New arrival forces a rethink on finances

misterk

Registered User
Messages
38
Age: 39
Spouse’s/Partner's age: 42

Annual gross income from employment or profession: 57k + 10% Annual bonus
Annual gross income of spouse: 44k

Monthly take-home pay Spouse currently on maternity leave - Pre 6071 Current incl Maternity Benefit 5328

Type of employment: Both private sector PAYE

In general are you:
(a) spending more than you earn, or
(b) saving?
Main focus has been paying down debts very heavily while keeping with in our means

Rough estimate of value of home 260k just completed multi mortgage switch used to clear down personal debts
Amount outstanding on your mortgage: 194k
What interest rate are you paying? 2.3% 2 years fixed 20 years remaining

Other borrowings – car loans/personal loans etc
430 pm Credit Union Home Improvement 10 year loan balance 22.5k 6.5 years remaining
500 pm Credit Union Car Loan 6.7k 3.5 years remaining overpaying monthly different amounts 8k ahead

Do you pay off your full credit card balance each month? No
If not, what is the balance on your credit card? 450, limit 500, reduced from 6k

Savings and investments: Credit union 4k & 2.3k presume cant be used to reduce loan balance
Post Office 500 save 50 per month
Buy 20 euro of company shares each month employer gives 10% extra shares value 600

Do you have a pension scheme? Yes Monthly Employer pays 10% and i pay 5%, AVC of 2%
Spouse no but has 14k retirement bond and 1.5k to be transferred out of previous employer to new fund yet to be set up

Do you own any investment or other property? No

Ages of children: 7 and 6mths with special needs

Life insurance: Yes and income continuance policies for both

Childrens allowance 280pm used to clear down debt

Domicilary care allowance 310pm case still pending

Respite Grant 1700 annually case still pending

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

Had a really tough time in the recession like many others and have kind of embraced the motto "never a borrower nor a lender be"

Family circumstances have changed significantly with the arrival of our second child who has special needs and i need to refocus my attitude towards our finances which has been very much focused on clearing and overpaying debts as quickly as possible without building up savings etc. Have applied for all the relevant assistance for him Medical card, Domiciliary care which he will need etc. think i have a 4-6 mth window to continue overpaying heavily before i need to take the foot off the levels of repayments

I am very good at tracking spending and have an excel workbook with all finances tracked for last 6 years so know my costs very well. I know i should build up a rainy day fund and did a budget up for this our monthly bills including annual bills such as house, 2 car insurances, TV licence, property tax etc over the 12 mths this figure would be 3.5k p.m.

Adding in back to school costs putting money aside for car maintenance, doctors/prescriptions and a holiday, we are looking at a figure of 4.1k p.m.

I also need to look into setting up a special needs trust, i know there are strict limits i need to stick with.

Rereading the above i can see some glaringly obvious things i am doing wrong like not taking advantage of the 10% on shares from employer, saving 50 a month or putting a few % more into AVC. Most obvious is the no rainy day fund

Idea in overpaying the smaller credit union loan was to clear it then switch the monthly 500pm repayment to overpaying larger loan

I would just love if a few of the well informed members of this forum could give some of their opinions on the above and where i could be doing better.
 

SBarrett

Frequent Poster
Messages
3,164
Look at getting your personal loans down first. That will free up income to save and do other things. Otherwise you are going to be juggling your finances and taking money out of one account to pay for something else.

How much additional care does your son need? Will he be able to go to mainstream school or school at all? Are there schools, organisations in your area who can help? Get in touch with some charities linked to your son's needs. The experience of other parents who have been through it all will be invaluable to you all.


Steven
www.bluewaterfp.ie
 

Peanuts20

Registered User
Messages
111
Don't be afraid to ask for help would be the first piece of advice. Secondly, (and its a morbid thing to think about but stuff happens), make sure your will and future plans for guardianship if it was ever needed are in place and agreed with all.

Secondly, what are your longer term plans once maternity leave is completed. Is additional leave going to happen, are there are redundancy schemes/part time working/home working that could be taken advantage of. You need to start looking at those now rather then panicking closer to the time.
Thirdly make sure your tax affairs are fully up to date and in particular see if there are any tax back you can claim retrospectively
 

misterk

Registered User
Messages
38
We have engaged with the local charities as regards schooling its too early to tell but the high chance it will be mainstream.

I plan to keep driving down the personal loans as quickly as possible.

There will be some unpaid leave before my wife goes back to work so planning for that now also.

At the minute there are no redundancy schemes available but a possibility of part time work.

I ensure our tax affairs are up to date every year and do a balancing cert every year.
 

Laughahalla

Frequent Poster
Messages
127
You just need to readjust where you are putting your money and efforts. You need to focus on paying down debt first . Trying to pay down debt and invest is the wrong way to tackle things. Once you focus on one thing at a time everything else will get easier.
Stop saving and investing until you have your consumer debt paid down.

Take your savings except for €1k and pay off your car loan. Hey presto , you now have an extra €500 per month that is yours. It will feel like you just got a raise.
I would also stop paying into your pension for a year and redirecting that money + that extra €500 a month you have towards paying off your next highest debt.
Sell whatever you can to pay down debt , sell so much that the children think they're next. This will also free up space in your home.Everybody has old stuff in their house that they don't use anymore.

Stop borrowing, borrowing money is stressful. You don't need that additional stress that being in debt brings into your life.

I follow Dave Ramsey's baby steps - It works as long as you do this in order.

  • Baby Step 1 – €1,000 to start an Emergency Fund
  • Baby Step 2 – Pay off all debt using the Debt Snowball
  • Baby Step 3 – 3 months of expenses in savings. Baby Step 3(a) Save up for a deposit on a home
  • Baby Step 4 – Invest 15% of household income into retirement
  • Baby Step 5 – College funding for children if applicable
  • Baby Step 6 – Pay off home early
  • Baby Step 7 – Build wealth
Steps 4,5 & 6 can be done at the same time.


Good luck. Have faith, follow the baby steps.
 
Last edited:

Homelandfan

Registered User
Messages
12
Agree with everything Laughahalla says - esp. focus on one thing at a time - paying down debt. I think you are on the right track.
heres what I would do:
1. Leave 2000 in the Credit Union (call that your rainy day fund) , use the remainder and other savings and EVERY other bit of spare cash that comes in, Respite grants etc to pay down debt, focus first on credit card, then car loan and then other loan, then overpay mortgage - GO AT IT HARD!
2. Pay off Credit card in full EVERY MONTH or else cut it up and close the account
3. No more new borrowings (in my case I've decided NEVER again)
4. Cancel payments you are making into shares and AVC for now, and suspend holidays & pension for 12-18 months as Laughahalla says
5. Are you good at your job? are you getting properly compensated? if not ask for a raise or start looking around - go where you are treated best! and maybe look at some ways to make extra cash (online, from hobbies, buying and selling, start a small business etc)
6. Have a frank discussion with other half about one of you staying at home for now and get rid of 1 car. I know this is not PC to say . but it will suit some families, and save money on car, maintenance, insurance, etc, childcare costs, income continuance policy etc - and enables more quality family time

Once you are debt free, the fog lifts and everything becomes clearer, you can then focus on Baby Step 7, you are no longer a debt slave and maybe you get a chance to get out of the rat race!
 

Bronte

Frequent Poster
Messages
13,680
Pay off debt based on what interest rate is the highest. So that would be the Credit card, then the Car loan, credit union.

You didn't mention life insurance. That's very important with two young children.

Is there any savings to be made to your current spending. If you post up all the details other posters might spot things you have missed.
 
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