Divorced with mortgage, loans. Plan for kids college and clear down debt.

[dubdub123]

Pretty sure you can use savings against credit union loans at any stage. Brendan had a excellent pinned post - I’ll try find it. I would def chip away at the car loan and while you have €10k in savings (do you need that much?) it’s worth putting all extra savings against that loan. With rising interest rates the 10 year one looks quite attractive. While there’s some that would say to prioritise AVC’s I think reducing debt should be highest priority

10k savings is the highest ive had in years and majority is due to recent tax returns.
I know theres a few bits of work to be done in the house (plumbing work) and im keen to keep some buffer but this may be a little high alright.

The car loan is variable and while lower rate than long term loan right now that could change.

I might pay a lump sum off of car loan but for now i'm sitting tight til i think it through so any further input really appreciated.
I do have access to majority of that money as i took car loan out before i got refund.

 

[dubdub123]

I could pay off car loan now and have smaller amount of savings available (say around 4k in few weeks) but not sure im fully st ease with this.
I will be getting a sign on bonus of couple of thousand soon and small bonus, so might be worth paying off a lump sum and try get rid of car loan, then tackle the bigger loan

 

[Horatio]

@dubdub123 , delighted to see your progress since your posts earlier this year.
You've put in hard yards to get into a stronger position & now the decisions you need to make are good ones. Good for you.

1. I'd be looking at getting those high interest loans paid down as fast as I can while maintaining a sufficent emergency fund.
2. You have changed jobs to a higher salary - can you consider revisiting the loan consolidation question with your Mortgaging bank?
3. What about the value of your house has that risen? Are you in a lower Loan to Value bracket now, perhaps with equity that can be used as leverage on yout high interest loans?
4. Maybe consider taking another look at the maintenance question - I read that it's a head melt for you to think about it but you've done well this year & this would really make a difference to your & your childrens situation if you can make it work. You have a good head of steam built up this year - give it a shot. What's the worst that could happen?

 

[dubdub123]

@dubdub123 , delighted to see your progress since your posts earlier this year.
You've put in hard yards to get into a stronger position & now the decisions you need to make are good ones. Good for you.

1. I'd be looking at getting those high interest loans paid down as fast as I can while maintaining a sufficent emergency fund.
2. You have changed jobs to a higher salary - can you consider revisiting the loan consolidation question with your Mortgaging bank?
3. What about the value of your house has that risen? Are you in a lower Loan to Value bracket now, perhaps with equity that can be used as leverage on yout high interest loans?
4. Maybe consider taking another look at the maintenance question - I read that it's a head melt for you to think about it but you've done well this year & this would really make a difference to your & your childrens situation if you can make it work. You have a good head of steam built up this year - give it a shot. What's the worst that could happen?

Great thank you, its nice to hear positive feedback!
1. Im going to think more about this maybe pay 4k off of the higher interest 10 year loan and keep 6k emergency fund. It might make better sense as would cut a chunk of interest off the loan. I just need to get the balance right here, struggling with this being honest.. Maybe them make a smaller regular overpayment. Would be great to get handle on this loan..
2. Im still in probation but might be worth getting some info on this. Mortgage and 10 year loan are both with Avant
3. Not sure if its risen but even if not, its already in the less than 60% bracket. Around 50 to 55% LTV at minute
4. Yes i might revisit this but right now i dont have the appetite to go to court as its very stressful, but might see how he can support on regular basis.

Any other feedback really appreciated

 

[dubdub123]

Does the following seem to be a good strategy? At least til large 10 year loan paid off.

1. Keep 8k emergency fund accessible
Note that theres an additional <2k in shares in CU, so 10k total

2. Pay off lump sums from 10 year loan (its at about 22k now) when I can.

3. Do not overpay car loan
4. Do not make AVCs
5. Do not make lump sums against mortgage
6. Do not upgrade car

I need to look at my regular and irregular outgoings more closely, but does the above sound ok as overall strategy?

 

[dubdub123]

Hi
I havent been contributing to the site as we had quite a bit going on with my son, but things are settling down now..
Would really like to hear feedback on my current situation as ive now managed to pay off my car loan and feel im making progress!

Family situation: divorced, 2 teenage children (one is autistic)
Salary: 71k
Net monthly pay: 4600
Child benefit: 280 pm (will reduce in a year to 140)
Weekly contribution from son: 50 euro pw from his disability allowance
Annual bonus: 0 to 10% of gross salary
Pension: im not currently msking AVC but employer pays over 15%

Mortgage: approx 198,000 at 2.1%
Monthly payment: 1,128

Car loan: Zero! Just paid it off and no plan to upgrade (got advice on AAM a while ago on this)

Other loan Amount 18, 500 ( i paid lump sums off it from tax returns, bonus) @ 5.7 %
loan payment: 273 per month

Emergency fund: 2k
Other savings: none

- maintenance. Not going to follow up on this but instead will try get some amount towards school costs for daughter. Too stressful to go back to court.
- tax situation. Claiming all allowances including ICC for son.
-VHI : all of us on VHI
- loan restructuring doesnt seem to be an option as my long term rate of 5.7 is pretty decent now.
- i dont want to go interest only on mortgage as can cover full payment.


Concerns/considerations:
- I need to sort a Will. Have a solicitor I spoke with last year so need to get back onto thst. Cost will be over 1k as special needs considerations
- son in TY going to college. We live close to a Dublin University campus (previously an IT). that looks like best option as concerns about attendance and travel to other universities eg DCU would be too much for him. We regularly save from his DA which should cover some/all costs.
-daughter in 1st year going to college.over time she will get part time job. Should be able to save closer to the time.

GOALS:
- main aim now is to build back up emergency fund
- next priority is to pay off 18.5k loan by overpaying by 160 pm (car loan amlunt) and lump sum bonus.
- save few hundred per month for ongoing home improvements eg attic stairs, painting etc
- then in 2 or 3 years, focus on overpaying mortgage
- not sure if i should push more into pension as its low, but current ployer makes generous contribution
-

Am i looking at this ok? Separately i need to examine life insurance policies as have a few old one, put a better monthly budget in place again as i havent been as diligent about this recently.

Any pointers appreciated on next steps. Thank you

 

[qwerty-2023]

No advice as I am not familiar with your specific challenges, but just want to say fair play to you for making such progress on your situation! Impressive to see you through the past year or so increasing your salary, paying off your loans, and tackling one priority after the other! I'm more or less a beginner at personal finance myself but feel inspired by you

One thing to note though: by Dublin uni that used to be an IT, are you talking about TUD (formerly DIT)? If so, I don't know if you're aware but although they're currently based in Aungier Street, there are plans to move the campus in the city centre near Heuston Station. Likely won't actually happen for several more years as there's so much red tape etc and they are still needing to sell the D2 buildings, but something to be aware of if location is a very important factor with your son. Also to note they have several locations/campuses so actual location may depend on your son's course of study! (Source: I work in the academic sector and heard this from colleagues working at TUD - but this is all secondhand so take with a grain of salt).

 

[Brendan Burgess]

- i dont want to go interest only on mortgage as can cover full payment.

Do you have an option to go interest-only?

I doubt it, but in case you do, it would make sense to go interest-only and allocate the capital payments to your more expensive loan.

Brendan

 

[ClubMan]

One thing to note though: by Dublin uni that used to be an IT, are you talking about TUD (formerly DIT)? If so, I don't know if you're aware but although they're currently based in Aungier Street, there are plans to move the campus in the city centre near Heuston Station. Likely won't actually happen for several more years as there's so much red tape

Are you sure that you're up to date on this?
The Grangegorman Dublin 7 campus is up and running for years now and more and more schools of the former DIT have been moving over there in recent years.

Grangegorman | TU Dublin

www.tudublin.ie

 

[dubdub123]

No advice as I am not familiar with your specific challenges, but just want to say fair play to you for making such progress on your situation! Impressive to see you through the past year or so increasing your salary, paying off your loans, and tackling one priority after the other! I'm more or less a beginner at personal finance myself but feel inspired by you

One thing to note though: by Dublin uni that used to be an IT, are you talking about TUD (formerly DIT)? If so, I don't know if you're aware but although they're currently based in Aungier Street, there are plans to move the campus in the city centre near Heuston Station. Likely won't actually happen for several more years as there's so much red tape etc and they are still needing to sell the D2 buildings, but something to be aware of if location is a very important factor with your son. Also to note they have several locations/campuses so actual location may depend on your son's course of study! (Source: I work in the academic sector and heard this from colleagues working at TUD - but this is all secondhand so take with a grain of salt).

Great thank you for the positive words and information! Yes im looking at TUD and also going to explore other options. Im concerned that a commitment to a 4 year course might be a bit overwhelming, so want to.see if he could potentially do a year or two and obtain cert/diploma and build up over time, if that makes sense. Either full time or part time.. travel wise im thinking somewhere on the Luas Redline line so Grangegorman or tallaght or city centre based. He has strong interest in engineering and hoping to take chemistry and biology for LC. He's not under pressure time wise as he will be living at home but i know he struggles with buses and long trips, so its a big consideration. Thank you so much

 

[dubdub123]

Do you have an option to go interest-only?

I doubt it, but in case you do, it would make sense to go interest-only and allocate the capital payments to your more expensive loan.

Brendan

Ill check that out @Brendan Burgess Is there any risk of negatively impacting credit rating? I can ring Avant but it can be hit and miss sometimes getting clear info.

 

[Brendan Burgess]

Is there any risk of negatively impacting credit rating?

Yes, if it's not part of your contract, which I don't think it is.

Some lenders have a facility for taking a 6 month payment break during the mortgage term, but I doubt if Avant has that.

If they don't, then you would be classified as restructured.

Brendan

 

[dubdub123]

Yes, if it's not part of your contract, which I don't think it is.

Some lenders have a facility for taking a 6 month payment break during the mortgage term, but I doubt if Avant has that.

If they don't, then you would be classified as restructured.

Brendan

Ok thanks. Ive had a look at contract and there's no mention of payment break or interest only. I reckon ill keep overpaying the high interest loan and just build up an emergency fund.
We arent planning any big vacations and want to focus on paying down the loan this year.
Then maybe look at pension AVCs vs mortgage overpayments

 

[dubdub123]

I just wanted to check in on best strategy regarding clearing higher interest loan with overpayment vs using that for AVC

Im currently overpaying the 18k loan @5.7 perfect by 237 pm (brings monthly payment to 500 in total), which should sabe me 2k in interest over the life of the loan.

My current pension pot across employer pensions, PRSA is around 80k and im considering making AVCs..
If i paid in around 5k pa, that would be (very roughly) mean a reduction of 237 pm in take home pay..

Would i be better to divert this amount to AVCs or keep overpaying loan? Any thoughts appreciated.. thanks

 

[ClubMan]

I just wanted to check in on best strategy regarding clearing higher interest loan with overpayment vs using that for AVC

Im currently overpaying the 18k loan @5.7 perfect by 237 pm (brings monthly payment to 500 in total), which should sabe me 2k in interest over the life of the loan.

My current pension pot across employer pensions, PRSA is around 80k and im considering making AVCs..
If i paid in around 5k pa, that would be (very roughly) mean a reduction of 237 pm in take home pay..

Would i be better to divert this amount to AVCs or keep overpaying loan? Any thoughts appreciated.. thanks

At a glance, if cashflow is not an issue for you and your pension is light for your age then it may make more sense to divert spare cash into the pension. By overpaying the loan you're "saving" 5.7% on interest avoided. But if you contribute to the pension then you presumably stand to gain a lot more via pension tax relief - never mind any subsequent gross roll-up gains over the years that the pension is invested.

 

[dubdub123]

At a glance, if cashflow is not an issue for you and your pension is light for your age then it may make more sense to divert spare cash into the pension. By overpaying the loan you're "saving" 5.7% on interest avoided. But if you contribute to the pension then you presumably stand to gain a lot more via pension tax relief - never mind any subsequent gross roll-up gains over the years that the pension is invested.

Thank you. I think i might go this road as pension pot seems very low based on my age. Im 51 and value of pension is around 90k spread across occupational pensions and PRSA. Employer is making decent contributions, but id like to try bump it up a bit more. Thanks for the advice, appreciate it.

 

[ClubMan]

Thank you. I think i might go this road as pension pot seems very low based on my age. Im 51 and value of pension is around 90k spread across occupational pensions and PRSA. Employer is making decent contributions, but id like to try bump it up a bit more. Thanks for the advice, appreciate it.

Please wait for other opinions here or get a second opinion elsewhere. Mine is based on limited info posted here so I could be missing something important.

 

[dubdub123]

Please wait for other opinions here or get a second opinion elsewhere. Mine is based on limited info posted here so I could be missing something important.

Yes, ill weigh it all up and try hit the right balance. Might not be something i switch to straight away but can plan to make small AVCs, like i had been with previous employer. A bit to think about longer term though.

 

[dubdub123]

So for now, ive held off making AVCs as employer is contributing quite a bit.
Im focussing on overpaying my loan which is currently under 16k. Ì think id be more comfortable getting rid of this first, so heavily focussing on it.

Mortgage is approx 195k now.
Im aiming to pay off 16k loan mid/end next year (using xmas bonus and overpaying monthly).

Any recommendations for next steps??
- should i build up emergency fund? I have only 1k in savings as used savings to pay off car loan
- Should i try max out my AVC and up my pension?
- overpay mortgage with lump sum equivalent to max AVC overpayment?
- do a bit if both.. pay smaller AVC and make smaller lump sum payment off mortgage

I'm trying to make some home improvements as I go.. fitting attic stairs, painting and eventually will want to refit bathroom in few years. Paying for these improvements as I go is working well, so currently not planning any major work.

Would really like to hear various opinions.

 

[lovethissite]

I think you should talk to your wages dept and see how much per month it would cost you to increase your pension contributions by 10%. And be bringing that up the the max (20-30%??) in the next few years.
Also if you get up to 10% bonus and taking it in cash you are losing half of it. But you get the whole benefit of it if you put it in your AVCs.
2.1% interest on your mortgage for 8 more years is a real deal now .
You should definitely increase pension and keep chipping away at loan - but don't use your xmas bonus for the loan .