgage account. It's not earning any interest and it's not reducing your capital, term and amount of interest you pay on your mortgage. I might be wrong on that and I'm open to correction but if that's the case I'd sort that out immediately as that money is not working for you.

If you're comfortable continuing to overpay at that rate, then continue to do so but make sure the money comes off your capital and your term (considering you want the mortgage paid off before you retire). Or if having a bigger nest egg is more important to you at the moment, withdraw it and put it into a high interest savings acount. Also, keep going with the savings and make sure that the savings you make on reduced clothes shopping, basic NTL, etc, all go into savings.


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## Oscaresque (13 Mar 2010)

Fostra said:


> PS:  My take home pay is €2762pm.  Thanks for any advice.



Is this correct? €2762 take home pay on €60k annual salary does not seem right.


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## RIAD_BSC (13 Mar 2010)

Oscaresque said:


> Is this correct? €2762 take home pay on €60k annual salary does not seem right.


 

It isn't right at all. Should be around €3,300


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## Fostra (14 Mar 2010)

basic salary is 49k, the rest is bonus.


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## Fostra (14 Mar 2010)

So averaged out over 12 months, yes my monthly income would be approx €3300.  Thanks for pointing that out.


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