# 30 y.old: Saving opportunity with no debts, no assets, but also no clue :(



## Sagit (24 Feb 2013)

Hi, 
I’d like to ask the posters here for some financial advice. To cut a long story short, I’m 30 with virtually no debts and no assets. I have an opportunity for the next two years to save perhaps EUR 20k per year. Here are the details:

I work in IT and last August moved to Dubai to take up a permanent job. 
My income in Dubai per annum is EUR 63,000, all tax free. 
Of this, I receive around 3,000 euro per month
10,000 euro twice per year in lump sums
the remainder in a few smaller payments per year

In terms of debt, I owe EUR 3,200 to AIB for a student loan. This will be cleared by April 2013.
I have no children yet.
I met a girl here and am getting married in June.
We are planning for a child in the second half of 2015.
I bought a new car in Dubai last December on hire purchase. Outstanding amount is EUR 12,000 spread over the next 32 months. The repayment amount per month is very small and I only spend around 15 euro per fortnight on running the car. 
I know that: 

in 2013, after clearing my college loan, I can save 9,000 euro
in 2014 I can save 22,000 euro
in 2015 can save 25,000 euro, all while remaining debt free and living a good lifestyle
What I’m unsure of is what I should do with this money. Do I keep it in the bank?
I am concerned because right now I have no savings for pension, no investments, no emergency money, and I own no property.
What freaks me out is the fact that when I move back to Europe, possibly with only 55k in savings and a wife and kid, this is not a good situation, considering that I will need to provide for my family.
My fiancé is an experienced accountant (31 years old, 7 years experience) who has lived in Dubai for 7 years. She also has no savings, but a reasonable job with an annual income of 22,000 euro tax free. She, however, has some debt: 

4500 euro on her credit card (combo of purchases and debt incurred to fly family members to Dubai as a one-off)
A mortgage for a property in the Philippines: cost = 300 euro per month until mid-2017. Idea is to have an asset
A loan for the refurbishment of a family property, which she has a stake in. Cost = 300 euro per month until 2015 
I am worried that my wife will struggle when we move back to the west. My HQ is in Germany and I can relocate there in 2015 or later if I wish. My income then would be around 50,000 euro gross + company car + medical insurance. I see a massive reduction in income when this happens and I want to be ready for it. 

My fiance speaks English but not German; this would surely be a problem when we move back there. 

Also, she has 7 years accounting experience but no higher certification, which I see as a hindrance. I am trying to encourage here to do a CMA course here in Dubai. The cost would only be 3000 euro, but she is balking at the expense of it (I think it’s a bargain at that price). 

When I came to Dubai, I was single and expected to save 60 – 100k before returning, still single, to Europe for a life of comfort. 

Now that I’ll have a wife from June and a kid in 2015, and less savings and still no assets, I am a little stressed to put it mildly. I love my fiancé but want to avoid financial stress and be comfortable when we go back to Europe.

Please advise me. I really need it.


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## goingforgold (24 Feb 2013)

Interesting post.

First thing to point out is that compared to most you are in a very healthy situation. Most people in their early thirties would love to have your problems 

Second thing I would like to say is that if you are planning your finances around your future wife and kids then you need to include her assets when estimating your net worth in a few years time.

What are the values of her property in Philippines and family property. Can she possibly sell these or sell her stake in family propoerty? and This combined with your savings may put you in a very good place if/when purchasing a family property in Germany.

No need to "freak out"...you are in a good position


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## SarahMc (24 Feb 2013)

I concur with the above. I would also say the best investment you could make now is in your partners education, both formalising her accountancy quals, but also in learning German if that is where you see your future.


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## Luternau (24 Feb 2013)

I think its a strange post.

The best way to save money is to save money. Put it in a jar or in a bank. Banks are the preferred option.

Also the figure for the partner seems very low for an accountant working in Dubai. Then the OP says she is not qualified. She has outgoings of 7200 plus credit card bill of 4500. Does not leave much left over to live on in Dubai.

I don't get this!!


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## Sagit (25 Feb 2013)

What don't you get? 
Her earnings are actually pretty high for a non-Arab / non-westerner. Most people in Dubai actually earn very little. It's quite normal for job adverts to specify the desired nationalities of employees so that employers can pay multiples less. 

She has a bachelors degree but is not certified, ie CMA certified. 
Finally, sure, the easiest way to save money is to save money. I was partly hoping for advice about how to save it, for example whether it should all be saved together or be split into savings for different needs, for example, pension, emergency money, etc. 

Thanks for the replies.


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## Bronte (25 Feb 2013)

Can you tell us more about the 2 properties of your fiancee? Is she paying only the bare minimum on the credit card?

If the extra qualification means she'll get a higher salary I cannot understand why she would not go for it?

When you get the lump sum would you be better off paying the student loan.  What's the interest rate on the hire purchase.


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## Sagit (25 Feb 2013)

Hi Bronte, 

I'll find out all the details for you this evening or tomorrow evening. She is paying a fairly miminal amount on her card. 
My hire purchase interest rate is pretty good at 2%.

Having spoken to some colleagues today, one or two reckon that I should invest strategically in a property somewhere, either in Ireland, Dubai, or Germany. 

They reason that I earn good money now, so I should use that to buy rather than have it in cash. In this way, they say, you have an asset and a steady income stream later in life when you retire.

I am thinking about buying a two-bedroom apartment in one of the mentioned countries on foot of this. I mean, it would seem to make sense: pay perhaps 20,000 as an advance for a rentable apartment, then have the rent income service the mortgage and you have a nest egg. Rents are high in Dubai so you would recoup the amount reasonably quickly (in theory).

I definitely feel that in addition to having saved a decent amount of cash, I need an asset. I feel very exposed as things are.


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## goingforgold (25 Feb 2013)

Have you any idea as to the value of your fiancee's properties? I note that you are going to get all the details later in week but the value of these will make all the difference when getting advice on how next to proceed...


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## Bronte (25 Feb 2013)

Your long term intention is not to live in Dubai.  I would not invest in somewhere so far away as it will be exceedingly difficult to manage it.  In addition you do not have the same legal certainty of ownership as one would have in Germany or Ireland.  Germany is a very stable rental market.


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## Sagit (27 Feb 2013)

Hi again, 

So, I found out about the property in the Philipinnes. Basically, it seems to be a bad investment. 

The amount outstanding on the mortgage is approximately EUR 15,000. It looks like if my fiance were to sell it now, she would get substantially less than she paid for it. 

Renting it out monthly is also not a viable option as it would yield a paltry 60 euro per month in rent. The Philipinnes is a very low income economy.

My fiance will investigate cutting her losses and selling the property, and using the gained monies to clear her debts in Dubai, which in her opinion are large, but in my opinion small -- approx 5,000 euro.

She did some sums last night and her monthly outgoings are practically matching her income, which was tough to see. 

2000 euro = net income
312 euro = mortgage on bad property investment
312 euro = loan repayment towards rennovation of family home
312 euro = her rent (this will no longer have to be paid come October)
100 euro = her bills
200 euro = remittence to Philipinnes
519 euro = credit card repayment

This is a sore subject. I know that I could clear her Dubai debt of 5000 euro pretty easily; but to be honest, I want to clear my own debt of 3000 euro first AND I want to start saving, so that WE as a couple have some savings, because at the moment I (and we) have none. I also want her to see that she needs to get a grip on her finances because right now, she doesn't seem to have one, though she crunched some numbers last night. 

I am also a little concerned that if I bail her out, she will become complacent. 

I've said that I'll support her in terms of all food and socializing costs until her 5000 euro Dubai debt is cleared. I might start to give her some of my salary per month to make things more easy for her -- say. 1000 AED per month from July onwards. 

She's also contemplating selling her 6 year old car and buying a new one. She would use the gained money for clearing her debt and then borrow for the new car at a lower interest rate. Personally, I'm not sure that this is a sensible option at all. 

The remittence to her mother seems to be inviolable, and I accept it. What I find less tolerable -- but which I must also accept -- is that around 40% of her Dubai debt (i.e. 40% of the 5000 euro) has been accrued due to flying her brother to Dubai and paying for his visa. Now she will fly her remaining brother to Dubai (but this time she will not pay for his visa). This money will never be recovered. That's the Filipino way, however, and I accept it. It's coming out of her funds (and while she earns 9500 AED per month, they can only earn 2500 AED per month).

So -- should I clear my debt first and build up some savings and then assist her with clearing her outstanding 5000 euro credit card debt?

Or should I immediately help her to clear her credit card debt so that we can both then focus on saving?

She made a point that she accrued this debt and does not need my help to clear it. yet it's obvious that unless I help her, she'll really struggle for the next year. I don't want my soon-to-be wife to be struggling in our first year of marriage, while at the same time I don't want to set a precedent of bailing her out of her situation which largely arose because she lived beyond her means.

I'm mindful of the fact that we have a kid planned for 2015 and as yet no savings, which I find an intolerable situation. Granted my income stream is strong right now -- and that's why I want to save right now rather than clear her legacy debt.

Please advise... the dynamics of finances in a relationship are quite new to me 

PS: I realize I might seem a bit mean, but for the first time in my life I can actually save good quantities of money and ultimately, what I save will be for the future comfort of my wife and child. I have high hopes for the future but it'll be a hard slog between now and then.


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## Sagit (27 Feb 2013)

The more I think of it, the more I'm feeling that I should settle half or more of her credit card debt immediately by using my credit card and an interest-free overdraft that I have.

What this means is that my own debt will no be cleared at the time that I would  have liked, and that it will take me a bit longer to start savings.

I can much more easily clear the amount that I would incur than she could clear the amount that she has incurred.

But at least the pressure would be taken off her and she could breathe a little, and she would appreciate the gesture. However, I'd have to make it clear to her that should not live beyond her means again.

At the same time, it kind of goes against the grain. She's a very loving partner, and trustworthy, and I think this could help her to feel less stressed. 

Opinions? Don't spare the whip on me, please.


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## Bronte (27 Feb 2013)

Sagit said:


> Please advise... the dynamics of finances in a relationship are quite new to me
> 
> .


 
And they can make or break a marriage. One of the main causes of marital strife.

Can you please not use AED - just Euro's as it's too confusing.

I find it very strange that you are already planning 2015 as a date for having a child and you're not yet married. Maybe it's just me but I find it somehow too planned.

Can you also clarify what is her stake in the family home, who lives in it and who owns it etc.


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## Sagit (27 Feb 2013)

Bronte said:


> And they can make or break a marriage. One of the main causes of marital strife.
> 
> Can you please not use AED - just Euro's as it's too confusing.
> 
> ...



It's her grandmother's home and she has a one-fifth stake in it. Her monthly liability towards that debt is until mid-2014 and is around 312 euro per month.

Regarding the child, well, that's just her age. She's already 31 and we feel that 2015 is the best time for use to have a baby, given our situation and her age.

I will change the AED figures above to euro


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## Bronte (27 Feb 2013)

Sagit said:


> It's her grandmother's home and she has a one-fifth stake in it. Her monthly liability towards that debt is until mid-2014 and is around 312 euro per month.


 
This sounds very messy.  Would she not be better off divesting herself of this?


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## Sagit (27 Feb 2013)

Bronte said:


> This sounds very messy.  Would she not be better off divesting herself of this?



I think so! 

Her whole financial situation is messy if you ask me. From an outsider p.o.v, I think she's been bled dry by her family, albeit willingly. And I've learned that these issues are cultural. 

I've found out that for Filipinos, inter-dependence is a central feature of their culture, and that includes economic affairs too. 

However, I've made it clear -- and she accepts -- that when we're married, the situation will have changed, and she knows that I will have no part in her family's finances. She's quite happy to withdraw her support then too, with the exception of her mother's remittance (300 per month, from my fiance's own salary), which will continue. This really is a cultural thing. 

However, all of the debt of hers that I've described is legacy debt from before I knew her. It's hard for me to suggest that she extricate herself from a family entanglement like that one.

Of more concern in my mind at least is her credit card debt of 5000 euro, because it's more immediate and onerous, and isn't related to an asset.


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## Bronte (27 Feb 2013)

It's very hard to change someone's culture and I'm not sure that it's a good idea to try. 

 Money management is though something that should be tackled.  Sometimes though there are hopeless cases.  Sometimes in a marriage one spouse leaves it to the other, othertimes it never works out. 

How about this.  You pay off the credit card debt now and she pays you back 500 Euro a month.  See how that goes.


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## Sagit (27 Feb 2013)

Bronte said:


> It's very hard to change someone's culture and I'm not sure that it's a good idea to try.
> 
> Money management is though something that should be tackled.  Sometimes though there are hopeless cases.  Sometimes in a marriage one spouse leaves it to the other, othertimes it never works out.
> 
> How about this.  You pay off the credit card debt now and she pays you back 500 Euro a month.  See how that goes.



Thanks Bronte. I was thinking something similar. I think I'll do it.


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## marathonic (27 Feb 2013)

This is a difficult one. Obviously, you're in a very good position personally. Having lived in India for a while, I know how much more entwined family finances are in the east.

On their salaries, it tends to take years to save up enough to move west and earn a decent salary. For this reason, a lot of them will pitch in and send one person who will help subsequent people afford it.

You say that 300 per month, from your fiance's own salary, will continue to go to her mother. When you are married, your finances will be one and the same. As long as you are happy writing 300 per month off your budget indefinitely, you should be fine.

You talk about the situation changing when you are married. Personally, my advice would be to get the situation you expect in place before *marriage * and give it at least 6-12 months.

Your expectations could be different to hers and there's no knowing how her family will feel when she withdraws support. Things could get very tense for a while and, if it were me, I'd rather face that tension before marriage to ensure that we could handle it.

With it being the cultural norm for her to support family, I don't know what you would compare it to in Ireland. Perhaps it's comparable to her asking you to stop paying for rounds in the bar when out with friends. All I do know is that, with the support withdrawal being at your request, you should probably be expecting a sour relationship between yourself and your future in-laws.


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## Sagit (28 Feb 2013)

Maybe...but one or two other family members are already westernized, so she wouldn't be breaking the mold 

It's a risk. When I moved to Dubai, this was the last thing that I expected would happen.

But happening it is...in June this year: Civil ceremony in Ireland then; then a small party for her family in October; followed by a small church wedding in Dubai in June 2014 for friends and relatives who are here.

I will have to stay in Dubai for an three or four years to achieve my savings goal of between 70 - 100k + no debt.


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## Macstuff (3 Mar 2013)

I want to comment on your idea re buying an investment property. 

My main concern is that you are thinking about buying in Dubai. Personally I think thats unwise for a couple of reasons:
1) You wont live there going forward - managing an investment property remotely is VERY difficult. I have two overseas properties that work for me. However, I would never be able to do it only that I have a very trustworthy and knowledgable family friend (a lawyer who works in real estate) who lives there managing the property for me.
I realise that your partner may have family in Dubai for many years once she is gone, but don't consider using them as agents - you have already experienced how complicated mixing family and property can be, don't get caught twice.  
2) I have no faith in the Dubai property market. 
I was there on a holiday in Nov. and have been there many times over the last ten years. I am convinced that there is a huge number of empty rental properties there. I am guessing that the authorities are manipulating the market to hide this. 
Despite this there seems to be lots of building ongoing. I suggest that they have not learned any lessons from the 2009 collapse of their economy. 
3) I think that the overall Dubai economy has limited prospects. I know that they speak about being a hub for the region but most of their neighbors are competing for this title.  
4) Dubai is not a democratic state - the rulers can change the laws at any time, I wouldn't want to have long terms ties with the state. 

If you are thinking about using your money for an investment property maybe consider Germany as you plan to locate there long term.
However, investing in property is a serious business, you need to do a lot of research. If you are looking for a stress free investment don't think about property!


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## Luternau (3 Mar 2013)

OP started off by asking if banks were a good way to save-now they want to be in Property, which would require borrowings.

Everything is based on staying in Dubai till xx year. It's good to have a goal, but what if things change and you have to leave sooner than intended?

Personally, I would say if you are unsure about savings and investments, and plan on starting a family in 2015, then imvestkng in property is not for you at this time.

Put your money in a high a yielding bank account first and actively manage it as it grows, with little or no risk.


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## Dr.Debt (4 Mar 2013)

I know this is way off topic and I don't mean to be patronising in any way but you appear to be a young man in a huge hurry to get to an "ideal world" of luxury and happiness. Personally I dont think the world works like that.

If I was you I would concentrate on enjoying my new relationship for a whole lot longer before getting married. Your fiance comes from a completely different culture from you and a few extra years getting to know, each other, each others families and each others cultures would be very well spent. I think you should spend this time enjoying yourself and not to worry too much about money at all.

What you're planning is not easy. You are trying to juggle a new relationship, a new culture, a new wife, a new baby, a new job, a new country, a new extended family all into one very tight time frame. This doesn't make too much sense.

Slow down.


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## PaddyW (4 Mar 2013)

dr.debt said:


> i know this is way off topic and i don't mean to be patronising in any way but you appear to be a young man in a huge hurry to get to an "ideal world" of luxury and happiness. Personally i dont think the world works like that.
> 
> If i was you i would concentrate on enjoying my new relationship for a whole lot longer before getting married. Your fiance comes from a completely different culture from you and a few extra years getting to know, each other, each others families and each others cultures would be very well spent. I think you should spend this time enjoying yourself and not to worry too much about money at all.
> 
> ...



+1


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## Macstuff (4 Mar 2013)

Not to jump on the bandwagon but I was kind of thinking along the same lines when I posted yesterday. 
The OP in a good position, good job, good pay, probably a nice Dubai lifestyle etc. etc. but yet seems to be under alot of pressure, some of which seems to be coming from within. 
Take it easy, you are putting alot of deadlines on yourself some of which might not be entirely necessary/achievable. 
If you have doubts about anything you have wrote about just make sure that you are in a position where you can say no, or no not yet!


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## amtc (5 Mar 2013)

This doesn't help with the original question - but I do agree with others - this does seem very like a project plan. God forbid the child doesn't appear on exactly the right date!


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## Macstuff (6 Mar 2013)

Agreed it doesn't help with the original question - but peoples financial decisions are usually driven by their personal circumstances. It's often relevant to look at the personal circumstances when considering financial decisions.


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