Couple, young kids

[hometruths]

Age: 35
Spouse’s/Partner's age: 39

Annual gross income from employment or profession: 60,000
Annual gross income of spouse: 80,000

Monthly take-home pay: 6,900 (2 salaries)

Type of employment: e.g. Civil Servant, self-employed: Non profit and Education

In general are you:
(a) spending more than you earn, or
(b) saving?

Saving at least 1100 per month - direct debit
Mortgage is 1250 per month
Childcare is 800 per month
Groceries are typically 450 per month, bit less
Anything left over goes into home improvement account

Rough estimate of value of home 470,000
Amount outstanding on your mortgage: 300,000
What interest rate are you paying? 2.2%

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?

Savings and investments: Cash 80,000 Shares 40,000 (net)

Do you have a pension scheme? Yes 5% employer, 5% contribution from employee. Spouse has pension scheme with state job since 10 years

Do you own any investment or other property? 2 sites away from where we live , no intention to sell or build on either (complicated family background)

Ages of children: 1 & 2

Life insurance: None


What specific question do you have or what issues are of concern to you?
Hi all, grateful if you can give us a steer on anything we should be doing at this point in time. In particular, should we be using our cash deposit in a better way? And should we sell our shares (all of which are in one company) . Appreciate your insights and any recommendations for this stage of life . Thank you

 

[presidenttttt]

Purely a personal view, but I regard a healthy rainy day fund as 6 months worth of income. Assuming one job is very secure, unless saving for a house deposit, I would have itchy feet with more than 25-30,000 sitting in cash.

Does your employer pay any more into the pension if you pay more? I would look to overpay/AVCs either way.

Overpaying my mortgage has been the easy option when cash levels have risen, especially when the mortgage was new and we wanted to reduce it from the high numbers to a more comfortable level. Your mortgage interest rate is lower at 2.2% however, so there may be better options for putting money to work.

Shares are obviously better spread across a number of companies/funds. Depending on your industry you may not wish to ensure you are not massively over exposed to your own company - it would be frustrating if your company started struggling and you found yourself out of a job and your savings/stock worthless.

How much are you putting into your home improvement fund? There should be a decent amount left each month? If not I would suggest double checking the goings to ensure no lifestyle/cost creep, and route those savings to pension.

It is unclear what the situation is with your sites, if you ever plan to do something with them, or if you can cash in.

 

[imalwayshappy]

Why not take a large lump sum off your mortgage? It would be a kin to a 4.5% return on your funds.

Agree with the above also, explore the possibility of increasing the pension and see if the employer will match contributions.

 

[goingforgold]

Is there any way you can liquidise the sites? Without going into details on family situation they are effectively worthless to you now it would seem. If you managed to sell these (even to family if necessary) and used your savings then you would go a long way to clearing mortgage I would imagine. Not a bad position for someone your age with a 470k property.

Other than that it's the usual advice, keep a few months emergency fund, maximize pension contributions and yes, maybe sell some company shares to reduce exposure.

 

[Coldwarrior]

Groceries are typically 450 per month, bit less

Fair play on spending so little on groceries, we typically spend nearly double that with one less kid than you.

I'm unclear if you're saving for a renovation/extension with the home improvement account? If so, how much would it cost, and does the 80k savings include this account?

The spending/saving you list leaves around 3k per month left over going to your home improvement account, suspect there's a lot more spending not listed? Or if spending really is at that low level is it just temporary due to covid lockdowns?

Assuming you don't need an extension etc I'd max your pension contributions for last year and going forward, sell the shares and pay a lump sum of 80k off the mortgage, leaving about 30k in an emergency fund. Then set up a regular mortgage over-payment, the level of which would depend on your real level of expenditure and savings (assuming we get over covid eventually).