Review of our financial status

[Steven Barrett]

You need to:

1. Protect your income. If you can't work, everything goes out the window. I look after an accountant who was on her way to becoming a partner but got MS and hasn't worked in 30 years. Get income protection
2. Work out how much life cover you need. What kind of lifestyle do you want the surviving spouse to have if one of you is gone. Take into consideration the mortgage will be paid off.
3. Build up you emergency fund, €20k isn't enough for the level of expenditure.
4. Build up medium term assets by investing some of your income - you can use this for private school for kids instead of having to take everything from cashflow. No point in you doing all the heavy lifting when it comes to your money. Get the markets to grow it for you.
5. You will need to think about pension funding. 7.5% between the two of you is not enough to be able to maintain your lifestyle into old age.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[Blackrock1]

Blackrock, you doing mighty and fair duce to you. You have posted a number of times today so I guess you must have a handy enough number

you guess wrong

You need to:

1. Protect your income. If you can't work, everything goes out the window. I look after an accountant who was on her way to becoming a partner but got MS and hasn't worked in 30 years. Get income protection
2. Work out how much life cover you need. What kind of lifestyle do you want the surviving spouse to have if one of you is gone. Take into consideration the mortgage will be paid off.
3. Build up you emergency fund, €20k isn't enough for the level of expenditure.
4. Build up medium term assets by investing some of your income - you can use this for private school for kids instead of having to take everything from cashflow. No point in you doing all the heavy lifting when it comes to your money. Get the markets to grow it for you.
5. You will need to think about pension funding. 7.5% between the two of you is not enough to be able to maintain your lifestyle into old age.

Steven

thanks steven,

income protection is being arranged currently, life cover is adequate i think, the fund will be built up to circa 50k next year, turns out my wife has 10.5% going into her pension pot, so better than i had hoped, i do need to up mine however.

point taken on medium term assets

 

[gnf_ireland]

I have re-read the post and all the follow-up commentary today, and the one thing that comes across is a clear desire from the OP to 'plough ahead with his career' to ensure he makes the highest salary as quickly as possible. While admirable it does come at a high cost also, including
- it is likely you will be working long hours to achieve this. I wonder how much of your child(ren) you would see during the week
- it also appears that for you to achieve this, your wife will have to take the slack if the kids are sick, off school etc. This might be fine, but I do think it is something you need to sit down and agree as a couple. It is likely your wife has invested in her career also over the last 15 plus years, so taking a step back while sounding great will not be easy to do
- you talk about going to a 3 day week in 5 years. Realistically, if you want to achieve a better work life balance, this will need to be considered as your child(ren) start school. Ideally there should be a level of contact between the parent and the school/teacher, which means one/both parent doing their share of school drop-offs. Lots of schools don't open until 8:50, making it difficult to get into work at a reasonable time.
- I also wonder will you miss school plays, parent/teacher meetings, after school activities as you focus on your career. Most people I know who are on that 'career focused' route have a terrible work/life balance in that respect
I also wonder whether after this massive career push for 30 years, you will wake up in your early 50's and wonder where the last 20 years of your life went, and why your teenage kids think you are only an ATM & taxi.

Maybe I am being a bit harsh here, but I think most people will know people who are like this, and while they have a great lifestyle materially, being happy is a different matter. As was once said to me in a bar in Kerry at 3 am "I have yet to meet a man who on his death bed said I wish I worked more in my life"


Its all about choices. We all have to make them no matter how much we earn. Personally, I think you are still living the early 30's lifestyle with high disposable income, and not yet adjusted to life as a parent with future commitments. I think you adjusted your spending habits for your mortgage application, and then reverted to 'true form' straight away again. For people who are naturally spenders, saving is something that is really hard to get into the mindset of.

I think you would benefit sitting down with a financial planner to go through your life goals, projected cash flows etc and see where you end up. I think it would be a wise 1k-1.5k spent in your case.

 

[Bronte]

I agree with you GNF that he would be well advised to go to an advisor. Steven, who is an advisor, posted just before you and gave him some pertiment advice.

Also your points on life etc, totally agree. I knew a man married to his job, when he retired his wife divorced him and he died within a couple of years never really having a life other than the job, he even used to come back to the job to meet people, totally lost without it.

 

[Blackrock1]

I have re-read the post and all the follow-up commentary today, and the one thing that comes across is a clear desire from the OP to 'plough ahead with his career' to ensure he makes the highest salary as quickly as possible. While admirable it does come at a high cost also, including
- it is likely you will be working long hours to achieve this. I wonder how much of your child(ren) you would see during the week
- it also appears that for you to achieve this, your wife will have to take the slack if the kids are sick, off school etc. This might be fine, but I do think it is something you need to sit down and agree as a couple. It is likely your wife has invested in her career also over the last 15 plus years, so taking a step back while sounding great will not be easy to do
- you talk about going to a 3 day week in 5 years. Realistically, if you want to achieve a better work life balance, this will need to be considered as your child(ren) start school. Ideally there should be a level of contact between the parent and the school/teacher, which means one/both parent doing their share of school drop-offs. Lots of schools don't open until 8:50, making it difficult to get into work at a reasonable time.
- I also wonder will you miss school plays, parent/teacher meetings, after school activities as you focus on your career. Most people I know who are on that 'career focused' route have a terrible work/life balance in that respect
I also wonder whether after this massive career push for 30 years, you will wake up in your early 50's and wonder where the last 20 years of your life went, and why your teenage kids think you are only an ATM & taxi.

Maybe I am being a bit harsh here, but I think most people will know people who are like this, and while they have a great lifestyle materially, being happy is a different matter. As was once said to me in a bar in Kerry at 3 am "I have yet to meet a man who on his death bed said I wish I worked more in my life"


Its all about choices. We all have to make them no matter how much we earn. Personally, I think you are still living the early 30's lifestyle with high disposable income, and not yet adjusted to life as a parent with future commitments. I think you adjusted your spending habits for your mortgage application, and then reverted to 'true form' straight away again. For people who are naturally spenders, saving is something that is really hard to get into the mindset of.

I think you would benefit sitting down with a financial planner to go through your life goals, projected cash flows etc and see where you end up. I think it would be a wise 1k-1.5k spent in your case.

i agree with a lot of what you are saying, im not making these decisions alone dont worry, my wife and i have discussed them at length, we cant prioritise both careers so we have decided on mine and she is happy to take a step back, in fact in a lot of ways she already has (leaving on time every evening to pick up from creche is a change from working until 8 or 9) and she is happy with this.

both my father and my father in law worked very hard and have great relationships with their kids, i am aiming to the do the same. i have been given the tools to have a successful career through my own dads hard work and sacrifice so i will focus on that for the next 10 years at least see where it gets me.

i wont sacrifice everything for this however and its something im very conscious of.

 

[52andout]

FYI as mentioned a few times : Dublin private school fees oct 2014 cannot post link yet

• Alexandra College Dublin – €6,785
• Rathdown School Glenageary – €6,552
• St. Andrews College – €6,400
• St Columba’s College – €10,353
• St. Kilian’s German School – €4,500
• Sandford Park School – €7,000
• The Teresian School €4,675
• The High School – €5,500
• Wesley College – €6,000
• The Institute of Education – €6,800
• St. Joseph of Cluny, Killiney – €4,200
• The King’s Hospital – €6,700
• Mount Anville – €5,250

 

[Blackrock1]

thanks, cheap compare to creche then

 

[JamesN]

I think it’s fantastic that you are on such good wages at a relatively early part in your career. Well done you have worked hard to get there!


I know it doesn't feel like this right now but it’s very easy to lose a job. It’s easy then for a few months to go by and realise you have to take one at 1/3 the salary you were on, as younger people just as well qualified start to undercut you. It has happened to people I know. It sounds like you feel invincible in your career, maybe you are, maybe not but plans for a time in your life where you are not earning so much would be a sensible thing to do now. External factors too can take control, eg deteriorating economy etc. Accountancy is a good earner but it’s not a specialised unique skill that only few can do.


You got some advice to cut down on discretionary spending but you don’t feel you need to. Fair enough, but I can tell you from experience that you don’t need to spend a lot to enjoy yourself. But really this is down to everyone’s individual view on life. Parenthood for me made me realise this. I went with my daughters to the park yesterday and we spent a lovely time making my wife a ‘bouquet’ of dried leaves. The girls had so much fun doing it and it was so lovely watching them do this, my wife was bowled over when they presented it to her with big smiles on their faces.


My thoughts would be very simple, get your mortgage down (or build up a large pot of money) while the sun is shining and make it that your home will never be taken away from you in unforeseen circumstances.

 

[Blackrock1]

I think it’s fantastic that you are on such good wages at a relatively early part in your career. Well done you have worked hard to get there!


I know it doesn't feel like this right now but it’s very easy to lose a job. It’s easy then for a few months to go by and realise you have to take one at 1/3 the salary you were on, as younger people just as well qualified start to undercut you. It has happened to people I know. It sounds like you feel invincible in your career, maybe you are, maybe not but plans for a time in your life where you are not earning so much would be a sensible thing to do now. External factors too can take control, eg deteriorating economy etc. Accountancy is a good earner but it’s not a specialised unique skill that only few can do.

thanks, of course i could lose my job, i have been with a company that went into receivership before, so i know what its like, that said, my downside is more like a 30% drop in salary rather than 66%, there are different types of accountants

 

[gnf_ireland]

both my father and my father in law worked very hard and have great relationships with their kids, i am aiming to the do the same.

I fully accept this. But your parents generation, like my own, had a very different view of parenting and especially fatherhood. Its highly likely your father was even at your birth, and definitely would not be expected to go to a school play. His role would clearly have been the main breadwinner. That has changed, and it does need to be taken into account

thanks, of course i could lose my job, i have been with a company that went into receivership before, so i know what its like, that said, my downside is more like a 30% drop in salary rather than 66%,

Absolutely fine - you know your industry/role better than most. However, you currently live off a joint salary of around 250k. In the event your wife gives up work completely (which is not unheard of for someone with 2-3 children), and you take a 30% cut in salary, your combined income is now in the region of 120k. This would force a major lifestyle change, and one which would be magnified by your current lifestyle spending.

I actually thought about all CxO level people I know working for large companies, and I could not think of a single one where both parents worked (where kids were involved). This was across technology, finance, product, sales etc.

A company I used to work for closed their London office a few weeks ago. The people I knew there were highly skilled senior people who led multi-million euro/pound/dollar programmes. They were all let go, and now need to find new roles. However, roles at this level are hard come by, and you normally have to take a step backwards to get your foot in the door and then be internally promoted within a company. But once you get to CxO level, the attrition/turnover rate appears to be much higher than the level below that - especially for 'outside' acquired talent. Its just something to keep in mind

Fair enough, but I can tell you from experience that you don’t need to spend a lot to enjoy yourself. But really this is down to everyone’s individual view on life. Parenthood for me made me realise this.

Absolutely support this. The best form of fun any child can have is to have other children around to play with. The excitement when they are down at the local park/playground and bump into one of their friends from creche/pre-school and get to play together for a while is worth more than anything else.

 

[gnf_ireland]

There are people who are "bulletproof" from an employment perspective and whose earnings are more likely to double, triple, or quadruple rather than fall.

Absolutely agree. I would put a medical doctor en route to being a consultant in that category - and I am sure there are a few more.

However, whether the OP wishes to accept this or not, as you move towards the top of the career pyramid the level of opportunity seriously narrows. Certain companies prefer 'home grown' talent for their senior roles, while others prefer to acquire it in. Either way, many people end up plateauing from a career perspective in their early 40's and have to wait patiently for a more senior role to open up for them.

No industry is truly bulletproof. I work in technology which is relatively stable. Outside of the two bubbles in the last 20 years, I have also seen smaller patterns of contraction based on outside influences that cannot be ignored. I have seen mergers & acquisitions have untold effect on some peoples careers, both positive and negative. All it takes is a different boss for someone to fall out of favour. Think of soccer players and managers if you want a reasonable analogy here.

Dublin is also quite small - one 'mistake' can grow legs and seriously impact a career. I am sure the 'Anglo tapes' guys would agree

One issue with AAM is that many contributors take advice that's more pertinent for people who are struggling and replicate it for people who are doing well.

Absolutely agree with this comment, and I have suggested to the OP that maybe a financial planner would be more suitable to their needs.
However the general tone on this thread is more about reducing debt levels, increase the pension pot and don't assume 2 salaries. I have introduced a 'work life balance' aspect to it, as it is one I feel is important to consider especially when realistic financial options exist.

 

[trasneoir]

42k a year makes it sound more than it is , in reality its €400 a week per person to cover lunch, eating out, clothes and other sundries, yes lots of scope to cut it down, but i dont think im living like a millionaire!

Not to pile on, but I'm pretty sure you're spending more than most millionaires.
https://en.wikipedia.org/wiki/The_Millionaire_Next_Door

Ideally i would like to have the mortgage paid off by the time my daughter starts college, so gives me 16 years or so

In your shoes, I'd prefer to be financially ready to retire (ie. do exactly whatever I want) in 16 years time. You've got the surplus income, and I know you can do the sums. Here's a primer if you've never thought about it: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ it's a bit harder with today's interest rates and irish taxes, but still totally achievable with your income.

I'd also want to take plenty of time off during those 16 years - these are exactly the years where the kids will want to spend time with their parents. I'd spend 2/3 months a year with family and friends camping in italy, sailing in the caribbean, and hurling in the back yard - with an emphasis on five star experiences rather than five star accommodation.

No industry is truly bulletproof. I work in technology which is relatively stable.

Very true. IT in Ireland is having it's hayday, but that could be ended at short notice by a tax change in Ireland, Europe, or the US.
More broadly, the phenomenon of "machines taking our jobs" is coming soon to an industry/profession near you. Truck/bus/taxi/mail drivers should be running scared today, but as a programmer I'm looking over my shoulder too.

 

[Blackrock1]

Not to pile on, but I'm pretty sure you're spending more than most millionaires.

the only thing ill say to that is that i have no interest in being a millionaire that lives frugally, that is something i don't see the point in

 

[Gordon Gekko]

I've also no interest in retiring early...it's a road to ruin. Your brain turns to mud, and you become one of those people who rant and rave about Eircom not calling around on time and the stress of supermarket shopping.

 

[PGF2016]

Some contrarian comments / alternative viewpoints.

the only thing ill say to that is that i have no interest in being a millionaire that lives frugally, that is something i don't see the point in

The frugal don't see the point in pissing 10k away on a Rolex Daytona when a 1k Seiko is every bit as functional.

Your brain turns to mud, and you become one of those people who rant and rave about ...

The same comment could be said of working on late into life.

 

[moneybox]

I've also no interest in retiring early...it's a road to ruin. Your brain turns to mud, and you become one of those people who rant and rave about Eircom not calling around on time and the stress of supermarket shopping.

Reminds me of Victor Meldrew

 

[Gordon Gekko]

Some contrarian comments / alternative viewpoints.



The frugal don't see the point in pissing 10k away on a Rolex Daytona when a 1k Seiko is every bit as functional.


The same comment could be said of working on late into life.

No, the exact opposite. In my view, the best approach is working a couple days a week forever.

Keeps you young as the saying goes...

 

[Blackrock1]

The frugal don't see the point in pissing 10k away on a Rolex Daytona when a 1k Seiko is every bit as functional.

So is a 7 dollar Casio

Anyway if I could get my hands on a 10k Daytona I could sell it at a 25% mark up whereas the 1k seiko would be worth half that before I got to the door

Who is pissing away money in that scenario

 

[Gordon Gekko]

The white gold Cosmograph Daytona is the one to go for in any event...€25k

 

[Blackrock1]

Stainless steel is where the money is bizarrely! You can get a pre owned gold one for less than the premium being charged on the steel

Crazy world