saving for future advice?

oEmmao

so, my situation is, 32, married, no children (yet)

hubby owns our house outright, I have no property, so I could potentially have first time buyers status

currently paying off small credit card 1,000

and have credit union loan of 6,000 (car/house repairs) vs shares of 16,000

what next? I save 150 a month to a savings account, hubby pays 100 a month and pay back 400 a month to the credit union, most paying off loan, some to shares

jobs are ok at the moment, what next?

do I start a small pension, get saving for an apartment I can rent out to students or just keep saving in my bank account and pay off credit union?

I could get pregnant at any time, so cant lock away too much money

any suggestions?

euroboom13

Ambition to be a landlord to unreliable students, is a ghost from the Celtic tiger stupidity .

Being a landlord doesn't pay unless you see another property boom.(lucky to get a real return after taxes of 3% and your extra work load is unpaid)

amdublin

What are your salary levels like?

For people who don't have a mortgage I think you are saving way way too little

amdublin

Ps. If you are thinking of buying an apartment - do you have a deposit saved already?

*Not that I'm advocating buying an apt.

I think you should be looking to upping your savings to €1000 pm between you (on top of paying off all your debts)

You could always use shares to pay off loan. Save 1200 a month and you'll have the 6k back in 5 months.

Frogdog

In my opinion, in this order;

1. Start up a pension. Because the contribution comes out of your gross salary, rather than your net, you're effectively saving double (to simplify it).
2. Pay off your credit card (you're probably paying 20-25% interest on the balance).
3. Pay off your loans (you're probably paying 8-12% interest on the balance).
4. Increase your savings (you're currently saving too little - pay off the above and then put the equivalent amount into savings).

As per previous posters, buying and letting property wouldn't be recommended. Take the above step by step. Don't try and do them all at once, however your pension contributing every month should be done in tandem with points 2, 3 and 4.

topper_harley2

Frogdog wrote: »

In my opinion, in this order;

1. Start up a pension. Because the contribution comes out of your gross salary, rather than your net, you're effectively saving double (to simplify it).
2. Pay off your credit card (you're probably paying 20-25% interest on the balance).
3. Pay off your loans (you're probably paying 8-12% interest on the balance).
4. Increase your savings (you're currently saving too little - pay off the above and then put the equivalent amount into savings).

As per previous posters, buying and letting property wouldn't be recommended. Take the above step by step. Don't try and do them all at once, however your pension contributing every month should be done in tandem with points 2, 3 and 4.

Sound advice there.

On top of that, you should build up about 3 - 6 months living expenses and keep that in an instant access account so you can get at it should an emergency arise e.g. job loss etc.

Your savings should be split between instant access emergency (as above), regular monthly savers (you should contribute much more than 150/month if possible), and fixed term savings/investments. The latter ones are long term, get your house in order with emergency fund and increased regular saver first.

oEmmao

so I have increased my savings and got the info pack for a pension with the private company that I work for

how much of my earnings should I be putting into my pension?

any ideas?

I want to keep my savings and other accounts going too, so that I always have more options

happy_knome

euroboom13 wrote: »

Ambition to be a landlord to unreliable students, is a ghost from the Celtic tiger stupidity .

Being a landlord doesn't pay unless you see another property boom.(lucky to get a real return after taxes of 3% and your extra work load is unpaid)

broad brush statement , just as with an asset like equities , their are wise and foolish investments when it comes to property , the key to success with any asset purchase is to buy when they are undervalued , unfortunately for property , that ship has sailed in every major city with the exception of limerick

you could buy an apprtment in any number of provincial towns but appartment living is really reserved for citys so you could end up with a vacant premises

euroboom13

happy_knome wrote: »

broad brush statement , just as with an asset like equities , their are wise and foolish investments when it comes to property , the key to success with any asset purchase is to buy when they are undervalued , unfortunately for property , that ship has sailed in every major city with the exception of limerick

you could buy an apprtment in any number of provincial towns but appartment living is really reserved for citys so you could end up with a vacant premises

Broad brush is needed, and these small pocket of undervalued properties, wont appreciate ,while value returns to better areas. Timing is everything, and while interest rates are low ,asset prices will be overvalued.

Patience ,more value coming!

A wise purchase, in a foolish market, will look foolish in time.

Frogdog

oEmmao wrote: »

so I have increased my savings and got the info pack for a pension with the private company that I work for

how much of my earnings should I be putting into my pension?

any ideas?

I want to keep my savings and other accounts going too, so that I always have more options

It's up to you and depends on your circumstances, but I would guess that between your employer contributions (if any) and your contributions, you should be aiming for a total percentage of anywhere around the 15% - 20% mark. Obviously, the more you can put in, the better. And as you may know, this comes out of your gross salary, not your net - a good thing for you!

topper_harley2

Frogdog wrote: »

It's up to you and depends on your circumstances, but I would guess that between your employer contributions (if any) and your contributions, you should be aiming for a total percentage of anywhere around the 15% - 20% mark. Obviously, the more you can put in, the better. And as you may know, this comes out of your gross salary, not your net - a good thing for you!

My friend who works in pensions recommends roughy a percentage of half your age. Hence above is spot on for OP who is 32

daheff

topper_harley2 wrote: »

My friend who works in pensions recommends roughy a percentage of half your age. Hence above is spot on for OP who is 32

Can you friend who works in pensions pay my contributions??

The maximum reliefs available is as per below

http://www.citizensinformation.ie/en/money_and_tax/personal_finance/pensions/personal_pensions.html

AgeAmount which qualifies for tax relief
Under 30 years 15% of net relevant earnings
30 to 39 years 20%
40 to 49 years 25%
50 to 54 years 30%
55 to 59 years 35%
60 and over 40%

While its all well and good suggesting paying these amounts, in reality unless you've a massive salary, its not feasible to pay this, have savings, pay a mortgage/rent, raise a family etc. The average net salary for Ireland is 2160 EUR...so assuming you are on higher rate, if you put away 15% (7.5% net give or take) your net income becomes 1998 Eur. Tough to do all of the above on 2160 not to mind after putting money away for a pension!

The pension system in Ireland is unrealistic at present. More Employer contributions should be mandatory.

oEmmao

so trying to pay off credit card of 1,000 asap

have increased repayments on credit union loan of 6,000 (car/house repairs) to 100 per week and increased shares to 100 per week too
(vs shares of 16,000)

I save 150 a month and hubby is now saving 500 a month (2,500 between both a/c's so far)

started pension @ 9%, hubby already has pension for last 10 years

how am I progressing compared to the masses, anymore changes or am I ok for this year for awhile?

amdublin

Well done keep it up!

I am still not sure if you're saving enough...considering you have no mortgage.

Can you give us an approx guide of your salary levels?

Frogdog

Well done Emma, that's fantastic to hear!

Try and get rid of the debt for the time being. Once you've paid your credit card bill off in full, and your loans, you can then use the money you used to pay off your debt to increase your savings and make a bigger contribution to your pension.

All in all though, a fantastic start. Keep it up!

oEmmao

so im updating this thread to include our new stats:

salary levels are 350 per week for me and 550 per week for hubby (after tax)

have a loan @ 7,5% of 1,000 repayments are 86 per month for 1 year (just starting)

credit union loan is 13k vs 17k shares (100 per week)

I save 160 a month and hubby is saving 240 a month

we save 50 a week into an emergency fund (easy access)

we both have small pensions, are only paying what our employers will match

what can i do to improve? do i need to add anything else to the mix?

Frogdog

Hello again!

A few questions, in order to have more information to be able to answer your questions:

1. Your €1,000 loan - are you only paying back €86 a month for 12 months? If so, the total you'd pay back is €1,032. So the interest is only €32, which doesn't really add up if your interest rate is 7.5%. If the interest rate is 7.5%, which sounds right, then you should be paying back €75 (providing interest is only calculated once a year, and not monthly/compounding - don't worry about this info for a moment).
2. You have a credit union loan of €13,000 and you have shares of €17,000. Can I first ask you if you mean savings of €17,000? I know sometimes credit unions call savings "shares", I just want to make sure I understand you correctly.
3. Am I right in understanding that you have 2 sets of savings accounts - 200 a month into an emergency fund and 400 a month into the credit union (shares), which is made up of you putting in 160 a month and 240 from your husband as you have stated above, or are the 160 and 240 into a completely separate account from the credit union?

oEmmao

i have just started a loan to clear my credit card debt, and was quoted 86euro per month for 12 months, 7% APR, i will be making my first payment in January

each week i pay 100 to my credit union account, 20 goes to savings and 80 to paying back my loan, yes the 17k is savings

our savings is 400 between the 2 of us, 160 per month for me and 240 per month for hubby, this is seperate from the credit union

is this standard enough or what other changes do i need to implement?

topper_harley2

Why in God's name did you get a loan to the clear credit card debt if you have savings of 17K?!! You are now paying interest on both the credit card, probably 15-20%, and 7% on the loan A and 7% on load B, while your savings are earning a max of 2%. Combined they work out at costing about -25% in interest! Surely you should have taken your savings and cleared the credit card (and possibly credit union loan) in once off payment? If you cleared both with the 17K, you'd still have 3K emergency fund left over. Then you could redirect all your extra cash towards savings and YOU would be earning the interest, not the bank/credit union. There is little point in saving if you are paying a high interest credit card or loan. Clear your debts, then save.

Frogdog

Thanks for the info. As with the above poster, I'd strongly recommend using your savings to clear ALL of your debt, straight away. It doesn't make sense to have savings earning little interest and loans earning huge interest. If you use your savings to pay your loans, you're not only getting out of debt but you're also saving yourself the huge amounts of interest you would've had to pay.

I'm going to break my recommendations down into a few steps:

1. Use your savings to pay off all of your loans, straight away.

2. Only once point 1 is complete, whatever amounts you were paying off your loans, add them to your pension/savings instead. Ideally add them to your pensions, as you will get tax relief on them (the amount comes out of your gross pay, not your net pay) up to a certain percentage based on your age (as you're between 30-39 this is 20%, including your employers contribution).

3. Only once points 1 and 2 are complete, if you have any spare money left over, stick it into any of your savings accounts.