43 seeking advice

G

Grasshopper

Registered User
Messages
14
Hi

Personal details

Age: 43
Spouse’s/Partner's age: 38

Number and age of children: 2 kids 6yo and 16 months


Income and expenditure
Annual gross income from employment or profession: circa 200k
Annual gross income of spouse: 55k

Monthly take-home pay: 6-7K

Type of employment: e.g. Civil Servant, self-employed: PAYE

In general are you:
(a) spending more than you earn, or
(b) saving? Saving, anywhere from 1-2k per month.


Summary of Assets and Liabilities
Family home worth €600k with a €360k mortgage with 22 years remaining. I'm in process of switching mortgages as my fixed of 2.5% is up and looks like the best I can get now is 3.65% for 4 years.
Cash of €145k
Defined Contribution pension fund: €240k
Company shares : €125k
Buy to Let Property worth €360k with mortgage of €210k


Family home mortgage information
Lender: ICS but likely switch to AIB
Interest rate: 3.65%
Type of interest rate: tracker, variable, fixed. Fixed
If fixed, what is the term remaining of the fixed rate? 4 years
If tracker, what is the margin e.g. ECB + 1%

Remaining term: (Original term is not relevant) 22 years
Monthly repayment: 1800

Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? No CC
Car Loan balance of 37.5k with 3.5 years left to run. Repaying 872 per month.


Buy to let properties
Value: 360k
Rental income per year: 26,400
Rough annual expenses other than mortgage interest : 3-4k
Lender: Was UB now AIB
Interest rate: 2.15 above ECB tracker (I know...., but I literally think I got the last tracker handed out in Ireland in 2008 :). 210k remaining on the mortgage and 24 years left (40 year loan)
If fixed, what is the term remaining of the fixed rate?

Other savings and investments:

Do you have a pension scheme? Yes, maxing contributions and company match to 7.5%

Do you own any investment or other property? Buy Out Bond from previous pension scheme: 43k

Other information which might be relevant

Life insurance:


What specific question do you have or what issues are of concern to you?
I know I am not being prudent with my money or investments. I have been paying in to a company share scheme where the company provided a 15% reduction on the lowest buy rate each year, whether that be at start of annual period or at end. The share price has done really well over the past 8 years. When I started this they were at $55 and now they have risen to $127. I also get awarded shares RSU and I usually sell when the vest as they are put through payroll (10-12k per anum). This means that I have €125 in the stock plan account. If selling a big chunk I am lost as to how the CGT will be applied given the buy rates were at varying levels over many years. I was considering availing of an accountant for this and other items.

I really want to start paying down the debt. Should I pay down the rental property ASAP, with a large chunk now and then overpay? Should I sell the shares, which have been doing great, to fund this and/or use some savings?
Should I concentrate on paying off the car loan ASAP? Savings or stocks?
Would it be better to pay off the rental mortgagee ASAP and retain the asset for future given rental income is high, or think about selling this and paying down the family home?

I want to retire early, preferably before 60

Thanks in advance
 
It looks like you are making around €5k per annum on the rental, on an after-tax basis.

If you cashed out the €150k equity in the rental and applied it against the mortgage on your home @3.65% that would save you €5.5k per annum. Not much in it.

Better still, apply some of that equity against the car loan (assuming that is higher than your mortgage rate).

If I was in your shoes, I would sell the rental and the company shares (taking the CGT hit), pay off the car loan and throw the balance at your PPR mortgage.

I would also use some of your cash savings to further pay down the mortgage on your PPR. Actually, you could probably pay off your mortgage in full.

It’s good that you are maximising your pension contributions but your spouse should also be contributing to a pension.
 
Sarenco said:
It looks like you are making around €5k per annum on the rental, on an after-tax basis.

If you cashed out the €150k equity in the rental and applied it against the mortgage on your home @3.65% that would save you €5.5k per annum. Not much in it.

Better still, apply some of that equity against the car loan (assuming that is higher than your mortgage rate).

If I was in your shoes, I would sell the rental and the company shares (taking the CGT hit), pay off the car loan and throw the balance at your PPR mortgage.

I would also use some of your cash savings to further pay down the mortgage on your PPR. Actually, you could probably pay off your mortgage in full.

It’s good that you are maximising your pension contributions but your spouse should also be contributing to a pension.
Click to expand...
Thanks.
She is. She is a civil servant.
 
So the advice is to sell your investments and become debt free?

I find it's always the same advice on this website.

I don't understand what's wrong with having a property investment.

You're 43 years old, did you think you'd be debt free age 43?

Or there's a bit of life in you yet? You can pay down your mortgage, your car loan and keep your investment.

And over time pay down both the investment loan and the home loan.
 
moneymakeover said:
So the advice is to sell your investments and become debt free?

I find it's always the same advice on this website.

I don't understand what's wrong with having a property investment.

You're 43 years old, did you think you'd be debt free age 43?

Or there's a bit of life in you yet? You can pay down your mortgage, your car loan and keep your investment.

And over time pay down both the investment loan and the home loan.
Click to expand...
I'm of the mind to retain the investment property. Tenants are good and it is in a good area. But realistically it is going to need an injection of cash soon to freshen up and improve the BER. Also the tracker is awful now given the ECB increases. It is peace of mind for the kids given the struggles for youths these days, however.

The car loan has to go.
Maybe come off the tracker on investment property and move to variable, making it easier to overpay relative to fixed.

Do people and should people consider inheritance when planning for medium to long term. Don't see it discussed here much. It must be an Irish thing. Friends of other nationalities have no reservations about discussing and factoring in to their strategies.
 
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