I had the same thoughts. Sell the PPR, clear the debt, and buy a 'more modest' 1m home, keep the investment property, and sleep a bit better at night.
40 years old & need advice to steady the ship
- Thread starter Sean Bateman
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Sell the investment property. A couple with your earnings/pensions/equity in property should not have so much unsecure debt. Personally I would pay my parents back first as I would be embarrassed owing them €100k that I used for a lavish refurbishment when my home is worth €1.8 million.
I would then take €500 and get myself some professional advice.
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Sean today is the day you're going to begin to deal with the stress. I wouldn't be able to sleep at night with figures like you've posted. At least your home has a lot of equity. So all is not lost.
You came on here and this can be sorted I'm sure. But it likely will not be easy. If you are the problem than maybe your wife needs to take over the finance. But you need a plan and you need one you will stick to.
While I agree with your sentiments I suspect his parents would prefer he reduced his very costly debt first. They are probably worried about that and the spending.
As they should be. Sean you need to get a grip on your finances and figure out where all the money is going. Pay down the most expensive debt if your parents don't need the money and continue doing this until it is all cleared.
With your net worth at 40 years of age with fantastic earning potential you should not be having money worries so something has gone wrong. Perhaps you have built unsustainable lifestyle expectations over the years which may need to be revised and updated.
As with the people who post in here on very modest salaries looking for advice I would suggest you keep a spending diary to figure out where all the money is going. This will help you identify areas where costs could be reduced.
Just to see it from a slightly less conservative side - assuming the 80k is used immediately to clear 80k of unsecured debt then they are in a position where income is 260k while debt is 1026k with no immediate pressure to repay 100 of it (forgetting about embarrassment etc). This makes their debt less than 4 times income. Yes, the amounts are very large (but the majority of it would be secured debt with significant equity in both properties) but is it really so different to a family with income of 100k with a 400k mortgage which wouldn't seem half as disastrous?
While it seems the risk of OP losing his job is remote, even if it did happen then they could sell either property.
Rather than doing something dramatic like selling the family home you have probably put huge work into, I would take the 80k, pay off the unsecured debts, immediately start saving that amount monthly to build up an emergency fund and meanwhile work out a monthly budget to see where you could make savings.
Also - an interest rate cut on such a large mortgage would make a significant difference so switching to UB at 2.3% seems like a great suggestion (then obviously save the difference or keep a small amount on variable and overpay with the amount saved on the mortgage each month).
While it seems the risk of OP losing his job is remote, even if it did happen then they could sell either property.
Rather than doing something dramatic like selling the family home you have probably put huge work into, I would take the 80k, pay off the unsecured debts, immediately start saving that amount monthly to build up an emergency fund and meanwhile work out a monthly budget to see where you could make savings.
Also - an interest rate cut on such a large mortgage would make a significant difference so switching to UB at 2.3% seems like a great suggestion (then obviously save the difference or keep a small amount on variable and overpay with the amount saved on the mortgage each month).
This is not just about money, its about your life.
You and your wife are juggling three kids and 2 jobs. I know how much work that is, Also, on your income, I doubt you are home at 5.30pm every evening.
You are very wealthy but you have too much debt. That is adding stress that you dont need
The next ten years of your life should be about the 5 of you enjoying life, not trying to accumulate more wealth for the future.
in 15 years time, the kids childhood will be over ( and if your kids are lucky enough to have 4 healthy grandparents, this will not last forever)
Your massive house and investment property will not bring back those years.
Go for the simpler option.
Sell the investment property ( or downsize the PPR) , get rid of some of your debt and enjoy life the next 10 years.
You and your wife are juggling three kids and 2 jobs. I know how much work that is, Also, on your income, I doubt you are home at 5.30pm every evening.
You are very wealthy but you have too much debt. That is adding stress that you dont need
The next ten years of your life should be about the 5 of you enjoying life, not trying to accumulate more wealth for the future.
in 15 years time, the kids childhood will be over ( and if your kids are lucky enough to have 4 healthy grandparents, this will not last forever)
Your massive house and investment property will not bring back those years.
Go for the simpler option.
Sell the investment property ( or downsize the PPR) , get rid of some of your debt and enjoy life the next 10 years.
Sean Bateman
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The life insurance side of things is covered completely.
All of those bank/credit union loans have 8 years remaining; 7.5% on the bank ones and 8.5% on the credit union ones.
Selling our home doesn’t really make sense to us having put so much time, effort, and money into it.
I should point out that we were essentially defrauded to the tune of €100,000 by our builder, so that is relevant.
My worry is that the investment property is so good return-wise. It seems like I would be mad to sell it. I’ve thought about selling half of it to my Dad in exchange for the €100,000 plus some additional cash which I would use to clear the personal debts. That plus the €80,000 would leave us clear. Then build up €100,000 of savings and start attacking the home mortgage.
All of those bank/credit union loans have 8 years remaining; 7.5% on the bank ones and 8.5% on the credit union ones.
Selling our home doesn’t really make sense to us having put so much time, effort, and money into it.
I should point out that we were essentially defrauded to the tune of €100,000 by our builder, so that is relevant.
My worry is that the investment property is so good return-wise. It seems like I would be mad to sell it. I’ve thought about selling half of it to my Dad in exchange for the €100,000 plus some additional cash which I would use to clear the personal debts. That plus the €80,000 would leave us clear. Then build up €100,000 of savings and start attacking the home mortgage.
I think before you sell an asset you should work out your monthly incomings and outgoings. Your net monthly income including the rental income must be between 14-15k? I don't know how much the mortgage on the IP is but say it's 1k then your loan repayments plus childcare will be approx. 6.7k after you pay off the 80k of debt. That leaves you with c. 7k per month for living/saving/day to day expenses...
You need to do the exact figures but it seems there should DEFINITELY be room for making savings!
You need to do the exact figures but it seems there should DEFINITELY be room for making savings!
If you're not willing to sell either property then what are you willing to change? Some outgoings need to be reduced. What's coming in? What's going out? Which of those items is are you willing to address?
Sean Bateman
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I’ve looked at this. Excluding bonuses etc, €11,500 comes in.
The following goes out:
Mortgage €2,950
Mortgage €1,200
Tax re investment property €500
Groceries €600
Creches €1,600
Loans €2,130
Golf €178
Gym €165
Petrol €100
TV etc €200
Gas €140
ESB €130
Charities €150
AA €20
Tolls/Parking €40
Mobile phone €40
Bins €25
Mortgage protection €100
Helping relative €450
Leisure (pints/meals/lunches/clothes/travel/newspapers/kids’ stuff/etc €800)
THANKS
The following goes out:
Mortgage €2,950
Mortgage €1,200
Tax re investment property €500
Groceries €600
Creches €1,600
Loans €2,130
Golf €178
Gym €165
Petrol €100
TV etc €200
Gas €140
ESB €130
Charities €150
AA €20
Tolls/Parking €40
Mobile phone €40
Bins €25
Mortgage protection €100
Helping relative €450
Leisure (pints/meals/lunches/clothes/travel/newspapers/kids’ stuff/etc €800)
THANKS
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moneymakeover
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I agree with you to keep the investment property.
Now you are aware of you situation start paying down the term loans. 80k is a good start. Then bonuses etc.
Now you are aware of you situation start paying down the term loans. 80k is a good start. Then bonuses etc.
Sean Bateman
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I suppose just to push back on that, I saved €350,000 plus the €80,000 that I’m getting back from that ill-judged investment. And we were defrauded out of €100,000 by a dishonest builder which created mayhem as it left us in the lurch and unable to move into our property. The other mortgage was with Bank of Scotland but is now with Pepper. Mea culpa we underestimated the cost of doing up the house. We do have expensive tastes.
Partly we think that the right financial decision is to keep the investment property but partly we think that we should clear all of our debts and split the disposable income into buckets - one to overpay the mortgage, one to build up a cash safety net, and one to do stuff with the kids (Disney, Australia, safari, etc).
Sean you are obviously very skilled in some areas given the large salary but money management is lacking. Underestimating the house refurbishment by so much seems like poor planning. Also if you were defrauded by a builder have you looked at recourse?
On a positive note you have a fantastic net worth. With some moderations you could be rid of all the unsecure debt in 2 years freeing up over 2k a month. A few things I would change in the short to medium term-
Change mortgage to Ulster Bank and fix for 2 years at 2.3%
Reduce pension contributions to the minimum that your employer will match
Explain to your family relative that you are not in a position to continuously help and cut back on social activities
Do a more detailed analysis of your monthly spending to include annual expenses like home/car insurance, tax, car & home maintenance, property tax etc. Do the incomings include €420 children's allowance?
Have an open conversation with your partner about finances and agree budgets
Manage children's expectations from Disney, Australia, Safari (probably the 3 most expensive family holidays you could do) to a week or two in France in a camp site
I really feel that you should get proper financial advice as a few changes now could give huge benefits down the line. Proper retirement planning could take years off your working life.
On a positive note you have a fantastic net worth. With some moderations you could be rid of all the unsecure debt in 2 years freeing up over 2k a month. A few things I would change in the short to medium term-
Change mortgage to Ulster Bank and fix for 2 years at 2.3%
Reduce pension contributions to the minimum that your employer will match
Explain to your family relative that you are not in a position to continuously help and cut back on social activities
Do a more detailed analysis of your monthly spending to include annual expenses like home/car insurance, tax, car & home maintenance, property tax etc. Do the incomings include €420 children's allowance?
Have an open conversation with your partner about finances and agree budgets
Manage children's expectations from Disney, Australia, Safari (probably the 3 most expensive family holidays you could do) to a week or two in France in a camp site
I really feel that you should get proper financial advice as a few changes now could give huge benefits down the line. Proper retirement planning could take years off your working life.
Sean Bateman
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Yes, it includes childrens allowance and I use my bonus to pay annual stuff like insurance etc (€4k does it). I pay the property tax monthly through payroll so I don’t notice that.
Actually, I’ve some other income too, maybe €10,000 a year, which gives me €5,000 which I use towards the family holiday.
Actually, I’ve some other income too, maybe €10,000 a year, which gives me €5,000 which I use towards the family holiday.
Learner2015
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Sean when I read your first post I saw great similarities between your family and mine. We are similar ages, have similar combined income with the private / public sector split. We have young children, we have an investment property.
The difference is our mortgage around €350k and the house is worth around €700k. Our investment property only has about 25k equity in it but other than a car loan we have no debt - and I still loose sleep sometimes wondering if we are saving enough / spending too much / overpaying mortgage enough etc.
Stress is a dangerous thing and if it was to take over the house of cards could come tumbling down.
My advice is to do now whatever takes the stress out of your situation and like some other posters said enjoy life and time with the kids when they are young. Nothing wrong with having great family holidays to fantastic places but I think I'd park them for a few years until you felt like the money side of things was in hand.
Fair play to you both, you have done great, probably just need a bit of a reality check which I'm sure is why you posted here.
Anyway I'll leave it to the experts on here to give the proper financial advice, just wanted to write something cause of the similarities!
The difference is our mortgage around €350k and the house is worth around €700k. Our investment property only has about 25k equity in it but other than a car loan we have no debt - and I still loose sleep sometimes wondering if we are saving enough / spending too much / overpaying mortgage enough etc.
Stress is a dangerous thing and if it was to take over the house of cards could come tumbling down.
My advice is to do now whatever takes the stress out of your situation and like some other posters said enjoy life and time with the kids when they are young. Nothing wrong with having great family holidays to fantastic places but I think I'd park them for a few years until you felt like the money side of things was in hand.
Fair play to you both, you have done great, probably just need a bit of a reality check which I'm sure is why you posted here.
Anyway I'll leave it to the experts on here to give the proper financial advice, just wanted to write something cause of the similarities!
Let's not make things even more complicated by becomming half owner with your Dad.
Just on this point, and bear with me please.
The apartment is not that fantastic an investment. You've rent of 1750 on a market value of 350k. That's a gross yield, before expenses, of exactly 6%.
The thing that's valuable is the tiny margin tracker mortgage.
If your dad wanted to invest in property, he can get 6% yield any day of the week.
Blackrock1
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There are a few posters here ready to give you an almighty lashing Sean, ready to scold you for your profligate ways and tell you tales of doom. You have lost the run of yourself a little but its relatively easily sorted id have suggested and i can sympathise with the home renovation, it happens easily unfortunately.
Sell the investment property, its not an amazing investment and if your pensions are well funded what do you want it for - +170k
Returns from the business investment - +80k
Share options exercise (any tax on this?) - +100k
Thats 350k which can clear parents 100k plus 126k of other loans. Leaves you with 124, put say 6 months of the larger salaries net wages to one side (on the assumption you wont both lose your jobs)) say 35-40k leaving you with 84k to knock off the mortgage.
you are now down to a circa 600k morgage, income of 210k (less than 3 times) plus bonuses to live a little, and a gaff worth 1.8m (LTV 33%). Pretty good if you ask me.
i really dont see the big deal, if the amounts you have coming in are accurate then all you need to do is bite the bullet, sell the old house and rearrange things.
Im guessing all your debt comes from the new house and the renovation, this sorts all of that and hopefully you dont ever need to move again.
Or you can take the alternative advice, sell your house and live on baked beans waiting for armageddon
Sell the investment property, its not an amazing investment and if your pensions are well funded what do you want it for - +170k
Returns from the business investment - +80k
Share options exercise (any tax on this?) - +100k
Thats 350k which can clear parents 100k plus 126k of other loans. Leaves you with 124, put say 6 months of the larger salaries net wages to one side (on the assumption you wont both lose your jobs)) say 35-40k leaving you with 84k to knock off the mortgage.
you are now down to a circa 600k morgage, income of 210k (less than 3 times) plus bonuses to live a little, and a gaff worth 1.8m (LTV 33%). Pretty good if you ask me.
i really dont see the big deal, if the amounts you have coming in are accurate then all you need to do is bite the bullet, sell the old house and rearrange things.
Im guessing all your debt comes from the new house and the renovation, this sorts all of that and hopefully you dont ever need to move again.
Or you can take the alternative advice, sell your house and live on baked beans waiting for armageddon