Doing ok but just a bit of a steer and/or some tips

T

The Oggster

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Age: 40
Spouse’s/Partner's age: 40

Annual gross income from employment or profession: 45,000
Annual gross income of spouse: 52,000

Monthly take-home pay: 5,500 (+140 child allowance)

Type of employment: Both Civil Servants

In general are you:
(b) saving: 260 per month each into our own Credit Union and 1,000 into joint savings account

Rough estimate of value of home: 370,000
Amount outstanding on your mortgage: 165,000
What interest rate are you paying? 2.6%

Other borrowings – car loans/personal loans etc: 0

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: Savings of approx. 70,000 in total across our individual and joint accounts

Do you have a pension scheme? Yes, Civil Service pension

Do you own any investment or other property? No

Ages of children: 1 year old

Life insurance: Cover for 300,000 on a dual life policy at 54 a month. Also paying 20 a month for mortgage protection


I think we're doing ok but would like some pointers on things we may not be considering.

We both have income continuance which will pay 75% of our salary if we can't work due to illness or injury.

We're looking into switching our mortgage for a start. We're currently over paying by about 320 a month.
We probably won't pay down the mortgage with the 70k as we're hoping to build an extension in the next couple of years.

Just typing it out I think we should reduce the amount going to CU and add that to mortgage payments? I'll have to get out the calculator and spreadsheet and work out how much we've over paid by so far as the 10% allowed without a break fee averages out at 308 a month but at the start of the fixed period we were overpaying by 200.

We're with KBC and fixed for 5 years in December 2018 at 2.6%. Balance at the time was 185k and is now 165k.

We don't have any investments or funds for the baby. She just has a CU account in her own name where money is just deposited on an ad hoc basis, mainly by family.
 
With zero return on any savings in the credit union,I'd direct the credit union money too the mortgage as it will save some money on the mortgage
 
Pinoy adventure said:
With zero return on any savings in the credit union,I'd direct the credit union money too the mortgage as it will save some money on the mortgage
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The bulk of the savings is with KBC, sorry should have said that. I have around €14k in my CU and my wife probably has closer to €20k. I was thinking of combining the KBC amount (€37k) and possibly €10k from each of our CU and buying prize bonds until the cash is needed for the extension. Could continue adding €1k a month.

KBC paying 0.25% on their savings. CU gave no interest last year, and will probably do the same this year.
 
The Oggster said:
We don't have any investments or funds for the baby. She just has a CU account in her own name where money is just deposited on an ad hoc basis, mainly by family.
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Would you consider saving the children's allowance as it could go towards a college fund. Perhaps also consider €5 per week each into an account for your little one. We do this from our wages and its building up nicely. It can be used for a starter car or travelling when kids are older
 
Personally if your situation allows it I would not setup a savings account for the a baby with the intent of it being useful 17 years later. Have enough cash available for a rainy day, several months considering with exact amount depending on security of you and any partners jobs, put everything else to work. Likewise I would use child benefit to pay down deb now, as that should in theory enable you to afford a lot more for them in 17 years.

Putting cash into a savings account now will see it lose money every year and that’s before all the talk of higher inflation, put it to work by paying off debt.
 
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It looks like:
  1. In the event of the death of one or other of you the mortgage is paid off and the other gets €300k;
  2. In the event of serious illness you get a 75% income continuance
  3. You will have death-in-service benefits too
To me this looks like you are a bit over-insured, and it is costing you. You both have sedentary jobs and 75% cover for the unlikely event of complete loss of income seems a lot. I would target something like 50%. In case of death, it seems a lot to assume that a working spouse with one child will need €300k once the mortgage is paid off.

You have too much sitting in cash for people with such secure incomes too. I would pay down the mortgage by about 50k or so which would reduce your monthly cost by nearly €100.

Otherwise you have a very secure income so you can afford to take risks. You could set up a bare trust for the baby and direct it toward equities. Over 18 years the after-tax return is likely to be better than the credit union.
 
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