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Age: 38
Spouse’s/Partner's age: 36
Annual gross income from employment or profession: €66k
Annual gross income of spouse: approx. €58k
Monthly take-home pay €5,688 combined
Type of employment: e.g. Civil Servant, self-employed
Myself: Private sector, construction industry
Wife: Public Sector
In general are you:
(a) spending more than you earn, or
(b) saving? Saving
Rough estimate of value of home €400k
Amount outstanding on your mortgage: €295k
What interest rate are you paying?
Split loan 75% fixed for 10yrs @ 2.99%, 25% variable @3.1%
Other borrowings – car loans/personal loans etc
Repayment of interest free loan to family member of €115 per month. Approx 3yrs remaining.
Do you pay off your full credit card balance each month? n/a – no credit card
If not, what is the balance on your credit card?
Savings and investments:
Approx €3k in equities
€5.5k in instant access savings a/c – this a/c has two purposes i.e. saving for a modest replacement used family car & Rainy Day Fund (saving €450 per month to this account)
Do you have a pension scheme? – yes, as follows:
Me – Occupational scheme – I pay 5%, employer pays 10%
Wife – Public sector ‘Single Scheme’ – possibly with the option to buy back years in the future
Do you own any investment or other property? – no
Ages of children: Child #1 – 5yrs, Child #2 – 7months
Life insurance:
Me – some death in service benefit through employer – not sure of the details
Wife – Unknown – assume similar to mine through Public Service
What specific question do you have or what issues are of concern to you?
Our main medium/long term financial priority is to save for our children’s third level education. We live close to a number of universities & I.T.’s in Dublin so we’re assuming they will live at home through the college years.
Our main challenge is maintaining a decent standard of living while saving for the above. It is proving to be quite a struggle.
Our strategy is to overpay our mortgage by as much as we can afford, keeping the term unchanged, and reducing monthly repayments due, so that we can change to saving cash for college when our repayments become more comfortable. The other reason for this strategy is my employment in the construction industry – if/when there is a decline in the sector, my salary may decrease or worst case I may be out of work for a period. In such a scenario, it would be good to have low(er) monthly repayments to prevent us going into arrears.
The first difficulty I have with this is it is hard to determine when we’ll be able to switch from overpayments to saving cash. I have it in my head that we’ll look into switching for Child #1 after primary school and then do the same for Child #2. But this time period isn’t based on any calculation so it might be too early to stop overpayments.
The second difficultly is the strain on our finances of meeting the additional payments each month, compared with the following month’s reduction in repayment due. It varies month by month but we overpay by approx. €400 (edit) each month and it only seems to knock about €2 off the next month’s repayment. (edit: we also save €450 per month into an account which acts both as a Rainy Day Fund and a savings account to pay for a replacement car in approx. 2yrs time). Given the sacrifices that we make as a family (lots of holidays, house renovations, etc., put on the long finger as well as day-to-day stuff), it’s hard to justify that the reward next month will be €2!
I’m probably painting too grim a picture here, and much of the sacrifice is self-imposed. For example, if/when I get a bonus in work, we try to use most of it to overpay the mortgage. I suppose our attitude is ‘if it isn’t a little bit painful, we could/should be making a bit more effort’.
Our other concern is our pensions. I’m in a decent scheme now but only started about 3yrs ago. I’m choosing to use any disposable income to overpay the mortgage rather than using AVC’s to improve my pension pot. Similarly, my wife started her pension in 2013 but is forgoing AVC’s for mortgage overpayments. The plan would be to address pensions when kids are finished college but by then we’ll only have approx. 12yrs to go until retirement. Is this too late?
To wrap up, I used to dip into a range of different products such as State Savings, Prize Bonds, some equities, investment trusts, P2P lending, etc., and my tolerance for risk would be medium to high. However, due mainly to Ireland’s penal tax regime on most forms of investment, I’ve become somewhat disillusioned with the other options.
I’m not sure what my specific questions are here, besides am I taking the right approach?
Spouse’s/Partner's age: 36
Annual gross income from employment or profession: €66k
Annual gross income of spouse: approx. €58k
Monthly take-home pay €5,688 combined
Type of employment: e.g. Civil Servant, self-employed
Myself: Private sector, construction industry
Wife: Public Sector
In general are you:
(a) spending more than you earn, or
(b) saving? Saving
Rough estimate of value of home €400k
Amount outstanding on your mortgage: €295k
What interest rate are you paying?
Split loan 75% fixed for 10yrs @ 2.99%, 25% variable @3.1%
Other borrowings – car loans/personal loans etc
Repayment of interest free loan to family member of €115 per month. Approx 3yrs remaining.
Do you pay off your full credit card balance each month? n/a – no credit card
If not, what is the balance on your credit card?
Savings and investments:
Approx €3k in equities
€5.5k in instant access savings a/c – this a/c has two purposes i.e. saving for a modest replacement used family car & Rainy Day Fund (saving €450 per month to this account)
Do you have a pension scheme? – yes, as follows:
Me – Occupational scheme – I pay 5%, employer pays 10%
Wife – Public sector ‘Single Scheme’ – possibly with the option to buy back years in the future
Do you own any investment or other property? – no
Ages of children: Child #1 – 5yrs, Child #2 – 7months
Life insurance:
Me – some death in service benefit through employer – not sure of the details
Wife – Unknown – assume similar to mine through Public Service
What specific question do you have or what issues are of concern to you?
Our main medium/long term financial priority is to save for our children’s third level education. We live close to a number of universities & I.T.’s in Dublin so we’re assuming they will live at home through the college years.
Our main challenge is maintaining a decent standard of living while saving for the above. It is proving to be quite a struggle.
Our strategy is to overpay our mortgage by as much as we can afford, keeping the term unchanged, and reducing monthly repayments due, so that we can change to saving cash for college when our repayments become more comfortable. The other reason for this strategy is my employment in the construction industry – if/when there is a decline in the sector, my salary may decrease or worst case I may be out of work for a period. In such a scenario, it would be good to have low(er) monthly repayments to prevent us going into arrears.
The first difficulty I have with this is it is hard to determine when we’ll be able to switch from overpayments to saving cash. I have it in my head that we’ll look into switching for Child #1 after primary school and then do the same for Child #2. But this time period isn’t based on any calculation so it might be too early to stop overpayments.
The second difficultly is the strain on our finances of meeting the additional payments each month, compared with the following month’s reduction in repayment due. It varies month by month but we overpay by approx. €400 (edit) each month and it only seems to knock about €2 off the next month’s repayment. (edit: we also save €450 per month into an account which acts both as a Rainy Day Fund and a savings account to pay for a replacement car in approx. 2yrs time). Given the sacrifices that we make as a family (lots of holidays, house renovations, etc., put on the long finger as well as day-to-day stuff), it’s hard to justify that the reward next month will be €2!
I’m probably painting too grim a picture here, and much of the sacrifice is self-imposed. For example, if/when I get a bonus in work, we try to use most of it to overpay the mortgage. I suppose our attitude is ‘if it isn’t a little bit painful, we could/should be making a bit more effort’.
Our other concern is our pensions. I’m in a decent scheme now but only started about 3yrs ago. I’m choosing to use any disposable income to overpay the mortgage rather than using AVC’s to improve my pension pot. Similarly, my wife started her pension in 2013 but is forgoing AVC’s for mortgage overpayments. The plan would be to address pensions when kids are finished college but by then we’ll only have approx. 12yrs to go until retirement. Is this too late?
To wrap up, I used to dip into a range of different products such as State Savings, Prize Bonds, some equities, investment trusts, P2P lending, etc., and my tolerance for risk would be medium to high. However, due mainly to Ireland’s penal tax regime on most forms of investment, I’ve become somewhat disillusioned with the other options.
I’m not sure what my specific questions are here, besides am I taking the right approach?
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