Financial Makeover

V

valona

Guest
Hi folks,

I've decided to get my finances in order, and am reading this site, but as a person who doesn't look at their account balance for fear of disappointment, it is safe to say that I have avoided these issues before now.

Age: 27
Salary: Basic of €35,000, overtime etc bring it to about €45000 per year before tax.

Current A/C: AIB Current A/C: Approx €8000-€10000 at pay time, closing balance on night before pay day €5750-€7500.

Credit Union €3000, €500 each month from my salary.

AIB Online Savings A/C €900, €50 from my current a/c each month.

SSIA A/C. Got €8500 for my SSIA, with the BOI, they automatically opened an a/c for me, have never even checked the balance.

Credit Card, cleared by Direct Debit at the end of month, have never paid interest.

As you can see, I have a nice lump of money, but it is all spread around and probably not working as well as it should. I intend to budget €10000 for a car in the new year. Plenty of outgoings, good social life etc which comes from current a/c but always have a balance.

Can anyone recommend a way to clear all this mess up into one/two/three accounts/investments. I would like to always have 2-3k in the current a/c for bills/direct debit/credit card payments. The rest I would like to put somewhere reasonably accessible. I downloaded a Rabodirect application form this evening, and will open an account, but as I have more than 10K is this the best place to invest all the rest?

As I intend to buy a shoebox in Carlow with a 35 year mortgage whilst commuting to Dublin in the next few years, I don't want to get my money wrapped up in something I cannot get regular access to. The 10k for the car will come from a credit union loan (currently at 6.5% intesest). I have never had a loan before, and am told it is wise to build a credit history? So I will need to keep money floating into the credit union a/c before I apply for the loan.

Can anyone offer any advice, or is this for a financial planner. And if so, how much do they charge, to put my house in order?

Cheers,

Val
 

niceoneted

Registered User
Messages
1,996
use your savings to buy the car and save what you would expect to pay in repayments. This is the first thing to seriously consider as it will cost you less.
 

Brendan Burgess

Founder
Messages
44,885
Agree with Niceoneted

Borrowing €10k at 6.5% while having it on deposit somewhere at 3.2% after tax, makes no sense. it will be costing you €330 a year every year while you do this. So buy the car with cash. You might even get a better deal.

It's an interesting question about tidying up your financial affairs and makes me wonder if one financial institution offers just good alround value. If there is, I suspect it's probably NIB.

Brendan
 
G

gonk

Guest
Borrowing €10k at 6.5% while having it on deposit somewhere at 3.2% after tax, makes no sense. it will be costing you €330 a year every year while you do this. So buy the car with cash. You might even get a better deal.

Probably true, but it could make sense if one wanted to have an easily accessible cash reserve for the proverbial rainy day. Provided it's been thought through and in full awareness of the costs involved, it could be a perfectly reasonable course of action.
 

Brendan Burgess

Founder
Messages
44,885
it still does not make a lot of sense. If you have a good relationship with your Credit Union, borrow the money for Rainyday when he needs it.

Brendan
 

sam h

Registered User
Messages
1,249
My dad always told me to pay cash for my car as it illogical to pay interest on a depriciating asset....buy what you can afford and as pointed out, you will get a better deal if you pay cash.
But do work out what your repayment would have been on the car loan and commit that amount to a high interest savings account....you'll have your deposit for the shoebox in jig time!!
Check out the terms offered by the various other accounts and decide the best one to put your lump sum into (may not be one you're with at the moment...try Rabo or (dare i say it) Northern Rock.
If you streamline, it will be easier to budget and you should get the best return.

Good luck
 
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