Low income, cash lump sum soon, how do we manage our finances

H

hiagain

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43
Age: 34
Spouse’s age: 35

Annual gross income from employment or profession: €15,000
Annual gross income of spouse:€39,000 (he is paid in sterling)

Type of employment:
Private sector, both working part-time

In general are you:
(a) spending more than you earn Yes, but not by that much anymore
(b) saving? No

Rough estimate of value of home
Renting (€700 per month)
Two investment properties, see below

What interest rates are you paying?

Renting €700 per month

Other borrowings – car loans/personal loans etc
We have 1 car, but still have 1 year left to pay on the old car

Car loan 1 - approx €1,500 left to pay (this is a sterling loan)
Car loan 2 - approx €6,800 left to pay (this is a sterling loan)

Do you pay off your full credit card balance each month? No
If not, what is the balance on your credit card?
Credit card 1 €1,500
Credit card 2 approx €6,500 (spouse's)

Savings and investments:
€20,000 from SSIA

Do you have a pension scheme?
Husband paying into UK one - approx €115 a month

Do you own any investment or other property?

Property 1 - Being sold at mo for €310,000
Property 2 - Approx €170,000

Mortgage 1 - €176,000
Mortgage 2 - €105,000

Ages of children:
One child aged 2

Life insurance:
Bank of Ireland on Property 1
Husband has one on property 2 which is not directly linked to the property, but is linked to the term of the loan and the benefit decreases concurrently

Other major expenditure:
Childcare €150 a week

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

How do we make best use of the €135,000 from the sale of the house and €20,000 SSIA money and of our income generally. We would like to buy a house and want to figure out how much to spend. We don't want to have to move again. I was thinking of buying one for €380,000 and using €65,000 to do this and saving €40,000 in case my husband loses his job. Paying off both credit cards and car loans and saving some for fees and stamp duty.

We both want to continue working part-time. My husband works 4 days and I work 3 days. My earnings should increase over the next few years as I am a trainee solicitor due to be kept on. While I won't earn a fortune, given the economic climate, it will be more. We both have the option of working full-time.

Quality of life is more important to us (i.e. having free-time to spend with our family) than a huge income. We don't make any major purchases or go on holidays other than to stay with family except for one weekend a year to London. Our/my one vice is nice food.
 
I'd imagine the 135,000 will probably have capital gains tax on it of 20% + costs, which may need to be figured into the calculations.
(Someone's got to pay for all those overpaid PS workers :)

Regarding how to use that money, a lot of that will depend on what the bank demand of you, and what deposit they they look for.
 
The first thing I would do is use the SSIA money to clear the two car loans and two credit cards.
I would set up a separate household budget account for all monthly/annual expenses and lodge money to it weekly/monthly depending on how you get paid. I would set up a separate savings account and then a disposable income account.
I would check with the bank what you would be able to borrow rather than deciding how much you want to spend on a house.
Is your second investment property rented out and are you making money on it?
I would put the proceeds of the sale of investment property 1 into a high interest 30 notice account so you can get access when it comes time to buy a house. I would be off the thinking that if you want to continue working part time and enjoying family life, I would not be spending so much on a house. Where do you want to buy?
 
It was a family home up until fairly recently and the gain made can be written off again a loss from years ago. So I hope that clears us there.

We were given loan approval recently for €360,000 for 92% but that was with a guarantee on some of it

I suppose that I should go about paying off those debts now then? It could be a while before the money comes through

The second house washes it's face with the rent coming in

We're in Galway. Houses are quite expensive. It seems to have one of the lowest percentage drops.

I think that managing our day to day expenditure is where we fall down, so it definitely seems sensible to organise bank accounts better. At the moment we transfer money over from the uk every month

Do you think I'm being unrealistic niceoneted?
 
No I don't think you are being unrealistic, but think about it hard. when I bought a house 8 yrs ago I was told I could borrow up to 250/260k cannot remember exact figure but it was in that region. I borrowed 163k. I wanted to be able to enjoy my life and not spend 30 yrs paying a mortgage and doing nothing much else or be dependent on lodgers.
I'm around the same age as you, with similar earnings and I am hoping to have my mortgage paid off before I'm 45. I certainly don't want to be paying it when I'm hitting 60.
It's horses for courses I understand that but you always have to keep the bigger picture in mind.
Is there a chance you would be moving from Galway or could you move further out from the city to get a better price. I know this would mean commuting but if your only working half weeks it wouldn't be as bad as every day.

Just did a quick search on myhome.ie and there are a number of 3 and 4 beds in the city region of Galway for around 300K. What exactly are you looking for.
You could save hard for a year after clearing the loans with the SSIA money now. It will be easier to do when you have a lump sum in the bank.
 
Most of those in the city centre are apartments unfortunately.

I feel we need to move because we don't have a garden and I am reluctant to move to other rental accomodation and then have another move in a year's time. I feel that if there was a system with rental property like there is on the continent and you were fairly certain that you could stay in the same rental property for the rest of your days, I wouldn't have a problem with it.

Retiring early isn't a priority to me. It's being able to spend the time with my kid (/s) now, so in fact I would think that my earning capacity should be higher at age 60 than now, but I don't want to be buying a house then. I kind of want to make the decision to either rent for life or buy one house for life within the next 6 months
 
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