Mortgage-free but worried about job security

S

skjom24

Registered User
Messages
16
Personal :

40, wife is 38. Two kids - 6 & 3.

Income

Wage : Take home after tax is about 66k a year , that's after I divert wages into APSS schemes and ESPP schemes below. I've tried to maximise any tax benefits from work (bar the pension). Bonus is typically 12k a year but goes straight into the APSS scheme.

Wife is public service worker , salary about 35k.



Property:

Own my house , value 450-500k. I don't really consider this an asset it's just my house. Mortgage is fully payed. Id like to do renovations to the house in time , we tip away every year- like 50k this year on driveway , furnishings. Flooring , showers,stairs outside all planned - estimate maybe 25k a year for next few years. It a nice house so in an emergency where I lost my job we would park the refurbishments as needed . It's big and meets all our living needs for now and future. It would be nice to improve it though.



2nd Property - This is the messy situation, my father was left a property which was in probate then he died. Estimated the inheritance tax and legal fees are about 100k when the probate happens in next 2-3 years. Then the property itself is in ruins. Id like this as a holiday home - but I would say it would take 200k+ to build up a new house. The property and land is probably worth well over 600k without doing anything with it as it has a lot of land. If I did need to sell it.






Pension:

Something I was not good at when I was younger.

Aon tell me my current me is 142k and my future me is 922k.


Employer puts 2.5% in and I put 5% in.



Savings:

50k earning 4% interest.

40k earning 4.2% interest.

23.5k earning 3.75% interest.

2.5k Crypto

5k current account.



Life Insurance:

3x my salary payed for by my employer.


Health Insurance:

All family covered by my employer.


Shares:

APSS : Savings scheme at work - will return 12k a year starting next year.

ESPP at work : 24k a year before tax.

RSU: 107k vested. 127k unvested. Sitting in E-Trade.


Cars:

Both cars are fully payed.

One is 3 years old and worth about 35k.

2nd car is 10 years old , it runs fine and I don't intend to change it unless it calves. Not into flash cars.



The advice I was looking for was that - I think I'm over exposed at my job. They are my employer and also my shares are all tied into them. I took 40k out of the RSUs recently and deposited it in Trading 212 as I thought all my eggs are in their basket. I would describe my own job as volatile enough. 10 years in the company with a USA multinational, in IT sector of their pharma side. They have exercised a lot of redundancy in the USA last few years , for me I have no idea , I could be there in 5 years or gone in 1 year. Id get redundancy, prob about 60k if left go.


My main motivation is to provide for the family , id like to improve my own home , and build up the holiday home so we have somewhere to go at weekends .Also id like to be able to put the kids through college , and help them out when older with cars , etc. Dont mind working till retirement - think I'd be bored if I retired early , I've always liked to work and keep the mind ticking. Not a big spender , we like a nice holding every year that's about it. The crypto thing was a whim , didn't loose anything and don't expect to gain anything. If lost my job then I'd have to adjust any plans. I would consider myself a skilled worker. People tell me id have no bother finding work in the morning but that's easier said than done when market takes a downturn.


My big worry though would be loosing job and having to put food on the table.

Thanks
 
Last edited by a moderator:

@skjom24​


Your post is very difficult to follow which is probably why no one attempted to answer it. It would have been a lot easier, if you had followed the Money Makeover format.


I am assuming that you have been left or will be left this property and that you have no siblings who will be sharing it with you?

So you have an asset which is worth €600k if you sell it.
You could spend €200k and have a nice holiday home.

Why not sell it and buy a holiday home somewhere for €300k?

Or have you some emotional attachment to this holiday home?

Brendan
 
Apologies, I will try to update it.

No one will be sharing it with me.
Some emotional attachment I guess to the property.

I have set my pension now to 25%.
 
skjom24 said:
My big worry though would be loosing job and having to put food on the table.
Click to expand...

You have a mortgage-free home.
You have a property worth €600k coming to you in a few years.
You have €230k cash or cash equivalents.
You have €127k in unvested shares.

You have absolutely no need to worry about putting food on the table.

But, you should sell any shares in your employer as soon as they vest. Take the tax hit. You are far too dependent on your employer.

You have over €1m in property including your home.

So put the cash into a diversified portfolio of shares.
 
skjom24 said:
Id like this as a holiday home - but I would say it would take 200k+ to build up a new house.
Click to expand...

You can well afford to have this as a holiday home and spend €200k on doing it up or building a second home on it.

If you lose your job and if you can't get another job and if you struggle to put food on the table, you can always sell this property and realise €600k + any increase in value due to your building a new home on it.

The fact that you can afford to do it, does not mean you should do it.

Ask yourself: "If I had €800k cash, would I buy this place in this location as a holiday home?"

I am guessing that the answer is no. In which case you should sell it and, if you want to, buy a holiday home somewhere else which you, your wife and, most importantly, your two children would get most value from.

Brendan
 
Yes , I'm not very knowledgeable on finances , took my father's advice. Don't have loans , so payed my mortgage as fast as could and never have had car loan.I was lucky I got a good paying job for last 10 years.

You are correct , I would not buy it if I had that cash.

I was looking at option of ETF or funds like FCIT to park the cash . I will have to pay tax on the property and solicitor fees before it mine, so the cash I have will sit around for 1-2 more years. I have put some in trade republic for the 3.85% interest rates.
 
Financially you are are in very good shape. You have access to nearly quater of a million in cash plus potentially 60k of redundancy.

You might get some peace of mind from creating a household budget to know how much putting food on the table costs per year. Knowing you have eg 1-5 years of expenses in cash might make financial decisions for the remaining cash easier.

You could draw up a checklist of everything would you need to find another job, should the worst happen: An updated CV, a suit for interviews, a linkedin profile and a network, any standard industry qualifications you might need, a good cam and mic for online interviews. Even organize a public service card if you don't have one.

All this sounds trivial but even writing a CV can be strangely exhausting after a redundancy so it helps to be prepared.
 

Can i ask a question on this, what do you mean by take the tax hit. ?
Is this on the RSUs. If my RSUs are taxed on payroll what is the tax hit.

Often struggled with this.

lets say i have 107k vested in something like Etrade.
is the tax due

1./ Just the CGT on the profit - the shares have performed badly so this would be about 2K profit.
2./ 52% tax on the actual 107k .
 
I was speaking about your correct strategy.

You should start a separate thread setting out the tax issue.

It's not something I know anything about.

Brendan
 
If RSUs are taxed through payroll then on vesting you will receive a number of shares net of tax (tax will be 52.1% of 107K if in the highest tax band). RSU shares will be sold to cover your tax liability. Your payslip will show this benefit and the tax paid. CGT is then due on any gains from vesting/transfer to ordinary shares and when you sell them.
 
Generally the point of taxation on share options is at exercise. Any profit at that point is subject to payroll taxes. Thereafter any gain on disposal of the shares is subject to cgt. Note your cost for cgt would be the value taxed for payroll taxes.
 
Here is what CoPilot told me for an example :


Entry Details:

Plan Type: RS (Restricted Stock Units)
Quantity Sold: 16 shares
Date Acquired: 02/10/2020
Adjusted Cost Basis per Share: $68.99
Date Sold: 07/26/2024
Total Proceeds from Sale: $1,234.44
Proceeds per Share: $77.15

Step-by-Step Tax Calculation:

Determine the Ordinary Income Recognized:

For RSUs, the ordinary income recognized is usually the fair market value (FMV) at the time of vesting/acquisition. In this case, you noted an ordinary income per share but not explicitly in this entry, so I assume the total acquisition cost recognized as income is equal to the adjusted cost basis since no value was provided for Ordinary Income Recognized.

Adjusted Cost Basis per Share: $68.99

Calculate the Total Adjusted Cost Basis:

The total adjusted cost basis is the total value of the shares at the time of vesting:
Total Adjusted Cost Basis=Adjusted Cost Basis per Share×Quantity Sold
Total Adjusted Cost Basis=Adjusted Cost Basis per Share×Quantity Sold
=68.99×16=1,103.84
=68.99×16=1,103.84

Calculate the Capital Gain or Loss:

The capital gain or loss is the difference between the total proceeds from the sale and the total adjusted cost basis:
Gain/Loss=Total Proceeds−Total Adjusted Cost Basis
Gain/Loss=Total Proceeds−Total Adjusted Cost Basis
=1,234.44−1,103.84=130.60
=1,234.44−1,103.84=130.60

Since this amount is positive, it is a capital gain.

Apply Capital Gains Tax Rate:

In Ireland, the Capital Gains Tax (CGT) rate is 33%.
CGT Owed=Capital Gain×CGT Rate
CGT Owed=Capital Gain×CGT Rate
=130.60×0.33=43.10
=130.60×0.33=43.10

Summary of Taxes Owed:
Ordinary Income Tax: Already paid through payroll when the RSUs vested.
Capital Gains Tax (CGT): $43.10

Conclusion:

For the last entry, you owe $43.10 in Capital Gains Tax on the sale of your RSUs in Ireland. This is the tax on the profit made from the sale of these shares after they have vested and been taxed as ordinary income when they were acquired.
 
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