Moneymakeover Couple in 30's - Spending Dilemma

ReviveActive19

ReviveActive19

Registered User
Messages
11
Age:
33
Spouse’s/Partner's age:
32

Annual gross income from employment or profession:
€53,000 + €11,400 going into my pension.
€865 Net weekly income approx.
Annual gross income spouse:
€0

Type of employment:
I left teaching a few years ago to join the family business. My wife is on career break since March 2025 when her maternity leave finished.

Expenditure pattern:
Savers, would rate ourselves as prudent spenders. Things are tighter now when down to 1 income but feel okay.

Rough estimate of value of home: N/A
We are renting currently, a nice house that suits our needs for €1000 per month.

We sold our previous property 2.5 years ago and moved to our hometown. We have been renting since.

Other borrowings – car loans/personal loans etc
None. We own our cars, 2014 & 2011 worth approx. €4,000 & €5,000 respectively.

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

Savings and investments:

  • €100,000 in a Revolut account earning Rev Points. (Proceeds from house sale, ring fenced for home purchase)
  • €13,000 in Degiro purchasing an all-world ETF. (Children’s allowance)
  • €27,000 in savings between us from over the years. Credit union / Trade republic.


Do you have a pension scheme?
Yes, I have a PRSA that has 28k in it. I set this up after leaving the public sector. 6 years of contributions made to public sector pension (teacher). My wife has no private pension but has approx. 9 years paid into public sector pension also (midwife).

Do you own any investment or other property?
No

Ages of children:
3.5 & 2

Life insurance:
No

What specific question do you have or what issues are of concern to you?
We have just been approved for Domicialry Care Allowance for our 3.5-year-old (€380 / month) and my wife should be eligible for carers allowance now also.

We have approx. 140k in savings. While this seems high, we are renting so much of this money is essentially ring fenced for a down payment on a house. This however will affect the carers allowance payment, and I believe will reduce our weekly payment by approx. €70 a week. If we could afford to own a house, this wouldn't happen, so I feel like we are nearly being punished but anyway.


One option I have thought of; Spend approx. 30k, bringing our savings down to 110k which would mean the weekly payment would only be reduced by €10. Upgrading one of the cars would be an option. However, I was always previously of the mindset of not doing this until we had a house purchased.

Spending this money in as prudent a way as possible seems like the best option, maybe pay up front for a few years of gym / golf membership, money that I will be spending anyway combined with a newer car.

Spend 30k for a saving of €60 / week so €3120 / year. This would likely roughly cover the yearly depreciation of a newer car. I can’t say how long this would be for as it would be dependent on when we buy a house. Our ability to buy a house where we are now is limited due to our single salary. Hopefully my wife will be able to return to work, up to the 18.5 hours limit a week in the next few years and this will put us in a stronger position to buy.

I may be overthinking this entire thing, but I didn’t know where else to turn for advice. Thank you for taking the time to read and I hope I haven’t left any important information out.


* EDIT * - Some information from the first couple of pages to save people reading everything.
  1. Carers Benefit is applied first if you are eligible for it (which we are). Carers Benefit does not have a means test and lasts for 2 years. After this time, Carers Allowance comes into play.
  2. With regards to our house, we feel like it is quite secure. See post #15 for rational.
  3. Also I refer to future earnings in post #15 which influences our potential borrowing capacity.
 
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My advice would be to buy a property; it likely won't be your forever home, but it seems mad to me to be paying out 12k a year in rent when you have the money to buy.

140k in savings & a mortgage of (say) 160k gives you 300k. You could surely buy a property for that?

When / if you have a second income you can look to trade up.
 
Can you have some of your pension diverted to salary, so that your borrowing capacity increases?

What is the target price of your new home to understand if waiting and paying rent > costs of moving twice?
 
ReviveActive19 said:
Spend approx. 30k, bringing our savings down to 110k which would mean the weekly payment would only be reduced by €10.
Click to expand...
I don't think that spending 30k to get €3120 a year and so recover the money over 10 years make great financial sense. Particularly if you are paying gym or golf membership. If you find a house, the gym or golf might be less accessible and you might have closer option... €30k is also lot to spend on a car with a net income of €44k a year. There are cheaper options that could be considered.
My advise would also be to focus on buying a house and then you might actually need the €30k.
As above, you spend €12k in rent, 4 times the gain you could make if you spend €30k
 
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Thank you all very much for the responses.

@DannyBoyD
I get what you mean. I suppose my reasoning for not doing so is twofold.
  1. It would involve a significant downgrade in house. We are in a lovely 4 bedroom detatched house, private driveway and a large outside area. The location is also idea for us, 5 minutes to work, 10 minutes to one set of grandparents and 2 to the other. The house is probably worth close 500k. The house we could buy for circa 300k could not come close to it. (If we could find something suitable, the supply is extremely limited - rural town)
  2. We have moved twice in the last 2 years so would be happy to avoid. This is just a minor point, number 1 is the primary reason.

@misemoi
I could do this, however it would put us over the threshold for carers allowance then. If I stay under that threshold the carers allowance is €328 / Week.


@Premos
The gym is a few hundred meters from my work and includes a leisure center where we will be for the foreseeable as there are no other options close. Same for the golf club. We realistically will be staying in this town forever more.
I'd look at the 30k slightly differently when it comes to the 10 years, as if we kept it for 10 we would have an asset worth maybe 10k ish after so the yearly amount doesn't have to make up the full 30k. Not sure if that makes sense. If we were to go this route, I think we would spend maybe 20k or less on a car and use the other 10k for different but hopefully nescessary things.
 
Tend to agree with what other posters are saying, buy some type of property if possible ASAP, buying newer cars is a great way to burn money

But see your most recent post now, it would be hard to downgrade from what you have but you do need to bite the bullet at aome point and might be no easier doing in the future, you'll have just spent more money on rent between now and then
 
ReviveActive19 said:
  1. It would involve a significant downgrade in house. We are in a lovely 4 bedroom detatched house, private driveway and a large outside area. The location is also idea for us, 5 minutes to work, 10 minutes to one set of grandparents and 2 to the other. The house is probably worth close 500k. The house we could buy for circa 300k could not come close to it. (If we could find something suitable, the supply is extremely limited - rural town)
  2. We have moved twice in the last 2 years so would be happy to avoid. This is just a minor point, number 1 is the primary reason.
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Your current rental is affordable and desirable. But if it is 200k over your budget, it's unlikely that you will be able to afford something similar just with savings or it will take you quite a while. I would revisit my needs and wants in terms of housing and try to find a compromise.
 
ReviveActive19 said:
We are in a lovely 4 bedroom detatched house, private driveway and a large outside area.
Click to expand...
You're blindsided by the "lifestyle"; so what if you have to take a step back for a few years? It won't kill you. You're young enough to be able to do this now & save towards the 'forever' home in a few years.
 
ReviveActive19 said:
I left teaching a few years ago to join the family business.
Click to expand...
OP what is the salary difference (plus future pension impact) on the potential for you returning to teaching? Would the increase in salary offset any loss of carers allowance and any potential commuting costs if you can't find a job locally? Is there a chance you could apply for a principal role to improve family income?

In short, are you working your finances/work pattern around qualifying for a payment where your family might be overall better off if you worked in a different way?
 
misemoi said:
Is your landlord potentially only netting 6k a year on this house after tax? Given all the changes to tenancy laws coming, how sure are you that they will continue to rent? Buying your own home is not just a financial decision, it is also a security one.
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I think this is a real danger for you.

It makes no sense for a landlord to rent out a 500k house for 12k a year indefinitely as he must do now. That's a gross yield (before expenses and taxes) of about 2.5%. As @misemoi correctly said with the new rules coming in you could easily find yourself with an eviction notice. Your next rental will be twice the price for a small, lower quality house.

Buying is now a matter of security even if what you get isn't a patch on your rental.
 
ReviveActive19 said:
ReviveActive19 said:
We have approx. 140k in savings. While this seems high, we are renting so much of this money is essentially ring fenced for a down payment on a house. This however will affect the carers allowance payment, and I believe will reduce our weekly payment by approx. €70 a week.
Click to expand...
Click to expand...
I think a reduction of €70 a week is not big deal in the scheme of things.
Best to hang on to the €140000 to get yourself set up in a new home.
And no more yearly rent to be paid €12000
 
Original thread here in case any of the comments feed into this Money Makeover:

Carers Allowance

Hello all, some advice would be very much appreciated. Background: I'm working, earning 53k per year with another 11.4k going into my pension. (Was previously going directly in from company, but it is now going through my payslip for auto enrolment. This may be important for means test later...
www.askaboutmoney.com
Edit: thread seems to have been removed which is a pity because it contained some feedback relevant to this thread.
 
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Sorry for the delay in responses, I'm classed as a new user so I have to wait 1 hour between posts but it seems to making me wait longer!

As regards to the security, I believe it is secure but I suppose I can't say that with certainty. The owner build the house 20 ish years ago, is mid 50s approx and has been living abroad for 30+ years. He is local to the area, but doesn't have any direct family here. Market rate would probably be 1600/1700, he told me that he was happy to rent it to us at that rate knowing that we'd mind the place, which we do.


@misemoi
The move to the family business was very much to increase future earnings. I will be taking over the company fully in February 2028. I couold increase my current salary if needed, but will be paying higher rate on any extra wages taken.

@Premos
It is 200k over our current budget yes, but hopefully down the line it will be in budget.

I probably should have included what I said to mise above in the overall picture. I will be taking over the company in February 2028, so the mortgage lending limits will be based on the company accounts. Based on current figures, that would allow me a mortgage of 400-500k.
 
As I posted in the now removed original thread...
... the Carer's Allowance issue may be moot if they qualify for Carer's Benefit which is not means tested. And I don't believe that you can pick and choose which payment you get. E.g. opt for a means tested allowance when you already qualify for the non means tested PRSI linked benefit payment of the same class.
 
As @ClubMan said, I have discovered that first off you are put on carers benefit if you have the required prsi payments made.

So we will be out on carers benefit for 2 years, which is not means tested. And then the means test will happen.
 
The means test for carers allowance won't happen in 2 years if it is abolished by then, which is a possibility. If not abolished the limits on the test should be raised in the next two budgets.
 
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