Windfall, not sure what to do with it

D

Dro123

Registered User
Messages
13
Personal details

Age: 43
Spouse’s/Partner's age: 44

Number and age of children: 3 Children, 17, 16 and 10


Income and expenditure
Annual gross income from employment or profession: €82,000 basic
Annual gross income of spouse: €70,000

Monthly take-home pay €3,800 and €3,200 approx

Type of employment: e.g. Civil Servant, self-employed both private sector

In general are you:
(a) spending more than you earn, or Spending - always run out before the next pay day
(b) saving? we dont' save anything from our monthly wages.


Summary of Assets and Liabilities
Family home worth €300k with a €108k mortgage Tacker with AIB now paying 5%
Cash of €380k - sold a business recently
Defined Contribution pension fund: €170k (me ) paying in €2,000 per month including 8% from employer. Himself started later. fund worth maybe $50k and he pays in around €1000 per month.


Family home mortgage information
Lender AIB
Interest rate 5%
If fixed, what is the term remaining of the fixed rate? Tracker €107 left on it, repayment now €960 per month


Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? Yes limit of €500 so keep this under control
If not, what is the balance on your credit card?


Other savings and investments:

Do you have a pension scheme? Yes my fund is around €170K, himself around €50K

Do you own any investment or other property? No

Other information which might be relevant

Life insurance: €300k joint cover we took out at time of buying the house, costs around €36 per month


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

1. Should we pay off the mortgage ? If we do, I would like to save the money or invest it in a Davy account for something similiar.
2. I would like to buy an investment property in a nearby coastal town with a view to renting it out for a few years and eventually retiring there. What would be the best way of financing this.
3. I find we are running out of money every month and constantly dipping into the savings so I dont' want to see them dwindle away over the next few years. We live fairly frugally ourselves but are always treating the kids or paying for their hobbies etc.

Thanks for any advice folks.
 
I understand how expensive it can be with 3 children, 2 of them teenagers who are potentially heading to college very shortly. But my main question is where is your money going currently?
Take home €7000 per month. (I am assuming your AVC/pension is not part of your take home pay as these are usually taken at source)
Mortgage €960 pm
Life assurance €36 pm

So can you estimate where the other €6000 goes?

And I am guessing you get other overtime/bonus payments per annum because you mention basic?

Once you understand your spending then I would breakdown your goals into short, medium and long-term and see how you can fund them.

Short - college for kids
Medium - holiday home
Long - pension & mortgage

I think I would maintain the mortgage, you seem to have pension covered, so it comes down to your short and medium term goals. You live frugally but you spend all your money on the kids? Is that realistic. Or are you spending on yourself as well but don’t see it, holidays, car, other hobbies? My main concern would be that you buy the holiday home and cannot afford it month to month, or you are not planning for the kids in college and you end up living beyond your means without the very healthy lump sum you have now.

i feel there is information missing from your post.
 
Thanks for replying Clamball. We put around €3500 into a joint account each month and this covers all the bills/food/car/health insurance and mortgage. The rest is just frittered away. Shameful really. Will start tracking expenses to get a better understanding of it.
 
Dro123 said:
3. I find we are running out of money every month and constantly dipping into the savings so I dont' want to see them dwindle away over the next few years. We live fairly frugally ourselves but are always treating the kids or paying for their hobbies etc.
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Whatever about anything else, you need to analyse your spending to see where exactly your €7k net income after mortgage costs (plus extra from savings) is going each month, in my opinion.
 
Given you definitely want to buy an investment property in a seaside town, which sounds like a great idea, i would prioritise on following order:

1. buy the investment property, say this costs 250k?

2. Allocate funds for education, certainly for older two, say 40k or 50k

3. Leaving maybe 80k : pay down mortgage this amount


Continue pension contributions as before
 
Personally I would
- analyse my spending
- allocate funds for education as needed
- pay off mortgage
- maximise pension contributions
- invest the remaining

I would not invest in a rental if I was not close to it to manage it.
Your requirements and expectations might be quite different than what is needed for an investment property.
In 15-20 years, any property bought now would probably need substantial refurbishment.
I would not invest in something on the basis of a potential need in 20 years time. Plans by then could be quite different.
Finally, funding could be available with the sale of your current home, pension lump sum or other investments when needed.
 
Dro123 said:
Income and expenditure
Annual gross income from employment or profession: €82,000 basic
Annual gross income of spouse: €70,000

Monthly take-home pay €3,800 and €3,200 approx


Defined Contribution pension fund: €170k (me ) paying in €2,000 per month including 8% from employer. Himself started later. fund worth maybe $50k and he pays in around €1000 per month.
Click to expand...
Are you sure that these figures are correct?
Using this calculator and gross incomes of €82k/€70k, joint assessment, and annual pension contributions of €36k I get a net of ~ €9k+ p.m. (ignoring child benefit) not €7k.


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In your shoes, I would definitely pay off your mortgage. That’s pretty much a no brainer.

I think you also need to get serious about funding your retirement. At your ages, you could (and should) be getting tax relief on pension contributions of up to 25% of your salaries - regardless of any employer contributions.

I wouldn’t give up on the “dream” of retiring to a costal property. But treat it as a long-term aspiration - something to look forward to once the kids have flown the nest.
 
ClubMan said:
Are you sure that these figures are correct?
Using this calculator and gross incomes of €82k/€70k, joint assessment, and annual pension contributions of €36k I get a net of ~ €9k+ p.m. (ignoring child benefit) not €7k.


View attachment 7770
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Figure of 9k net per month seems of in this calc.
That would give annual 108k net plus 36k to pension total of 144k.
When gross income is 152k.
 
ClubMan said:
Whatever about anything else, you need to analyse your spending to see where exactly your €7k net income after mortgage costs (plus extra from savings) is going each month, in my opinion.
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Agreed, starting today !
 
Sarenco said:
In your shoes, I would definitely pay off your mortgage. That’s pretty much a no brainer.

I think you also need to get serious about funding your retirement. At your ages, you could (and should) be getting tax relief on pension contributions of up to 25% of your salaries - regardless of any employer contributions.

I wouldn’t give up on the “dream” of retiring to a costal property. But treat it as a long-term aspiration - something to look forward to once the kids have flown the nest.
Click to expand...
Thank you for this advice, I'm thinking along the same lines.
 
Dro123 said:
Thanks Clubman, I will plug the figures in here and see what it comes up with
Click to expand...
You don't need a calculator. You can just look at your payslips and end of year balancing statements on your Revenue online myAccount.
 
Dro123 said:
Thanks Clubman, I will plug the figures in here and see what it comes up with
Click to expand...
The calculator linked is clearly incorrect - you can't have a take home pay higher than your taxable pay.

The take home pay you originally said looks broadly correct based on your pension contributions.
 
RedOnion said:
The calculator linked is clearly incorrect - you can't have a take home pay higher than your taxable pay.
Click to expand...
Ok, I didn't notice that and don't really understand what's going on there. I've contacted the calculator owner to flag the issue.
 
Dro123 said:
What specific question do you have or what issues are of concern to you?

1. Should we pay off the mortgage ? If we do, I would like to save the money or invest it in a Davy account for something similiar.
2. I would like to buy an investment property in a nearby coastal town with a view to renting it out for a few years and eventually retiring there. What would be the best way of financing this.
3. I find we are running out of money every month and constantly dipping into the savings so I dont' want to see them dwindle away over the next few years. We live fairly frugally ourselves but are always treating the kids or paying for their hobbies etc.
Click to expand...
1 Yes ASAP
2 Pay off existing mortgage first, but check if there are penalties for paying it off early
3 You and all the other family members need to get receipts for ALL expenditures as your top priority.

I don't mean a piece of paper that reminds you you spent €12.35 in Joe's, but what did you pay Joe for. Analyzing spend has been mentioned a few times. You cannot analyze unclassified expenditure - what is the money being spent on? Record the classified expenditures, not just "groceries" or "clothing" or "cosmetics". Do this daily until it becomes second nature. Everyone has a role to play here. No new crispy €50 handed out unless and until receipts are produced for the last €50 you handed out.

FWIW
 
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