44 years old, new to feeling financial comfort, and wondering how to make money work a bit harder

D

DoobieDoo

New Member
Messages
3
I'm 44, they're 43
2 kids - 12 and 10

Income and expenditure
Annual gross income from employment or profession: 97k
Annual gross income of spouse/partner: 72k

Monthly take-home pay: €8500

Both employed in a private company.
Potential for bonus of up to 10%, and they get a car allowance of 14k per annum

We're saving about 800 a month currently, and have more left over at the end of the month than we're used to.

Summary of Assets and Liabilities
Family home value: 350k
Mortgage on family home: 160k
Net equity: Assuming a-b, 190?

Cash: 20k saving (10k in 0% interest CU, 10k in AIB savings that gets decent interest on the first 4k and a pittance on anything over it)
Another 17k across two CU accounts for the kids (zero interest)

Family home mortgage information
Lender - BOI (exKBC)
Interest rate 4.3%
Type of interest rate: Variable
Remaining term: 18
Monthly repayment: 1090, + 500 overpayment

We're on the verge of moving to a 3.15% 2 Year Fixed rate thanks to an updated BER.
We were thinking of keeping the payment as is, i.e. 1590, which would reduce the mortgage term to 10 years remaining.

Other borrowings – car loans/personal loans etc
Buying a car on 0% finance - covered by the net of the car allowance

Pension information
4 pensions from various jobs over the years
Combined current value is approx 105k.
I pay 10% AVC, employer matches 2%

Spouse has about 27k across 2 pensions.
Their contribution is currently 10%.
Their employer's contribution is unknown (new job) but we will look to minimum match contribution.

We both have life and serious illness cover, enough to cover the mortgage.
I hope both kids will go to college, but they may well live at home while doing so

Why I'm here: My twenties were lean, hand to mouth days. My thirties saw income and expenditure slowly align, and then - thankfully - start to separate in the right direction. My forties have seen that gap widen, and I now typically have 3k ish left to play with at the end of each month. But I've no idea what to do with it. I also have growing savings that could probably be working harder for me.

I want to get a better understanding of
a) if i'm making the right move re. the mortgage, i.e. locking in the higher price is smart when getting the reduced rate on the mortgage, and thereby reducing the term to 10 years. The idea of being mortgage free in my fifties in incredible to me.
b) what I could/should be doing with that extra bit - I want to maintain a bit of an emergency fund and (or?) a home improvement fund, but I'm leaning towards increasing our pension with anything left over.
c) what I could/should be doing with the (wasted?) CU funds, so they at least are getting some return. Ideally something that can remain separate, but also allow me to throw in monthly amounts and occasional top-ups.
 
Last edited:
DoobieDoo said:
a) if i'm making the right move re. the mortgage, i.e. locking in the higher price is smart when getting the reduced rate on the mortgage, and thereby reducing the term to 10 years. The idea of being mortgage free in my fifties in incredible to me.
b) what I could/should be doing with that extra bit - I want to maintain a bit of an emergency fund and (or?) a home improvement fund, but I'm leaning towards increasing our pension with anything left over.
Click to expand...

Generally speaking, I'd say your combined pension pots of 105k are quite light for your ages - you need to start maxing out your AVC's more than reducing your mortgage further in my opinion.

On the subject of mortgage, which lender is the new mortgage offer with? You could get that same rate with PTSB but with the option of overpaying on the fixed rate mortgage as what they call a credit. This effectively forms part of your rainy day fund as it can be used to make monthly repayments should you need to, but crucially while it sits there as a credit it is reducing your interest bill. You also would not need to shorten your term to reach your objective of clearing the mortgage by 50's, which gives you better options to reduce repayments should a rainy day occur. It's also effectively a 3.15% DIRT-free return, which you won't get in a credit union.
 
DoobieDoo said:
We both have life and serious illness cover, enough to cover the mortgage.
Click to expand...
Is this sufficient? Worth checking if you have any further cover through your respective employments, sometimes your pensions may have 2-3x salary as a benefit.
 
Generally speaking, I'd say your combined pension pots of 105k are quite light for your ages - you need to start maxing out your AVC's more than reducing your mortgage further in my opinion.
Click to expand...

It's 132k combined as I had omitted my spouse's current pot. Still much too low I'd imagine. I've updated that info above. Maxing AVC does indeed seem like the logical next step. But the... safety net?... of being mortgage free appeals to me. Would you continue overpaying what we currently are, 1.e. 1500 ish, or go back to the ticket price, and put the extra 500 in as AVCs?

My spouse will also have a foreign pension

On the subject of mortgage, which lender is the new mortgage offer with?
Click to expand...
It's with BOI, our current provider. We'd get the same with AIB too I believe. I hadn't seen the PTSB one. Changing to a lower rate anywhere would be significant for us.

Hah! One is enough :)
conor_mc said:
Is this sufficient? Worth checking if you have any further cover through your respective employments, sometimes your pensions may have 2-3x salary as a benefit.
Click to expand...

I do! I have have 4x salary.
 
Last edited:
Paying down the mortgage doesn't seem attractive to me, it's quite a small mortgage relative to your income (and any income really, you'd struggle to find accom. for a family for that monthly amount). Don't forget with inflation the outstanding value of the mortgage in real terms (and the repayments) are dropping a couple of percent every year on average. In 10 years that 1k repayment should be equivalent to only around 800 euro in today's money. With AVC's you are getting tax back plus much higher compound growth (on average) than the 3% you save on mortgage interest by overpaying.
 
At 44, you should definitely prioritise maxing out your pension contributions ahead of paying down your mortgage ahead of schedule.

I would also be inclined to throw €20k at your mortgage before you fix.
 
DoobieDoo said:
It's with BOI, our current provider. We'd get the same with AIB too I believe. I hadn't seen the PTSB one. Changing to a lower rate anywhere would be significant for us.
Click to expand...
As I mentioned above, PTSB might be a better option all other things being equal, on account of allowing you to pay extra into an account credit that can serve as a significant portion of your rainy day fund at a relatively high interest rate equivalent to a DIRT-free 3.15%.
 
DoobieDoo said:
Maxing AVC does indeed seem like the logical next step. But the... safety net?... of being mortgage free appeals to me.
Click to expand...
You have a few small pension pots from prior employments that can potentially be cashed out from age 50 (check with pension providers) - that's 25% tax-free on the spot and the rest can go into a deferred ARF I believe. That's an option if you really feel the urge to clear down your mortgage in your 50's and/or a safety net is needed. Granted, it doesn't serve you for the next 6 years, but at least it's not locked away until you're 65 (probably - check first!).
 
You must log in or register to reply here.
Back
Top