# Money make over advice pls



## dovetail (27 Feb 2017)

*Age:*
38
*Spouse’s/Partner's age:*
N/A

*Annual gross income from employment or profession:*
€75,500 

*Annual gross income spouse:*
N/A

*Monthly take-home pay:*
€4,200


*Type of employment:*
Private sector

*Expenditure pattern:*
I am generally a good saver

*Rough estimate of value of home*
€375,000
*Mortgage on home*
€274,000
Amount outstanding on your mortgage: Just 3 months into repaying first time buyer mortgage. 27 year term. Currently pay €1,300/mth.


*Mortgage provider:*
EBS

*Type of mortgage: Tracker, interest only, fixed rate*
Variable

*Interest rate*
3.3% 

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

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

*Savings and investments:*
€47,000 in saving account earning about 1%

€36,000 in regular savers account earning 3%

*Do you have a pension scheme?*
No

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

*Ages of children:*
N/A

*Life insurance:*
Mortgage protection only

*What specific question do you have or what issues are of concern to you?*
From doing some reading here, I think now that I have the mortgage I should put most of my saving’s against the mortgage. Keep a rainy day contingency of around €20K. Each month I also have €1,000 that goes into regular savings @ 3%.  I am concerned that I should be doing something else with this €1,000. My options could be to:

a) continue regular saving’s at 3%
d) overpay the mortgage on a monthly basis

c) Start a pension plan (this is an area that I do not know much about and as I edge towards 40, this is fast becoming a big concern!)


Given my age, what would others recommend to do with the €1,000 per month to work better for my future?

Any suggestions and advice welcome! Thanks!


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## aristotle (27 Feb 2017)

What are you thinking about your pension provision? You should consider stating a pension especially if your employer would contribute to it. It's a no brainier for me. 

Your mortgage is costing your 3.3% and over half of your savings are earning 1% so many people would say your should pay down your mortgage more. 

If you start a pension you can also do additional AVCs if you want to put more into your pension. Plenty of reading for you on the web about pensions.


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## gnf_ireland (27 Feb 2017)

@dovetail 

I think you actually list the three options above pretty clearly. Its now just about deciding which way to divide the money.

I think you will find general agreement that you are carrying too much cash reserved when your debt is quite high and expensive (3.3% after tax). You need to decide what is the cash reserve level that makes you feel most comfortable and pay the rest against the mortgage. Only you know what this figure will be

Regarding the 1000 a month, why not do both pension & mortgage over payments
- Does your employer have a pension scheme and do they contribute anything towards it? If they do you should pay enough into it to benefit from this 'free money'
- If not, I would probably pay 1000 euro a month into a pension, which would see a tax saving of 40% or so. That would leave ~400 euro remaining
- The 400 euro I would use as a regular over payment against my mortgage

Personally, I would not continue to pay into the regular savings if I have sufficient cash reserves, unless you wish to use the money for a holiday or something else. If you need to dip into the cash reserves, you can always reduce the pension contribution/overpayment until they are back to the start level again


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## dovetail (28 Feb 2017)

Thank you Aristotle & GNF_Ireland for the advice! Regarding the pensions I will get going on the research to have a clearer idea of the options available and will talk with my employer also! I think getting a pension plan going whilst making overpayments on the mortgage that can be adjusted if necessary is a good idea and will work well for me. Thanks again!


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## gnf_ireland (28 Feb 2017)

Ask the employer what pension scheme they have, if any, and what contributions they make into it, if any.

If your employer does not contribute to the pension, then you should determine if their scheme is the best value for money - sometimes they are not with higher charges.

The key things to ask them are:
1. What is the allocation rate for the premiums?
2. What is the Annual Management Charge on the funds?
3. Are there any other charges on the pension scheme?
4. Are there any lock in periods or early exit penalties?
5. What funds have you access to, and are they restricted in any way?

I am sure others will advise here on other things to be aware of

Once you have this detail, you should ask on here to see if the offer is reasonable? There may be some people on here who work in the industry who can offer you a better deal.

The other thing is how actively do you want to manage your investment? If you dont, you need to put your money into a fund each month and just enjoy the ride for the next 10-15 years, reviewing each year or two. You will have lots of people advise between passive and actively managed funds, but in the end it depends on what you believe is best. Same will be for asset allocation across different classes etc, and this is where a managed fund can sometimes make things easier.

Good luck in the review, and definitely post again (in the pensions forum) before making a final decision


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## Bronte (1 Mar 2017)

Why don't you make more money by renting out a room.  If you're living on your own you could do this quite easily and use that money to pay down your motgage quickly.


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## gnf_ireland (1 Mar 2017)

Bronte said:


> Why don't you make more money by renting out a room. If you're living on your own you could do this quite easily and use that money to pay down your motgage quickly.



I am not sure where you are based OP, but it may be possible to offer a Monday-Friday let option for commuting workers. This is relatively common in London for example and allows the home owner enjoy the privacy of the house at weekends and holidays. Most people don't mind having company on 4 evenings a week... 

Up to 14k tax free - a nice holiday for yourself and a chunk off the mortgage each year for the 'hassle'


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## dovetail (5 Mar 2017)

Thank you Bronte & GNF. I am already looking into the rent a room scheme to help get that mortgage paid off more quickly and to be able to have that holiday treat . Thanks for the tips on the questions to ask in terms of pensions and will post again after the research and when I have short listed some options.


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## fistophobia (5 Mar 2017)

IMHO theres no such thing as good debt. I would smash it down, so 2K a month repayments of principal and interest.
With your amount of monthly nett income should be putting away 3K after living expenses, until you get this demon debt off your back.
I would forget about market returns right now, equity and bond markets are overheated.


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## dovetail (9 Apr 2017)

I finally got around to transferring a lump sum repayment to EBS. I was in contact with EBS by email who, replied back by saying that 'this will go as credit on your account until you instruct us Verbally or by writing to take it off the Principle(Repayments) or the Capital (Term). Once you restructure the loan, that is the new terms of the loan'.......I'm still new to this, and want to check here that I'm doing the right thing.  Basically, I'm not clear on which option works provides better advantage to me.  Should I instruct EBS to take this lump sum payment off the Principle or the Capital?


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