Planning for Future - Some Advice

celtp

Registered User
Messages
12
Age: 47
Spouse’s/Partner's age: 41

Annual gross income from employment or profession: 80,000
Annual gross income of spouse: N/A
Type of employment: e.g. Civil Servant, self-employed:
Private sector


In general are you:
(a) spending more than you earn, No
or
(b) saving? yes


Rough estimate of value of home: 500,000
Amount outstanding on your mortgage: Ca. 230,000
What interest rate are you paying?
Variable 1.6%

Other borrowings – car loans/personal loans etc: None

Do you pay off your full credit card balance each month? Yes

If not, what is the balance on your credit card? 0.00

Savings and investments:
An Post - 35,000
Angelo Irish - 15,000
AIB - 1,500


Do you have a pension scheme? Yes - but not worth much at the moment

Do you own any investment or other property? Yes
Investment Mortgage - 80,000 - House value 175000, Interest Only


Ages of children: 13, 11, 8, 3, Due Sept 09
Life insurance: Yes
Serious Illness Cover
Health Care

Monthly outgoings:
Monthly fixed,Monthly variable and budgeted allowances for all annual must-do's = 4,200 per month

Monthly Disposable allowance = 350


What specific question do you have or what issues are of concern to you?
Concerned about having enough money to put children through college and a retirement fund for ourselves. Home mortgage is our biggest expense and we have 20 yrs left on the mortgage. Not sure if we should use savings to reduce mortgage. Currently ear marked for college fund. Or is there an investment option that would allow us to increase our savings? Between serious illness, life insurance & health care we spend about 500 per month. This seems high to me but haven't been able to get any lower quotes. Not sure if we need all this cover.

Thanks in advance

CeltP


 
Would you not consider moving over to making principal payments on the investment mortgage?

Remember that the current interest-only payment you're making is dead money. You'll never see that money again and it's not even going towards paying off the mortgage.
 
We only recently changed to interest only as the rent had dropped and wasn't covering the mortgage. Don't really want to tie up money in the investment property as we know it would be near impossible to sell. Interest only is just for 2 years anyway.

Thanks for the suggestion though.
 
I don't see anything wrong with the cash at the moment, if you pay it off the mortgage you may not get it back if you need it. You have 5 years before you need college money and with a bit of luck things may have turned around a bit and the investment propety might either be earning money or be saleable.

Life insurance is a must, look at the serious illness cover, they are often very limited and it may be better to save the equivalent for the purposes of self insurance.

You might also think about the health insurance although people have very strong views that this is an essential, I'm not convinced. If you have a few bob in the bank and are reasonably healthy again you can self insure against minor stuff, I wouldn't let a private hospital near me for serious stuff anyway so why pay for it.

You seem to be doing relatively OK compared to most. There is a view that pension contibutions are valuable now because you are buying in low, not sure about that but if you could get your investment property paid off by retirement age the rent would be a pretty good supplement to the state pension.
 
Thanks Ramble - We've been wondering about the serious illness as it's about 310e per month. We are trying to pay off our home loan as a priority but at best will have another 15 years on it. I'll crunch the figures again to see how quickly we can pay off our mortgages.
 
I think you are in a great position.

I wouldn't use your savings on reducing your main mortgage as interest rates for savings accounts must be higher at present. In addition, if you have problems any month to meet repayment then you can use some savings..Great having 50k nest egg available to you

Also, i would not use savings to reduce your investment mortgage property as some of the loan interest can be offset against tax on the rent...so if you reduce the mortgage then you reduce the interest and hence pay it in tax.

so if you have spare cash, then i think save it... best of luck
 
Back
Top