Advice on Next Steps after Forever Home Purchase

JuzAAM said:
I always enjoy when people updates threads so here we are 1 year on…..

Age: 36

Spouse’s/Partner's age: 37

Number and age of children: (5, 4, due 2023) 6,5, 11 months

Income and expenditure

Annual gross income from employment or profession: 150k + 20% bonus (private sector)

Annual gross income of spouse: 60-70k depending on over time (public sector)


Monthly take-home pay: Between €8-€9k after deductions

In general are you:

(a) spending more than you earn, or
(b) saving? Saving


Summary of Assets and Liabilities

Family home worth €950k with a €520k €510k mortgage

Cash of €75k €18k

Family home mortgage information

Lender BOI
Interest rate 3%
If fixed, what is the term remaining of the fixed rate? 3 2 years 1% cash back due in 3 2 years


Other borrowings – car loans/personal loans etc
9.5 years left on 70k credit union home improvement loan @4.75% Cleared


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

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

Other savings and investments:

Do you have a pension scheme? Yes I pay 6% company 4% spouse civil service


Other information which might be relevant

Childcare fees: currently €1500, likely close to €2000 after baby born Just over €2000

Life insurance: Yes, health, mortgage protection, death in service and critical illness


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

Thanks to a higher than expected bonus and following a lot of the advice here, we are possibly in a better position than expected/feared. We used our savings to pay off the home improvement loan upgraded the car with solid, sensible but dull 7 seater 2nd hand car.

I’m not going to lie found the year of reduced income on maternity leave very tough. I obviously knew that our spending had increased inline with earnings but was eye opening to stick to a strict monthly budget.

Plan now is to enjoy income being back for a bit then start to slightly overpay mortgage and increase pension contributions unless anyone else has better ideas.
Click to expand...
Don’t get too used to the income you’d be better off going with the increased pension contributions straight away at least rather than doing it later. It’ll be hard to sustain 2 full time jobs with 3 small kids unless the second job is very child friendly (eg a teaching role )
 
Now that home improvement loan is no more, and spouse is back working, this gives cashflow latitude, to increase your Employee Pension, and a higher priority, is to reduce that mortgage, by overpaying within the fixed rate limits.
 
Its the EE + ER combined total, that counts, and 10 % in this case, is low.

In this case, the EE nett cost, of increasing pension from 6 % to 12 %on salary alone, is 5,400 per annum, while 9,000 goes into the pot.

In practical cashflow terms. The nett additional pension cost of 5.4 k annually, is just a little over half the cost, the OP was paying on the now cleared home loan.
 
A couple of years on since my last update…..

Age: 38

Spouse’s/Partner's age: 40

Number and age of children: 9,7,3

Income and expenditure

Annual gross income from employment or profession: 130K + 30% bonus (private sector)

Annual gross income of spouse: approx 70k depending on over time (public sector)


Monthly take-home pay: Between €8-€9k after deductions

In general are you:

(a) spending more than you earn, or
(b) saving? Saving


Summary of Assets and Liabilities

Family home worth €975k with a 450k mortgage

Cash of €60k

€300k of company stock options (could fluctuate in value a lot so I mainly discount them)

Family home mortgage information

Lender AIB
Interest rate 3.15%
If fixed, what is the term remaining of the fixed rate? 2 years


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?

Other savings and investments:

Do you have a pension scheme? Yes I pay 12% company 4% spouse civil service


Other information which might be relevant

Childcare fees: Just over €1350

Life insurance: Yes, health, mortgage protection, death in service and critical illness


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

A few years on since my last update. We remain incredibly fortunate. I moved role to a lower salary but much more family friendly role. Looking at the numbers here I know I should increase my pension to maximum which I will do ASAP but just wanted to be settled in this new role first hence the build up of cash.

I feel like the next move of us is probably some kind of investing for kids future as cash in bank is just loosing against inflation but I have no idea where to start. Would you reccomend a visit to a financial planner?
 
JuzAAM said:
450k mortgage
Click to expand...

JuzAAM said:
Cash of €60k
Click to expand...

You have plenty of flexibility with two of you working. Pay the cash off against your mortgage.

That is a priority which gives you flexibility.

JuzAAM said:
€300k of company stock options
Click to expand...

Can you exercise any of these? Would you borrow €300k to invest in your company?

Presumably not, but that is what you are doing while you have €300k of options and a mortgage in excess of that amount.
 
JuzAAM said:
could fluctuate in value a lot so I mainly discount them
Click to expand...
What do you mean? You ignore the value because they fluctuate in value? As @Brendan Burgess suggests it almost certainly makes sense (from a risk/diversification and liquidity point of view) to liquidate these as soon as possible. If there are tax reasons for not doing this immediately with all of them then do it as soon as the relevant tax treatment allows.
 
JuzAAM said:
Do you have a pension scheme? Yes I pay 12% company 4% spouse civil service
Click to expand...
What is the value of your pension?
Might it benefit from increasing/maximising contributions?
Could the civil servant make AVCs to increase pension cover?
Are you (both?) on track to qualify for the maximum possible Old Age Contributory Pension?
 
Last edited:
Pension is approx €200k currently - yes I will look to increase. Good shout - I will enquire about AVCs on my spouses pension, not sure

The stock hasn’t vested yet and is dependent on a future sale or IPO. No I 100% would not borrow for this despite its huge increase in value over recent years (I suspect it’s a bubble so not relying on the value at IPO) I see anything I gain from this as a huge unexpected bonus. I’ll listen to all warnings about having your wealth and employment in the same company.
 
ClubMan said:
If the shares aren't publicly traded how are you putting a €300K valuation on them?
Click to expand...
Does it matter when it seems like they’ve only really tried to put a valuation on them for the purposes of the money makeover, and have stated that they basically see them only as a potential future bonus?
 
JuzAAM said:
Pension is approx €200k currently
Click to expand...
How are your pension pots grouped/split?

If you have a pension pot unrelated to your current employment, it could potentially be accessed from age 50. In that case, you could potentially consider it your “savings for college” and ramp up AVC’s now for your retirement instead of diverting cash to a separate college fund.

Your contributions into current employer pension would not be available to do this unless you ceased this employment.
 
You must log in or register to reply here.
Back
Top