As an introduction. I consider myself very financially literate and would often advise friends and family in this area. I have however made some terrible financial decisions myself in the past by not practicing what I preach. I fear I’m too involved to make objective decisions anymore.
Personal details
Age: 29
Spouse’s/Partner's age: 28
Number and age of children: None
Income and expenditure
Annual gross income from employment or profession: €220k base + €50k cash bonus + 30k RSUs (variable)
Annual gross income of spouse: €30k
Monthly take-home pay: €11,500 (excluding bonuses)
Type of employment: Private sector - permanent full-time
In general are you:
(a) spending more than you earn, or
(b) saving?
- Saving significantly. Cost of living (ex mortgage) is c. 40k per annum. Diverting 6k per month + c25k per annum bonus into savings/investments.
Summary of Assets and Liabilities
Family home worth €1.3m with a €930k mortgage remaining
Cash/savings: €170k
Defined Contribution pension fund: €180k
Company shares: 0
Family home mortgage information
€630k with lender @2.5%, 5 years fixed. 34 years remaining. Monthly repayment €2.2k. No early repayment options (I fixed at a bad time regarding swap rates so my early redemption charge is significant)
€300k family loan @ 0% interest. Repayments to begin in 5 years time over a flexible term.
Other borrowings
None
Do you pay off your full credit card balance each month?
YES
Other savings and investments:
- €150k cash primarily earmarked for home improvements
- €20k in Investment account
Do you have a pension scheme?
Yes - €180k Fund. €4k per month employee + employer contribs. 100% global equities.
Wife has a small pension
Do you own any investment or other property?
No
Other information which might be relevant
Life insurance:
Yes, €3m + 50% salary. Combined death in service + Mortgage protection
Health insurance:
Through work
What specific question do you have or what issues are of concern to you?
My concerns are twofold:
1. I’m extremely conscious that we bought a house for an amount well in excess of what I’d have advised to someone else. We plan to have a decent sized family so downsizing would be a nuclear option. I know that the cost of debt will be far far higher in 5 years time so I am neurotic about minimising our exposure to higher rates when our fixed period expires.
2. I find my job increasingly stressful to the point I’m not sure how sustainable it is long term. I would love to be in a position to take a step back and work either in a less senior role, or ideally do consulting work. This work wouldn’t be guaranteed so I’d want to be financially secure before I could consider this. The debt we have now means I have to endure for the foreseeable.
My current thesis is:
We can save c.€100k per annum (+12k equity cleared from mortgage each year). I plan to put 100% of this into global equities (any advice on how best to do this would be much appreciated. Given tax treatment of ETFs, I feel forced to invest in 20-30 large cap stocks which is not ideal).
When our fixed period is up in 5 years we should have close to enough to pay off the bank loan (assuming no market collapse).
That would leave us with a fairly modest €300k family debt with no interest charge. We could pay this off over 20 years. At this point, whilst nowhere near set for life, I’d certainly feel I was no longer a slave to the corporate world and could start exploring my options for a more fulfilling career.
Is there anything I’m missing here? (I know, sell the house - but again I’m not open to this). I sometimes fear I’ll be selling out my 20s and 30s just to be financially solid and this might be something I’ll regret in future.
Personal details
Age: 29
Spouse’s/Partner's age: 28
Number and age of children: None
Income and expenditure
Annual gross income from employment or profession: €220k base + €50k cash bonus + 30k RSUs (variable)
Annual gross income of spouse: €30k
Monthly take-home pay: €11,500 (excluding bonuses)
Type of employment: Private sector - permanent full-time
In general are you:
(a) spending more than you earn, or
(b) saving?
- Saving significantly. Cost of living (ex mortgage) is c. 40k per annum. Diverting 6k per month + c25k per annum bonus into savings/investments.
Summary of Assets and Liabilities
Family home worth €1.3m with a €930k mortgage remaining
Cash/savings: €170k
Defined Contribution pension fund: €180k
Company shares: 0
Family home mortgage information
€630k with lender @2.5%, 5 years fixed. 34 years remaining. Monthly repayment €2.2k. No early repayment options (I fixed at a bad time regarding swap rates so my early redemption charge is significant)
€300k family loan @ 0% interest. Repayments to begin in 5 years time over a flexible term.
Other borrowings
None
Do you pay off your full credit card balance each month?
YES
Other savings and investments:
- €150k cash primarily earmarked for home improvements
- €20k in Investment account
Do you have a pension scheme?
Yes - €180k Fund. €4k per month employee + employer contribs. 100% global equities.
Wife has a small pension
Do you own any investment or other property?
No
Other information which might be relevant
Life insurance:
Yes, €3m + 50% salary. Combined death in service + Mortgage protection
Health insurance:
Through work
What specific question do you have or what issues are of concern to you?
My concerns are twofold:
1. I’m extremely conscious that we bought a house for an amount well in excess of what I’d have advised to someone else. We plan to have a decent sized family so downsizing would be a nuclear option. I know that the cost of debt will be far far higher in 5 years time so I am neurotic about minimising our exposure to higher rates when our fixed period expires.
2. I find my job increasingly stressful to the point I’m not sure how sustainable it is long term. I would love to be in a position to take a step back and work either in a less senior role, or ideally do consulting work. This work wouldn’t be guaranteed so I’d want to be financially secure before I could consider this. The debt we have now means I have to endure for the foreseeable.
My current thesis is:
We can save c.€100k per annum (+12k equity cleared from mortgage each year). I plan to put 100% of this into global equities (any advice on how best to do this would be much appreciated. Given tax treatment of ETFs, I feel forced to invest in 20-30 large cap stocks which is not ideal).
When our fixed period is up in 5 years we should have close to enough to pay off the bank loan (assuming no market collapse).
That would leave us with a fairly modest €300k family debt with no interest charge. We could pay this off over 20 years. At this point, whilst nowhere near set for life, I’d certainly feel I was no longer a slave to the corporate world and could start exploring my options for a more fulfilling career.
Is there anything I’m missing here? (I know, sell the house - but again I’m not open to this). I sometimes fear I’ll be selling out my 20s and 30s just to be financially solid and this might be something I’ll regret in future.