9.5 years left on 70k credit union home improvement loan @4.75%
Cash of €75k
Their debt to income ratio is just over 2x. It looks an extremely manageable mortgage for them, even if the lower income spouse were to stop working to mind the kids.I would feel that your debt level is a bit too high. I know someone close in a similiar position 15 years ago. Except that their 600k mortgage was at 1%. I know if they had their time over again they would not borrow so much for bricks and mortar. They are now at 50 years of age burnt out by all the work done to try to overpay the mortgage to get it paid off a bit quicker. Still a couple of years to go. However the cost in terms of quality of life has not been worth it. A big mortgage with children in tow is not easy even for the well paid. Childcare is essential as staying at home is not an option with that level of debt. It’s hard to keep the plates in the air through your 40s and beyond without it taking its toll physically and mentally. A change of car should be far from your thoughts with those interest rates. Just my 5c.
I would feel that your debt level is a bit too high. I know someone close in a similiar position 15 years ago. Except that their 600k mortgage was at 1%. I know if they had their time over again they would not borrow so much for bricks and mortar. They are now at 50 years of age burnt out by all the work done to try to overpay the mortgage to get it paid off a bit quicker. Still a couple of years to go. However the cost in terms of quality of life has not been worth it. A big mortgage with children in tow is not easy even for the well paid. Childcare is essential as staying at home is not an option with that level of debt. It’s hard to keep the plates in the air through your 40s and beyond without it taking its toll physically and mentally. A change of car should be far from your thoughts with those interest rates. Just my 5c.
That doesn't really make sense.I would give some thought to using the cash to pay down the mortgage rather than the CU loan. The CU loan will be gone in 9.5 years, the mortgage will be with you I assume much longer.
I know that the CU loan is at a 1.75% higher rate
I would give some thought to using the cash to pay down the mortgage rather than the CU loan. The CU loan will be gone in 9.5 years, the mortgage will be with you I assume much longer.
It is all about cash flow.Hi cremeegg
Very unusual conclusion.
Could you set out your thinking a bit more on this.
Brendan
Often times on these threads the assumption is that high incomes are hard to maintain, my experience would be the opposite in that people with high earnings in their 30s tend to continue to progress and earn more as they get into their 40s + 50s.It is all about cash flow.
The mortgage payments I expect are about €2,200 a month and the CU loan repayments about €720 (though we don't know the original amount).
Today, late 30s the couple both have high earnings and young kids. Today they can manage these repayments.
Roll on 15 years the couple will be older and the kids more expensive (believe me!)
A repayment of €2,200 requires earnings before tax of €52,800 just for the repayments. So they will have to continue with the high earnings.
If they reduce the mortgage now, it should be possible to possible to get a lower monthly repayment if not now at a later date.
I realise that clearing the CU loan now and upping the mortgage repayments by the amount of the CU repayments would save them more money, but in my experience life is not like that.
I suppose it depends on the industry. Look around the office, its not how much do the 50 somethings earn, its how many 50 somethings are there. Many industries have a fairly narrow pyramid.Often times on these threads the assumption is that high incomes are hard to maintain, my experience would be the opposite in that people with high earnings in their 30s tend to continue to progress and earn more as they get into their 40s + 50s.
I realise that clearing the CU loan now and upping the mortgage repayments by the amount of the CU repayments would save them more money, but in my experience life is not like that.
Earnings (on average) top out about 50, it's true.Look around the office, its not how much do the 50 somethings earn, its how many 50 somethings are there.
Thought exactly the same myself. Realistically a 7 seater going to be required to fit everyone & their stuff. Doesn’t have to be new or overly expensive though, although cars both new & used have become really expensive in the last couple of yearsI wonder though if the arrival of the third child necessitates a larger car meaning it can’t be put off for too long?
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