Couple at 30 with no property and child on the way

J

joeymc

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4
Age: 30

Spouse’s/Partner's age: 30

Annual gross income from employment or profession: €72,000 with annual bonus approx 20% of salary (15k last year)
Annual gross income of spouse: €51,000
Monthly take-home pay: €6,000
Type of employment: e.g. Civil Servant, self-employed: Both PAYE

In general are you:
(a) spending more than you earn, or
(b) saving? Saving – approx €1600 P/M

Rough estimate of value of home: N/A
Amount outstanding on your mortgage: N/A - Renting at €1200 p/m
What interest rate are you paying? N/A

Other borrowings – car loans/personal loans etc: PCP on my car 308 p/m, finishing up next June 2020 with a final balloon payment of 10k
Wife has car loan of 300 p/m
Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?

Savings and investments: Cash €35,000 on deposit no interest rate
Share scheme through work which are worth €2k (2% of my salary goes into these per month and employer matches 50% of my contributions, am wondering if I should move this 2% to my pension or monthly savings?)

Do you have a pension scheme? Yes, Mine is at €30,000 after letting it lapse on a few occasions after changing jobs, currently pay 7% and employer matches with 7%
No idea of the value of my wife’s pension value but she has been paying 5% and employer has matched the 5% for the past 6 years

Do you own any investment or other property? No
Ages of children: None but wife is due our first next January
Life insurance: 2.5x Salary


What specific question do you have or what issues are of concern to you?

We are both originally from Cork and the dream is to eventually move home to Cork and buy a house there but the job prospects for my wife’s industry are not great (or nonexistent) there at the moment compared to Dublin.

We have always spent a large chunk of our income on cars as we both drive between 45mins to an hour each way to work. When the PCP on my own car is up, we intend to pay off the remaining 10k and then plan to hold onto this car or exchange for a more family friendly vehicle! This will at least remove one of our monthly outgoings.

We have talked about it a lot and still think that we are better off waiting before buying property as we would ideally like to settle in Cork rather than Dublin. We are renting from family at the moment and are lucky that the house will be more than adequate when our first child comes along next year. I’m sure, however, that we will soon outgrow this property over the coming years.

Are we right to continue renting or should we just buy in Dublin now and figure out Cork if it happens in the next 5/10 years?

We got married at the end of 2019 and used an instant access savings a/c with 0% interest to pay for whatever expenses arose, we now have 30k in this account earning 0% interest, should we move some of this (keeping a rainy day fund) elsewhere?

I am also aware that our monthly saving capability will be significantly impacted once kids come along.
 
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I know you've only given simple enough figures above but there's a huge gap in your expenses

Income 6000
Rent 1200
Savings 1300
Car loans 608

What do you do with the rest? 2800+?
 
Savings are actually 1600 p/m, corrected in the above post.

Other monthly expenses include

- 800 into a joint a/c each month to cover food shopping and most bills, generally a decent buffer left over in the joint a/c each month)
- 250 p/m Diesel

That leaves 1350 at the end of each month which is realistically spent on any other day to day expenses that arise as well as items such as any meals out or family birthdays etc. We always have a decent buffer in both accounts each month also so that we can cover once off expenses like car tax, insurance, holidays, etc.
 
Coldwarrior said:
Your net pays seems too low for your income, are you claiming all available tax credits?
Click to expand...
Fairly certain we are yes. We have a lot of expenses coming out of our paychecks before it hits our accounts such as health insurance, life assurance and bike to work.

We also maintain separate accounts and transfer savings and bills into the relevant accounts each month so my wife's net earnings may be slightly more or less than what I have calculated (who knows what happens in that account really :D)
 
Two thoughts:

1) If you don't plan to immediately buy a house then it makes no sense to have €35k in cash but to be paying interest on a car loan.
2) If you do plan to buy a house then for affordability purposes you look very good right now. Once you have a child you will have creche costs, etc. Once you have two kids you might find one of you working part-time. This will make it both harder to save and reduces what the bank will be willing to lend you.
 
Purchasing a property incurs a significant amount of costs (stamp duty, legal fees, removals, LPT etc). The interest you will pay on a mortgage will be significant, while your rental amount appears quite reasonable. Unless you are willing to purchase in the Dublin commuter hell belt, you will be paying quite a premium for a convenient Dublin property. Question is, have Dublin prices peaked, are you willing to take on the significant capital risk with Brexit looming and the wobble that may or may not cause to the Dublin market, not sure what industry you are in, but tax harmonization efforts in Europe may also introduce an amount of risk.

While prices in Cork are not cheap, perhaps there is less risk to your capital outlay should you purchase property there rather than in Dublin. My view is that I would focus on purchasing in Cork and perhaps your partner may wish to consider spending time with the new baby and ease back into work 12 months thereafter.... just a thought.
 
What type of polices are the health and life ones?

It's much cheaper in Cork than Dublin. And there is the problem of commuting in Dublin. Can your wife retrain to make her more employable.
 
Thanks all for the replies, lots to think about.

I think we will continue to rent in Dublin with the long term plan of buying in Cork. We are lucky enough to be renting from family and the house is more than adequate with one child at least. It's impossible to know what will happen with property prices in the near future but I guess we are better off waiting until we are 100% sure that we want to settle in Cork or Dublin anyway.

As NoRegretsCoyote mentioned, we really need to do something with our 35k savings which are sitting in an instant access savings a/c earning no interest. I will look to move a large portion of this elsewhere so that it will at least earn some interest and keep the rest as an emergency fund.
 
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