# opinion on my financial situation



## Giulia (21 Nov 2008)

*Age*
Me: 29
Spouse: 28
*Employment*
Me: treasury operator
Spouse: recruitment consultant

*Gross Income*
Me: 32k
Spouse 44k+bonus (another 30k now before it was higher)


*Property*
Family home: worth 290k, 310k fixed mortgage with EBS @ 4.80 , 27 years left on mortgage
with the interest relief taking into account our mortgage is 1,250 per month.*Other Borrowings:* None. 2 credit card paid in full each month

*Savings*
11k in  AIB saving account

14k in Bank of Ireland Saving Account

5k shares

13 K Irish Life Fund

5k built up between our two current accounts

right now we are saving around 2,000 per month

*Pension:* Me: No Spouse: yes

*Kids:* Yes , 1 daughter 2yrs old

*Life Insurance:* Just  mortgage protection policy

*Spender or Saver:* Savers

*My Question/s:* 

Three years ago we bought an apartment, with our daughter getting older we would like to move in the next 5 years. With house prices falling I'm worried that in five years things will be worse for us.
We would like to keep the apt as an investment as it's 2 miles from the city centre (Dublin) and eventually our daughter will have it.
We are being very carefull with money, no phone bill, no internet, tv basic package, one old car, we bring our lunch to work, my husband cycle to work..
I'm just worried in general. Just would like to know what you think.
Thanks


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## Purple (21 Nov 2008)

Can you clarify if the apartment if your family home or if you have a family home plus an apartment?


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## Giulia (21 Nov 2008)

the apartment is my home.


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## Brendan Burgess (21 Nov 2008)

Hi Giulia

You don't face any immediate decision do you? 

You are not in a position to trade up just at the moment, so don't worry about it. 

You are managing your finances fairly well. 

You have a mortgage of 310k and 48k in savings. If you can pay this off your mortgage without penalty, you should do so. 

I don't think you will be in a position to retain the apartment as an investment and buy a family home. If you think that you might be able to do so, then you might hold off paying down the mortgage.  This is because you are better off having as high a mortgage as possible on an investment property. 

I really would not worry about what happens to your daughter in 20 years. Surviving the present and the next few turbulent years with a decent financial base should be everyone's priority. 

Brendan


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## Welfarite (21 Nov 2008)

I don't really get this thread. There is nothing in the post to suggest that you should be 'worried', as you put it.


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## Giulia (21 Nov 2008)

My worry is to not to be able to move in the next 5/6 yrs , if houses prices keep falling.
The location of the apartment now suits me but eventually I would like to move.

My strategy now is just saving as much as I can. 

Welfarite: you are right, my issue is probably that I worry too much.

Thanks


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## Giulia (21 Nov 2008)

Brendan said:


> Hi Giulia
> 
> You don't face any immediate decision do you?
> 
> ...


 
my mortgage has a fixed rate until november 09.

Thanks


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## paddyodoors (24 Nov 2008)

If house prices are falling, you are saving 2k per month and you are not planning on selling your apartment - where does the problem lie?

In your hypothyetical scenario - 
in 5 years your savings will have increased - the price of houses decreases and the apartment is irrelevant as you will keep/rent out. 

so surely this market is ideal for your situation and future plan?

Paddy


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## Guest128 (24 Nov 2008)

Giulia said:


> *Employment*
> Spouse: recruitment consultant
> Spouse 44k+bonus (another 30k now before it was higher)





Some bonus! The only worry I would have on this thread is that that would drop off very soon.....


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## SteveW9 (26 Nov 2008)

Well you are in major trouble with the appartment in 5-6 years you can expect it to be worth 80k I'm afraid as with all the property available now nobody wants an appartment.


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## deedee80 (26 Nov 2008)

I think that flippant comments like that SteveW9 are very unhelpful.  Unless you know for certain that it will be worth 80k in 5 years then I would not make sweeping statements like that.


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## Giulia (26 Nov 2008)

Stewe: that probably would'n be so bad because I could buy a house with my savings then and keep the apartment.


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## deedee80 (27 Nov 2008)

Thats true Giuila, thought about Steves post afterwards and I was thinking I would love it if I could get a nice apartment for 80k in a few years time!


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## jnh (27 Nov 2008)

paddyodoors said:


> If house prices are falling, you are saving 2k per month and you are not planning on selling your apartment - where does the problem lie?
> 
> In your hypothyetical scenario -
> in 5 years your savings will have increased - the price of houses decreases and the apartment is irrelevant as you will keep/rent out.



I think this is a bit of a simplistic view. If (as you assume here) house prices continue to decrease over the next five years, the apartment will move further and further into negative equity. I would assume that having a mortgage on an apartment in negative equity will have an impact on the amount a bank would offer as a new additional mortgage?


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## Giulia (27 Nov 2008)

jnh said:


> I think this is a bit of a simplistic view. If (as you assume here) house prices continue to decrease over the next five years, the apartment will move further and further into negative equity. I would assume that having a mortgage on an apartment in negative equity will have an impact on the amount a bank would offer as a new additional mortgage?


 
Worrier as I am, I wouldn't add a mortgage to another one. that would kill me


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## jnh (27 Nov 2008)

Giulia said:


> Worrier as I am, I wouldn't add a mortgage to another one. that would kill me



Then I'm confused - if you intend keeping the apartment and buying another house, do you intend buying without a mortgage?


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## SteveW9 (1 Dec 2008)

deedee80 said:


> Thats true Giuila, thought about Steves post afterwards and I was thinking I would love it if I could get a nice apartment for 80k in a few years time!


 All indicators point to the fact that you will be able to


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## SteveW9 (1 Dec 2008)

and what will you do with the appartment when it falls you will not even be able to rent it out


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## Bronte (2 Dec 2008)

In 5 years time you will have reduced the mortgage somewhat.  If at that time the rent will easily cover the mortgage plus other costs, there would be no reason why you could not keep it.  The location is very important in relation to this.  If you continue to save you should be able to have a large deposit and thereby having a low mortgage on your new home.   There are tax advantages to having a mortgage on a rental property which is why it is nearly always better to have a high mortgage on rental propety.  One can only really look at the circumstances nearer to 5 years time as it is too difficult to 'predict' what way prices will go.  You are easily covering your current mortgage and saving too, I don't see any problems currently for you.


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## Maybrick (2 Dec 2008)

Sorry if I'm being dense, but why is it a good idea to have as high a mortgage as possible on an investment property?


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## LennyBriscoe (2 Dec 2008)

Maybrick said:


> Sorry if I'm being dense, but why is it a good idea to have as high a mortgage as possible on an investment property?


 
Because you can offset the interest payable against any rental income. The higher the interest you pay the lower your rental income tax liability.


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## Giulia (3 Dec 2008)

jnh said:


> Then I'm confused - if you intend keeping the apartment and buying another house, do you intend buying without a mortgage?


 
what I mean is that I would like to buy another house with a very very small mortgage.. otherwise I'll be trading in the apartment or if things go very bad I'll stay in the apartment.


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## Giulia (3 Dec 2008)

SteveW9 said:


> and what will you do with the appartment when it falls you will not even be able to rent it out


 
if things go very bad I'll stay in it. Keep saving and wait.

.. then I'll be run over by a bus and the world will end...
sorry just joking .. but I see you are very very negative.. 

I'm not irish and where I'm from is absolutely normal living in an apartment. I lived in an apt all my life, my dad is a teacher, my mum is a nurse, I have a degree, a master and I'm doing now the ACCA...
Living in an apt does not mean having a bad quality of life...


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## SteveW9 (3 Dec 2008)

Giulia said:


> if things go very bad I'll stay in it. Keep saving and wait.
> 
> .. then I'll be run over by a bus and the world will end...
> sorry just joking .. but I see you are very very negative..
> ...


 
Well we are being negative because things are going to get really bad here. I dont think having a masters will make any difference at all. 

You will be in huge debt from your appartment im afraid.


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## Giulia (3 Dec 2008)

SteveW9 said:


> Well we are being negative because things are going to get really bad here. I dont think having a masters will make any difference at all.
> 
> You will be in huge debt from your appartment im afraid.


 
Steve things are being very bad here, in italy where I'm from, in the US, Australia is in recession... there's nothing I can do about it. Winging won't help me. I'll work hard and do my best. 
and as I said I'll just keep living in an apartment and pay my mortgage that I can easily afford. 
I was just asking for an advice..


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## SteveW9 (3 Dec 2008)

Giulia said:


> Steve things are being very bad here, in italy where I'm from, in the US, Australia is in recession... there's nothing I can do about it. Winging won't help me. I'll work hard and do my best.
> and as I said I'll just keep living in an apartment and pay my mortgage that I can easily afford.
> I was just asking for an advice..


 No problems Giulia Im only trying to give you my advice. 
It is a bad time here and will continue to be. I think Italy might be a better option in 2 years, you might see a lot of Irish moving over there.


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## Giulia (3 Dec 2008)

SteveW9 said:


> No problems Giulia Im only trying to give you my advice.
> It is a bad time here and will continue to be. I think Italy might be a better option in 2 years, you might see a lot of Irish moving over there.


 
Trust me Italy has been in recession for the last 5 yrs, and property is as expensive as in Ireland. Oh and My husband does not speak any italian at all ....

I suppose I'll just wait and see
thanks for the advice anyway.
Nico


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## SteveW9 (3 Dec 2008)

No problems Guilia, ireland recession could last much more than 5 or even 10 years, a lot of people I know are considering emigrating as soon as they can before there are restrictions on visas.


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## Giulia (3 Dec 2008)

SteveW9 said:


> No problems Guilia, ireland recession could last much more than 5 or even 10 years, a lot of people I know are considering emigrating as soon as they can before there are restrictions on visas.


 
my husband is american.. that's an option.. we'll just wait and see..


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## CGorman (3 Dec 2008)

Steve, I dont normally interfer, but you are being a bit overtly negative no? Every reply is, 'well its even worse here' and 'will only get worse'... yes things are bad, but therse no need to over do it.

As regards Italy, do you really think your going to see lots of Irish emigrating there with their freckles, red hair and all  seriously, the Italian economy faces far more structural problems than the Irish one does and has a very very negative long run forecast in comparision to Ireland.


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## Giulia (3 Dec 2008)

CGorman said:


> Steve, I dont normally interfer, but you are being a bit overtly negative no? Every reply is, 'well its even worse here' and 'will only get worse'... yes things are bad, but therse no need to over do it.
> 
> As regards Italy, do you really think your going to see lots of Irish emigrating there with their freckles, red hair and all  seriously, the Italian economy faces far more structural problems than the Irish one does and has a very very negative long run forecast in comparision to Ireland.


 
I'd love to move back to Italy but I have to agree with you, Italy is not the place to be right now. that's why a moved, with a degree, master the only job I could get was a temporary contract (in Italy that means that you are not paid if you are sick, no holiday pay, no pension) and getting paid around Eur 800 per month. and trust me Italy is not that cheaper than here.


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## CGorman (3 Dec 2008)

Steve, without going too far in a tanget from the OP's original comments: I do agree the economy will suffer badly for the next few years and we are in trouble in the short/medium term - but to suggest or imply that we are going to see negative growth for ten straight years and at the same time to predict the situation in Italy is only going to last half that length... well personally I feel thats a little OTT. 

As I said, this is not the place to debate this, and as such I think expressions of very strong personal opinions on issues like the recession may not be particularly benificial to the OP. Theres plenty of threads in the Great Financial Debate section dealing with this.

On Giulias last post: I recently toured Italy whilst interrailing during the summer and it is a wonderful country in so many ways, but the price level was extraordinary, particularly when coupled with what I know of the economic situation there. I was struck by the variance in price, service, and attitude between north and south. €800 a month as you state would not be a very sustainable amount to earn.

To go back to the original question:

Despite your negative equity situation, you are actually in a fairly stable financial situation. You are comfortably meeting all repayment obligations and have a good amount of cash savings. If you want something to do:

> Reassess all savings accounts to ensure they are earning highest interest rates on the market
> Consider starting a pension, particularly as next year you turn 30 which improves the tax benefits (max deduction ^ from 15 - 20%)
> You have a very good rate on the mortgage as far as I can see
> Maybe split the €2k savings a month as follows: €750 pm, overpay mortgage (if possible), €750pm into savings accounts, balance into pension and maybe treating yourselves.

I suggest you overpay the mortgage as when it comes to trading up down the line, the smaller the existing mortgage balance the better.

About the pension; please speak to a qualified independent professional. 

Best of luck


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## Giulia (3 Dec 2008)

thanks CGorman you've been very helpful.


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## DrMoriarty (3 Dec 2008)

I've deleted a number of off-topic posts. Would posters please confine themselves to offering constructive advice to the OP?


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## SteveW9 (3 Dec 2008)

DrMoriarty said:


> I've deleted a number of off-topic posts. Would posters please confine themselves to offering constructive advice to the OP?


 Is being realistic not contructive whats the point in having a discussion if you keep deleting my comments


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## SteveW9 (3 Dec 2008)

DrMoriarty said:


> I've deleted a number of off-topic posts. Would posters please confine themselves to offering constructive advice to the OP?


 I spent 20 minutes writing a summary of how I see Ireland today. 
It wasnt abusive just a very honest submission which I wanted to share. 

Yet you guys deleted it after me wasting my time. Whats the point in having discussions, this is an absolute disgrace.


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## DrMoriarty (3 Dec 2008)

SteveW9 said:


> I spent 20 minutes writing a summary of how I see Ireland today.


Maybe you'd be better off posting in the Letting Off Steam forum? This forum is for people who want a review of their finances, not generalised ranting about the state of the country.


SteveW9 said:


> [...] you guys deleted it after me wasting my time. Whats the point in having discussions, this is an absolute disgrace.


Your sentiments are noted. Maybe you should have a read of the ?


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## SteveW9 (3 Dec 2008)

DrMoriarty said:


> Maybe you'd be better off posting in the Letting Off Steam forum? This forum is for people who want a review of their finances, not generalised ranting about the state of the country.
> Your sentiments are noted. Maybe you should have a read of the ?


So you are telling me the state of the economy and the state I believe it will be in should have no bearing on the advice I am giving people.....unbelivable


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## DrMoriarty (3 Dec 2008)

Steve. You got plenty of advice on your own situation without any of the off-the-point ranting along the lines of what I've deleted here.


SteveW9 said:


> Actually I think your best bet would be to keep your house for 1 more year as it should rise by at least 40% in value by then.
> 
> I wouldnt worry about your pension either I have heard Brian Cowen is an expert and will have them sorted out by March at the latest, expect a 200% return.
> 
> Now that should keep CGorman happy.


If you don't agree with the posting guidelines at AAM, perhaps you should seek out another forum, or start your own blog.


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## SteveW9 (3 Dec 2008)

DrMoriarty said:


> Steve. You got plenty of advice on your own situation without any of the off-the-point ranting along the lines of what I've deleted here.
> If you don't agree with the posting guidelines at AAM, perhaps you should seek out another forum, or start your own blog.


There are a few forums with a lot less restrictions or opionion control that this site believe me. 
On the property pin there is a section saying how bad ask about money is and to give your opinion on the moderators, there are a lot of people fed up with this site. 
I didnt believe it until today however i do now. 
I have copied all your responses to my time consuming posts as evidence. 
I wil not be be psoting to this site again. You are a joke.

Good Luck this is the Fianna Fail of "discussion" forums.


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## PaddyW (3 Dec 2008)

Is it just me, or is it "one of those days".


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