Moneymakeover Couple in 30's - Spending Dilemma

ReviveActive19 said:
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)
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I think you'd be mad to buy a house now. You have a nice house that suits your needs at a very low rent. In a few years your income will increase and your wife will probably be back at work either part time or full time. At that stage you'll almost certainly be better placed to buy.
 
@Purple I'm inclined to agree with you. We also get the tax credit which brings down the price further. While the financial side might not make 100% sense, the intangibles i think make up for it.
 
I think there were a couple of things missing from the original post that have since been clarified. The tenancy sounds relatively secure, the future earning potential is higher than at present. So on the basis of new information, to continue to rent in the short term sounds like a much better idea.
 
Sorry, I thought it was a reference to buying a house and some tax credit that brought the price down. I misread it and see now that it was a reference to renting and presumably the rental tax credit reducing the cost of that.
 
misemoi said:
The tenancy sounds relatively secure, the future earning potential is higher than at present. So on the basis of new information, to continue to rent in the short term sounds like a much better idea.
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It does sound much more secure than most tenancies with that type of rent and it makes sense to stay on. When you include the tax credit, renting this property is very good value and you don't have to pay for maintenance and repairs. It does make sense to stay there and not rush into buying.

That said, the landlord must intend to either sell or retire to it himself at some point. Otherwise it makes no financial sense for him to continue renting to you at that price. Any further changes in tenancy law which would restrict his right to do either of those things would force him to evict you, so I would watch that.
 
The landlord is happy to subsidise your current lifestyle to the tune of €400-600 a month. When you think of it like that, it can be compared to salary, SW benefits, etc, and it becomes a bit of a no-brainer to me. Even more so given your earning trajectory looks positive in 2-3 years time. Even then I’d stay in the rental as long as I could (maybe build up directors pension a small bit while you can stay put in house). At some point, your landlord will retire and they’ll have a decision to make, move home or stay where they currently are. If they stay, you’ll be in prime position to buy the house you’re in. Landlord seems like a sentimental type that values the care you show for their house and would probably see selling it to you as “going to a good home”, so to speak. That would be my happy-path plan if I was in your shoes, and I’d adjust from there based on how circumstances unfold.

Oh, but RevPoints - stop messing around with those, and get yourself a high yielding deposit account that protects the value of your cash asap. You’ve got about 30% of the value of this house in cash, you don’t want that falling away to 25, 20, 15% over the years.
 
Bronte said:
OP should buy a site and build.
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Since Covid between a shortage of builders and prices escalating by the day one would need nerves of steel to build especially outside Dublin. Watching any of the home building/renovation programmes unless you are in the building trade yourself it can be a stressful and costly job. The planning alone can be horrific so not for the faint hearted especially with young children.
 
@conor_mc
That's a really interesting view point on viewing our low rent as salary. If we were paying market rent of 1600 approx, I'd need to earn an extra 1200 a month to fund that.
On the Rev points, I had the money in Trade Republic but moved it as to build up some points to pay for summer holiday flights with Avios. Based on the return I'm getting on those flights of 2c per point, I am getting 5.4% on the money without any DIRT due, it feels like a no brainer to me. Top instant access interest rates of less than 1.5% after DIRT from what I can see. I'd welcome another perspective on this.

@Bronte
Purchasing a site is also a live option.
 
ReviveActive19 said:
On the Rev points, I had the money in Trade Republic but moved it as to build up some points to pay for summer holiday flights with Avios. Based on the return I'm getting on those flights of 2c per point, I am getting 5.4% on the money without any DIRT due, it feels like a no brainer to me
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Take this for what it is: an anecdote / n=1.

Me and a mate stayed at a hotel abroad. I booked through booking.com (top level genius as I travel a lot with work) and he booked using his rev points. On checkout he was surprised to find out that the three breakfasts we had were not included in his room rate and had to pay another €60 on checkout!

So the question I would ponder is: how much of the 5.4% you earn is given back in poorer value / more limited flights / hotels?
 
The likes of stays etc. are notoriously poor value, although in the specific scenario you mentioned it just sounds like they didn't know what they were booking.

2c / point is more than achievable with Avios. Twice a year they also offer a 20% boost when transferring which would bring the rate close to 6.5%. Now I'm fully aware it's not comparing like for like vs. Cash interest but it's just for comparison.
 
ReviveActive19 said:
The likes of stays etc. are notoriously poor value, although in the specific scenario you mentioned it just sounds like they didn't know what they were booking.

2c / point is more than achievable with Avios
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Well at least you’re thinking about the value, that is enough.
 
OP is maximising earnings at 20% tax and avoiding going into the 40% rate, but could increase salary if necessary

Also paying a low rent on a house that suits.

In this specific case I'd keep renting as the house seems very suitable. If the landlord decides to sell, the OP is in a good place to buy it and could make enquires if an when they think its something they'd like to do

So best of both worlds - if a property that suits comes up for sale, OP can purchase it and move without exit cost and also be a no-chain buyer. If LL wishes to sell, OP can purchase and stay in situ and LL happy not to have estate agent fees and a chain.


Only concern is revolut. Make sure you have maximum security settings and withdrawal limits set at lowest level.
 
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