# Pain now or kick can down the road



## Fire away (27 Jun 2019)

*Age:* 36

*Spouse’s age:* 35


*My Income:* 60,000

*Spouse's income:* 45,000


*Take-home pay:* Approx €5.8k (3.8k for last 6 months due to wife on unpaid maternity leave


*Type of employment* – Both private sector. Big companies


*Spending or Saving?*

At the moment big spender. Wife is just finishing unpaid maternity leave and we are in end of attic extension. (that costs went over budget 5k approx). All of which is being paid by my one income as well as general living costs.


*Value of home:* €420,000

*Amount outstanding on your mortgage:* €240,000

*What interest rate are you paying?    2.8% Bank of Ireland fixed for another 4 years 28 years remaining


Other borrowings* – Attic Extension Loan 20,000 paying 385e per month. 57 months remaining 5.8% Interest Rate. Credit Card balance this month of 5k which im going to transfer to new card and get 12 months interest free, plan is to pay this balance off over the next 12 months. Im due prob 2-5k bonus next December so that will coer it also. It was the costs overrun from the attic.


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



*Savings and investments:*

Zero. We used to be good but all went into extension and wife for unpaid leave. I have 20k limit on credit card so for any emergency i can dip into that.


*Do you have a pension scheme? *

Yes. balance of about 70k. I pay 4% of salary and company pay 8%
Wife has small balance around 10k mark and she pays 5% and company pay 5%


*Do you own any investment or other property? *

No.


*Ages of children: *

3 and 9 months


*Life insurance: *
Standard basic mortage cover

My company pay 6x salary if i die plus 2/3 of salary to my wife each month along with regular pension contributions
I also get 2/3 of salary if i have long term illness or accident.

My wife pays 4x if she dies but thats the only additional benefit I believe.

My company pay for best VHI package for the 4 of us. (paying BIK for 4k)



*What specific question do you have or what issues are of concern to you?* At the moment things are tight as we only have one income plus the overrun costs on the attic. Last year we switched mortgage provider to BOI for the 2% cashback and better rate. We are just about to complete attic conversion that will costs around 35k mark (double bedroom, bathroom and small office so was a big job). 

I took out personal loan for 20k over 5 years with rate 5.8% repayments 385e per month. My thinking was not to get extra 20k on mortgage as would be paying it back over the next 28 years and a load of interest. I worked out the personal loan i would be paying over half the interest and it would be clear after 5 years. 

Since the personal loans repayments have kicked in it seems like we are living from month to month (just probably because of 1 income when we were always used to 2 incomes). Once the wife is back to work Im thinking of applying to EBS/TSB for another 2% cashback on mortgage. Would I be better looking for extra 15/18k to pay off personal loan. Our 385e repayments would be gone but mortgage repayments would go up by 100e approx for next 25 years or so.

I'm aware we both have good jobs and our problem is really cash flow at the moment that's why I have no problem putting 5k on credit card interest free for year. My question is are we better keeping personal loan or drawing down extra in mortgage for next cashback? We would like to have the extra 300 quid a month to enjoy life and go the odd break away and not to be balancing the book whole time. At the moment our lifestyle doesn''t match our income and we both worked hard to get where we are. No family holiday this year


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## Buddyboy (27 Jun 2019)

There's nothing stopping you getting the 20k on the mortgage, then overpaying the mortgage to ensure that that portion of it (the 20k) is effectively paid off over 5 years.  By having a personal loan, you are getting the same amount of money, for the same period, but just paying extra interest. 
(Assuming it's not a fixed rate mortgage).


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## NoRegretsCoyote (27 Jun 2019)

You are in positive equity and the mortgage is well within your joint means.

It seems daft to be paying a second loan at twice the interest rate of your mortgage.

No idea if it is feasible but try to tack the personal loan onto your mortgage when you switch.


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## David1234 (27 Jun 2019)

When is your wife due to go back to work?

What are your usual monthly outgoings?

I would look to top up your mortgage as you have good equity in your house and the attic conversion has presumably added value to that. This will help reduce the short term pressure on your finances. A mortgage of €280k on combined salaries of €105K should be very manageable. As you are fixed with BOI for 5 years you will need to get a break figure to see home much it will cost to get out of that contract. The break fee will help determine if it's worth moving banks.

Once your wife is back working and you have saved a decent emergency fund I would then look to overpay your mortgage. This will reduce the term and the amount of interest paid.


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## elcato (27 Jun 2019)

It's not clear whether you will have an extra net 2k per month once your wife goes back to work. Will there be childcare fees which will eat into this ? Can you overpay the personal loan ? If childcare is 1k and you have 1k net and you can overpay loan then do a halvo-halvo on repayment on loan and CC. If you can't overpay loan then pay 1k a month to CC bill and you will be clear by chrimbo. The bonus then can be a back up fund for emergencies. Then in Jan you can save for a holiday fund which you can benefit from by April next year.


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## moneymakeover (27 Jun 2019)

You're fixed for another 4 years with BOI?

So get a top up now with BOI for 40k


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## NoRegretsCoyote (27 Jun 2019)

moneymakeover said:


> You're fixed for another 4 years with BOI?
> 
> So get a top up now with BOI for 40k



I enquired about this with BoI a few years ago.

They would only authorise a top-up for renovations and in advance of the work being carried out.


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## Fire away (27 Jun 2019)

David1234 said:


> When is your wife due to go back to work?
> 
> What are your usual monthly outgoings?
> 
> ...


 
My wife is due to go back to work next month. my net income will go from 3.8K to 5.8k plus 280pm children allowance. Chilcare costs will be 800 pm


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## Fire away (27 Jun 2019)

elcato said:


> It's not clear whether you will have an extra net 2k per month once your wife goes back to work. Will there be childcare fees which will eat into this ? Can you overpay the personal loan ? If childcare is 1k and you have 1k net and you can overpay loan then do a halvo-halvo on repayment on loan and CC. If you can't overpay loan then pay 1k a month to CC bill and you will be clear by chrimbo. The bonus then can be a back up fund for emergencies. Then in Jan you can save for a holiday fund which you can benefit from by April next year.



Including child care costs we will be better off by 1,200pm from next month (2k net minus 800 childcare costs)


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## David1234 (27 Jun 2019)

Fire away said:


> My wife is due to go back to work next month. my net income will go from 3.8K to 5.8k plus 280pm children allowance. Chilcare costs will be 800 pm



You will have €6,080 coming in
Mortgage I presume is a bit under €1,000 p/m 
Loan- €385 and
Childcare- €800

You will have €3,950 to live on a month. You can easily save €1,000-€1,500 a month without converting the loan.


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## Fire away (19 Aug 2022)

Hi All,

Just a update on the makeover 3 years on.


*Age:* 39

*Spouse’s age:* 38


*My Income:* 75,000 + bonus 20-30k

*Spouse's income:* 65,000


*Take-home pay:* Approx €7.8k


*Type of employment* – Both private sector.  Wife is in a big company. I switched jobs to a big company on balance sheet with not many employees hence the main reason behind the decent bonus.


*Spending or Saving?*

For the first time in years we are starting to save and have extra cash.


*Value of home:* €480,000

*Amount outstanding on your mortgage:* €220,000

*What interest rate are you paying? 2.8% Bank of Ireland fixed with maturity date Sept 2023


Other borrowings* – Debt free other than mortgage


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



*Savings and investments:*

About 20k in cash sitting in a couple of zero interest accounts


*Do you have a pension scheme?*

Yes. balance of 90k. I pay 10% but my employer doesn't contribute.  I will likely be getting very generous bonuses over the next few years in the regions of 50%+ of gross salary.  I intend to put most of this into my pension
Wife has balance around 25k mark and she pays 5% and company pay 5% but she will probably increase contribution to 10% now that cashflow in good


*Do you own any investment or other property?*

No but might look to investment in rental appt in the coming years as alternative to pension


*Ages of children:*

6 and 3


*Life insurance:*
Standard basic mortgage cover

I lost a lot of benefits of around pension and life insurance from my old employer which was been offset by the bonuses of my new company.
This is something I need to look into in the coming months. 

My wife pays 4x if she dies but that's the only additional benefit I believe.





*What specific question do you have or what issues are of concern to you?*  No Major concern or specific question just a general personal finance checkup on what we are doing right or wrong.  

The last few years we have been working hard on our careers, paying off debt, having a young family and trying to grow towards a comfortable lifestyle. Our mortgage and bills are at a very comfortable level and its only in the last few months that we have extra disposable cash in our pockets. Both my wife and I got a decent pay rise at the same time.  

My main question is what we should be doing over the next 5-10 years as don't intend to work into my 60's. My 2 kids will have a good trust fund around 200-400k each when they become adults so we don't have to kill ourselves working for them as they will already have a good head start  in life (still not sure if trust fund is good or bad thing)  I would have potential to earn 2x or even 3x my gross salary on bonuses over the next 5 years but don't want to go down that route as it would involve working over 60 hours per week and loads of stress.  My current bonus pool is generous already so happy with that. Any advice or guidance would be greatly appreciated.


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## PGF2016 (19 Aug 2022)

Congrats on the last few years. Max out your pensions. With two young kids forget about the rental property and the possible headaches it might bring. Avoid lifestyle inflation as you earn more and you should do well.


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## NoRegretsCoyote (19 Aug 2022)

Fire away said:


> *Do you own any investment or other property?*
> 
> No but might look to investment in rental appt in the coming years as alternative to pension


Why? On pension you get tax relief on contributions, tax-free growth, and a diversification.

With a rental property you get 52% tax on profits, 33% CGT on gains, and risk a bad tenant.

I wouldn't go anywhere near a rental unless I was mortgage free and maxing out tax-relieved contributions already.


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## ned official (20 Aug 2022)

My thinking was I could retire a few years before my pension kicks in and live off rent or sell property which would keep me going for a few years. This is of course for any surplus cash I have after my max contribution into my pension. I know pension is better value for money but it's locked away for 20/30 years. What if I need a lump of cash in 10 years i can always sell the rental. I was kind of looking at the rental as a alternative to my pension that I could cash in anytime


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