Advice on strategy?

Hi all

Thanks for reading my post. I'm looking for some advice on how people think I should be planning in the next few years

I’m 33, partnered (we keep finances separate), no children (won’t be having any)
My income from work is about 150k from salary, rent 23.5k

I am a professional and my income will double next year when I get a final qualification

Assets
House 1 - in my name - (inner city suburb) rented - value 800-850k, mortgage 479k (fixed rate until next year, no offset) P&I repayments. Rent pretty much covers mortgage
House 2 finance shared with partner- (inner suburb in a different city) - value 1.42m, mortgage 1.27 (205k cash in offset - P&I repayments) (partner and I will split mortgage payments but currently the payments are coming out of the offset as we are not living there and using as a holiday home)
We are currently living in my partners other home and I do not pay towards living costs there
Plan is to move into House 2 in next 6 months

Super - 110k
Art/Furniture - 20k

‘Good’ Debt - renovation to House 1
Personal loan 7% interest - 50k
Personal loan 0% interest - 10k
I consider this good, as it created the equity I have in the property
‘Bad’ Debt
Credit Cards all 0% interest now for next 2 years (this spending has been my Achilles heel) - 40k

I know the situation on House 2 is eating up equity right now as payments are coming out but we will be making the contributions towards the mortgage soon. The amount we have in offset though means we are still paying down principle which mitigates it a bit.

I know I should not have this kind of credit card debt and I am looking at addressing this, however with my income rise next year its a balance of quality of life etc as I like to travel. Bear in mind that I do not need to consider budgeting for a family on the horizon.

I have not had advice from a financial planner before so have some questions for anyone who has experience that is interested in replying

1. For now, should I just pay the minimum on all my loans since they are mostly interest free and put all my extra income into the offset on House 2? (Because I can redraw this cash anytime)
2. What should I do with the mortgage on House 1 when the fixed rate period is up next year?
3. When my income rises, should I keep going investing in property or diversify, and how would people recommend approaching the share market?
4. What do you think the quickest way to financial independence would be if you were in my position?

 

My first aim would be to pay off in full that credit card debt as fast as you can, unless it is on some sort of nil interest transfer deal.
Marg

 

Given your spending history having the cash available may not be best.

It appears you have a spending problem which you in part justify as you have a payrise coming. Plenty do this and then just up their spending. You have a healthy income now and should be able to enjoy nice holidays etc currently without getting into debt.

Lowering your lifestyle is the quickest.

Either way you need to work out how much you will need to retire and then you can start planning on getting there.

You've got your income sorted. Knock Off all that debt and if you can get your spending under control you should be able to achieve great things.

Good luck

 

Thanks for the welcome, ok you're making me thing a bit harder about it

My current resources to work with are my income which will increase substantially in the next few months, equity and cash in my offset account as above. I was after short-medium term advice on how to structure my debts

But what I want is to retire no later than 20 years from now, and maintain my income as high as possible through combined income from property portfolio/stockmarket or investment in a business. I'm willing to take med-high risks in investments at this stage in my life. I tend to prefer taking on debt to build wealth rather than saving money. That has worked for me so far in the property market. I hope this is a little more specific!

 

Can you change from being an employee to a contractor? This will allow you to claim expenses and possibly split your income with your partner to reduce tax.

Also pay off the credit cards off form your equity in the home

 

Thank you all for your replies!

Since I'm now restraining my spending, it makes sense to me to direct that money into another wealth building or interest saving opportunity rather than paying it all back before the interest free period. It's not costing me anything now. If I put my income into stocks or another property that will make a gain over two years, possibly far more than what I owe on the cards - to me that's better than paying off 0% loans. This is why I thought paying into the offset at least would be better as I'd be saving a lot of interest on the mortgage.

 

If you can,

1. Get a handle and pay off your credit debt then determine your highest borrowing ability via a gun broker.
2. Spend some time to identify your medium to long term goals
3. Be focused and increase your overall knowledge of real estate investing. (essential)
4. Hone in on value adding strategies and become clued up on various strategies and how to put a team together etc. I think you could be onto a winning path for your risk tolerance.

Definitely don't waste your time on $15/week cf deals.


Bonus tip: keep away from 99% of financial planners.

 

Thank you!
Should I keep going with property or look into stock market too? The first I have some knowledge about, but the latter zero. Where would be a good place to start?

Yes I have heard to stay away from financial planners but who do you trust when you move out of your zone of knowledge?

 

Refer to #2 above.

Its hard to know who is worth listening to when you don't have enough basic knowledge yourself. My approach to anything new has always been to first get the literature and read, study. Learn all the basics and different opinions. THEN, when you have some understanding you will be in a much better position to differentiate what someone says to be valuable or just hocus pocus and not for you. You first need to develop your own basic understanding of whatever it is you are trying to pursue. Otherwise, you are left in a vulnerable position to whomever says what to you. If only more people learnt the basics in RE investing, they would have avoided sooooooooooooooooo many basic, costly mistakes.

 

1. Yes that's probably best idea for now.
2. Stay on variable for a short while and pay down your mortgage in an offset. Need to assess if you go to fixed based on how interest rates are going.
3. Pay down mortgage in offset.
4. You're in a very easy position for financial independence and this is what I'd do for easiest life. You and your partner could have 2 PPORs, live in one, renovate another, sell what you were living in, live in renovated, buy another and renovate it and so forth. I'd then diversify into shares that amass dividends. I'd save hard and work hard until 40 and then retire.