Debt Recycling via salary, property and now shares...

No one enjoys socks being mixed up in the same machine

 

Couldn't agree more!!

 

@Terry_w, @The Y-man , @euro73 thank you for your comments and thanks again @euro73 for our latest cashcow.

Our experience so far with engaging businesses from the forum has been positive and helped us with moving forward. Everyone should do what suits them though.

I will keep the thread updated with my progress. Looking forward to getting the strategy moving. Thanks for your patience with us @Alex Straker . We are also currently going through our super, Insurance’s etc with Alex so keeping us and him busy and updating our estate planning. New year will REALLY be a New Year!

Thanks also to @Rolf Latham too for recent and ongoing assistance.

@Simon Hampel I can’t believe I have been around since 2005!

Kassy

 

Hi Kassy, apologies for calling you a first time poster. I am obviously mistaken.

I am awaiting your response to my genuine question if you're able to answer.

 

@pwnitat0r at work now so I will post an answer to your question tonight. Thank you for the apology BTW

 

hi,

To answer @pwnitat0r questions, we are looking to invest in stocks and shares (my husband knows more about this stuff, I am at home with Property. If I say something dumb about this I still have ‘L’ plates). We are looking for an annual new investment growth of 6% and new investment income of 4%. This is estimated and assumed based on my husband and my combined risk level as well as other factors like how long we have until we retire, what our eventual goal is etc...

Personally though we are looking at it like Property in that we are in for the long term eg. 15-20 years - not necessarily the same assets the whole time but that’s our overall timeframe.

I hope that answers the questions?

We are in the process of re-gigging at the moment to increase our cashflow (I am increasing my work hours) so still fine tuning things before we really get going on this side of things. Give me a couple of months and I will be able to update on how things are actually going...

Thanks,

Kassy

 

Nice, makes sense. Shares are a great long-term asset class. My personal preference is for shares over property! Good luck!

 

Hi @Kassy and @Pete_81

Any updates on how you are both getting on?

Cambridge

 

I'd love to know, too. I've actually been watching this thread for a while now.
Debt recycling seems like the 8th wonder of the world in its power.
I'm keen for my chat with Alex in the near future.

 

This is 2018, the word proxy should almost be as ubiquitous as the verb "google". A proxy means that anyone's real IP can be hidden.

 

Can Alex help with debt recycling strategies to pay off an IP we wish to be a second home? Can he review a whole portfolio?

 

Hi,

As I've been asked for an update, here it is. Apologies for the delay, I usually read the forum on the ipad or phone and hate typing more than a couple of sentences on them.

To recap, we contacted Alex I think November? last year? At the time, I was working part time and DH and I were pretty much snookered as far as taking on new debt. We already have a few properties which are cash flow positive when tenanted. Since then we've had a busy time.

From January this year we have had 3 properties offline at different stages and one the entire time. So no earning from them due to tenant changeovers and maintenance in between. One of the properties is still vacant although it has been advertised the whole time. It is nearly complete but has been nearly done for a while which does my head in to be honest.

It is a 40 year old brick and tile house and was in original nick except I put in Aircon a few years ago, the bathroom was replaced in the 90's and it was last painted then so has had a bit of work done in the kitchen and the front and back verandahs as well as a repaint inside and out and new window treatments etc. As mentioned, it's a brick house so pretty solid. A couple of surprises but all in all it was in better nick than it should be. The other 2 properties involved a bit of a touch-up for one between tenants and new carpet and repaint for the other. We had money put away for the repairs themselves but not to cover the mortgages and rates etc without the rent.

In normal circumstances none of this would have effected us much financially but taking 3 properties out of the system and covering all the mortgages, as well as covering our own mortgage which also went P&I on a part time and a full time wage has been fun. We have also been doing some work around our PPR prior to this happening (with more to do now waiting) which ate some of the savings we would normally have sitting around.

During this time, I asked for and got a promotion at work (in desperation), that was mid May. So I am now working full time. My promotion isn't necessarily permanent as the role will eventually need to be advertised but we will be right cash-flow wise by then and I would prefer to be part time to spend more time with my little boy. I had increased from 2 - 4 days in December 2017. I think 3 days work would be the sweet spot. It's funny though, whenever we desperately need money it appears.

In terms of our working with Alex, we were to extract a bit more equity at the start of this year (thanks Rolf!) and we have setup an investment account which we contribute a set amount monthly to and it's doing alright. It was also recommended we update our wills/estate planning which we have done and was quite involved given our circumstances. We still actually need to sign it off which we should do in the next week or so as soon as I print it all off. We have also reviewed our Super and Insurances, a little bit to go but we know where its headed. Alex is also organising a group soon which I am keen to be in.

This all may not sound like a lot of work but DH and I have a complicated pre-existing setup and we may be a bit older than some of you in similar positions. It has taken a lot of work to get this far and we are happy with the progress so far. I am the 'pusher and lifter' for this stuff in my relationship and on top of everything else going on with the houses/work and family it's been pretty full on for me if not DH. In the last week, we have also put our tax return paperwork etc into the accountant (also my domain).

Happy to answer any questions but I am not going to put anything really personal on the internet.

Kassy

 

Hi @Kassy

Thanks so much for your very detailed update. It's appreciated. It sounds like you haven't had the opportunity to fully explore the debt recycling strategy yet? Or is that what the investment account is the start of?

Many thanks

Cambridge

 

Hi @Cambridge,

Yes, the investment account is the start of the debt recycling so whilst we are standing still in a lot of ways at the moment we have still also made a start at chipping away at our debt long term.

Our properties are positively geared as well so once everything is back on track we should be able to get moving a bit more in the right direction.

Kassy

 

I am very pleased and privileged to be working with @Kassy and her family. Kass is by nature a particularly kind, as well as honest, polite and intelligent lady and a very keen student of all things relating to investing. As well as establishing their DR planning and wisely addressing some other financial risk management areas in their lives, Kass is also advancing quickly in her understanding of my charting and technical analysis methods, so much so that I have asked her to help me with the tutoring as a when we launch the TA study group.

Just wanted to add an important comment re: DR strategies. I was very fortunate when I first joined the FP industry to have a mentor who taught me the imperative piece of the financial success picture not often focussed on is instilling discipline in budgeting and cash flow forward planning/management, then off the back of this ramping up the dynamic acquisition of tax effective assets as a structured habit. DR is not so much about the investment itself as it is about optimising the debt & cash flow algorithm plus the cost and time efficiencies of smart debt & investment structuring in order to achieve the specific goal of paying off non-deductible debt more rapidly.

The all important goal to have 'no home loan or personal debt' is the true essence of a good debt recycling plan because it's the fastest route to fixing cash flow.....and this speeds up financial progress for the remainder of a lifetime The are several iterations of how the leverage and investment/s can be structured, some more aggressive than others. Same golden rules apply as for everything - if you want to push the returns along, inevitably this will involve taking more risk somewhere.

There is also a very long story as to how to have the most cost efficient portfolio structure but that is too involved to go in to here. Seen a lot of DIY portfolio 'basket cases' where people are showing up to their accountant with a shoe box full of 50 fund reports and share holding statements and being charged (and rightly so!) thousands of $ per annum to sort through the mess and extract the tax reporting info required. Smart structuring will completely eliminate that problem, not to mention the stress, transactional cost inefficiency, behavioural risks, and administrative nightmare of trying to manage all that stuff.

Something else to consider - a 'typical' client portfolio (not all are DR) would have exposure to Australian plus a range of International markets (Australian stock market is only 2% of the worlds markets, smart to have some exposure elsewhere!), commonly over 300 stocks plus in some cases other asset classes such as bonds, fixed interest, property and alternatives forming part of the mix. Clearly no one individual can DIY all the assets that comprise that kind of portfolio no matter who you are, at some point external expertise becomes essential, I'm a financial planner and I love leveraging off the expertise and specialities of particular smart money managers and stock pickers that I have a high regard for!! The goal is to make life easier, not create more and more administrative and management headaches

No Advice

 

It would be great to get into some specifics in this thread. It is hard to offer much comment otherwise. It is always useful to see real world numbers as people progress along their journey...

 

Hi All,

Still not keen to give out my financial history on the internet but here is a bit more detail for anyone interested. We have 7 houses all up, 2 are a dual occ in Orange, Ppr in Canberra, 3 in Brisbane and one in Morayfield. LVR is about 75% overall, positively geared and not setting the world on fire but all have only increased in value except for the house at Morayfield which took a bit of a hit after the 2011 floods. I have owned one of the houses for 20years and had 2 houses when my husband met me. Our ppr has a P&I mortgage, the rest are IO which start to expire in about 18 months. We are not entirely either worried or carefree about the upcoming change just making sure we are prepared.

Income wise we are both in the most common profession in Canberra and earn the average wage for that. I was unemployed for a couple of years in Brisbane after the gfc and both of us are IT people so redundancy has not been uncommon or unplanned for at different times.

How are we going now? It has turned into not too bad a year. We survived all the repairs and all the properties now have tenants. All have had rental increases this year as well which shows the markets they are aren’t going too badly. 3 of the rental increases were in the last month.

Still plugging away with our debt reduction strategy. Probably hasn’t been the best year for socking away savings but we are about to receive healthy tax returns which will help with that and next year is looking much brighter!

@Alex Straker is about to release his course which I am looking forward to doing as well. I am currently on holiday for a couple of weeks and back at home in SEQLD and have been fortunate to help Alex setup the group and doing the web page now. If you are interested in the course, send me a pm and I will send you the web page link as soon as it’s launched.

I am still working at a higher level in my day job as well which is good for cashflow (bit sad for seeing my 3 year old but DH has had a bit more time with him). The job I am in will be advertised soon (my previous boss has stood down for personal reasons). I am enjoying the money and experience while I can but also wouldn’t be sad to return to my old role and have a bit more time with my son.

Better get back to my holiday

 

I'm going to vouch for Kassy. I'm a long-time lurker, occasional poster and I am not @Alex Straker either. Lol.