Moneymakeover what to do next?

[marzic]

Personal details

Your age: 52
Your spouse's age: 53
Partner's age if not married:

Number and age of children: 3 - 18, 17 , 15


Income and expenditure
Annual gross income from employment or profession: 75k
Annual gross income of spouse/partner: 56k

Monthly take-home pay: 6600

Type of employment - Employee
Employer type: public servant

In general are you:
(b) saving


Summary of Assets and Liabilities
Family home value: ~450K
Mortgage on family home: 66K
Net equity:

Cash: 97K - 80k in Zurich investment (@800/ month), 17k in Credit union
Defined Contribution pension fund: public service


Total net assets:


Family home mortgage information
Lender Pepper
Interest rate ecb + 0.75
Type of interest rate: tracker - 3.15%


Remaining term: (Original term is not relevant) 8yrs
Monthly repayment: 782.27

Other borrowings – car loans/personal loans etc
home improvement loan credit union 20k - €405 / month - 4.5yrs to go - covered loan 6.43% apr


Do you pay off your full credit card balance each month? generally
If not, what is the balance on your credit card? 0

Other information which might be relevant
I will have full service at 65 plus have UK years purchased so not too concerned here
Mrs will have full service at 62 - retirement not a concern i think

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

we have first child starting college - all going well - this Sept living away from home, next child going into LC, 3rd on into JC.

> we did ask a QFA how to plan ahead, he suggest try keep saving into the Zurich until 2027 before 2nd child goes to college - then may have to pause saving
> he suggested try apply interest only for some period with Pepper to free up money possibly repay the credit union loan - Pepper interest only would be 182/month
> ~12k of the savings in the credit union have to go toward a replacement car for me - this I cant avoid!
> I have paused my avc of 296/month -

what is the best way to juggle all of this now / next couple of years?

Thanks in advance

 

[Persia]

Why depriorise AVCs- you're getting free money on contributions (40% back)
800pm on Zurich investment while ignoring AVCs seems a bit nutty.

 

[ClubMan]

If it were me I'd get shot of Pepper mortgage and load up on AVCs though others will disagree.

I would clear the more expensive loans first.

Cash: 97K - 80k in Zurich investment (@800/ month), 17k in Credit union

Other borrowings – car loans/personal loans etc
home improvement loan credit union 20k - €405 / month - 4.5yrs to go - covered loan 6.43% apr

If "covered loan" means that the loan is predicated on keeping money in shares/on deposit while the loan is outstanding then the effective APR will be, possibly significantly, higher than 6.43%.

Edit: Borrowing €20K from the CU while holding €17K with them in shares/on deposit is madness. You're effectively borrowing €3K but paying 6.43% on €20K in interest. Your effective interest rate is c. 43% APR on the net loan of €3K.

 

[marzic]

I suppose saving 800pm is how we got to 80k savings, 3 children x college x 4 years = 150K? More?

 

[marzic]

Persia said:
If it were me I'd get shot of Pepper mortgage and load up on AVCs though others will disagree.

How will boosting my AVC pay for college?

 

[marzic]

If "covered loan" means that the loan is predicated on keeping money in shares/on deposit while the loan is outstanding then the effective APR will be, possibly significantly, higher than 6.43%.

Edit: Borrowing €20K from the CU while holding €17K with them in shares/on deposit is madness. You're effectively borrowing €3K but paying 6.43% of €20K in interest. Your effective interest rate is c. 43% on the effective loan of €3K

We needed 20k to do work on the house,
have 17k in savings I think only 3k was 'covered' - so of 14k available at least 12k will now be going on a car for me which will get me a 2016 at best

 

[Protocol]

You are borrowing at 6.43%, while holding €97,000 in managed funds (80k) and CU deposits (17k)?

That is not sensible in my opinion.

Clear this expensive debt, as soon as possible, by reducing either the managed funds or deposits.

Or even by stopping increasing the managed funds, and redirecting the €800 pm towards the 6.43% loan.

 

[Brendan Burgess]

Cash: 97K - 80k in Zurich investment (@800/ month), 17k in Credit union

home improvement loan credit union 20k - €405 / month - 4.5yrs to go - covered loan 6.43% apr

> ~12k of the savings in the credit union have to go toward a replacement car for me - this I cant avoid!

You have a €20k loan from the credit union on which you are paying €1,200 a year in interest. You have €17k in the Credit Union on which you are probably getting 0% interest. Can you not see how crazy this is?

Go in today and pay off the loan in full.

 

[Brendan Burgess]

> we did ask a QFA how to plan ahead, he suggest try keep saving into the Zurich until 2027 before 2nd child goes to college - then may have to pause saving

This makes no sense for you.

It might make sense for the QFA if he set it up as he is getting commission.
Check out the terms and conditions, and assuming there are no penalties, stop contributing to this investment.

 

[Brendan Burgess]

After paying off the Credit Union and buying a car, you will have €55k left.

You are effectively borrowing this at 3.15% while you still have a mortgage costing you that.

The normal advice would be to set this off against your mortgage. But I think in your case, with three kids at College age, you need access to cash. So I would hold onto the mortgage and the cash until you have more clarity on the outlook for your finances, which might not be for a few years.

 

[Brendan Burgess]

You both have good pensions, so I think you are correct in pausing the AVC. It is great value, but cash is king. When your finances are clearer in a few years, then you can resume or make big one-off contributions.

 

[marzic]

Thanks for all replies

the QFA we went to didnt set up the Zurich fund, (that was done by the same broker as the workplace AVC) so he isnt biased on it. I think we were still in penalty territory with zurich Plan when we took the CU loan - JAN 2026, but out of that now. the CU loan appeared to be same repayments as banks on comparison CCPC.

The normal advice would be to set this off against your mortgage. But I think in your case, with three kids at College age, you need access to cash. So I would hold onto the mortgage and the cash until you have more clarity on the outlook for your finances, which might not be for a few years.

> in 2026/7 college will cost us possibly ~14-15K (one child)
> in 2027/8 college will cost possibly ~28 - 30K (two children)
> in 28/9 college will cost possibly ~28 - 30K (two children)
> in 29/30 college will cost possibly ~28 - 30K (two children) ... and the third child doing LC in 2030
> 30/31 college will cost possibly ~28 - 30K (two children)
> the 80K will be gone by 2029
> the 55K would be gone by 2028

this is the bit I need help on in as far as anyone can advise - with three kids at College age, you need access to cash ... does that mean all the cash? or repay the CU loan, buy the car and then keep the remaining cash?

 

[llgon]

> in 2026/7 college will cost us possibly ~14-15K (one child)
> in 2027/8 college will cost possibly ~28 - 30K (two children)
> in 28/9 college will cost possibly ~28 - 30K (two children)
> in 29/30 college will cost possibly ~28 - 30K (two children) ... and the third child doing LC in 2030
> 30/31 college will cost possibly ~28 - 30K (two children)
> the 80K will be gone by 2029
> the 55K would be gone by 2028

Don't forget you will free up almost 13k per year to offset these figures - AVCs + CU + Zurich.
So 55k will see you through to 30/31

Part-time and summer jobs would hopefully allow you to reduce the students' costs to you and stretch savings out further. Where I live, a lot of families with children away at third level take in European second level pupils during the school year.