Streamlining with debt reduction to focus on bigger picture financial goals

Background:

Our clients are a married couple in their early 50’s with two teenage children. Their household income is $280,000 per annum. They have a home in the Sutherland Shire worth $2,000,000, savings of $30,000, $400,000 in superannuation. They have a mortgage, car loan, personal loan and credit card that is nearly maxed out.

Goals:

  1. Develop a financial plan for their future.
  2. Tidy up their monthly cash flow and try to reduce their monthly interest bill.
  3. Review super accounts, investments and super strategy.  

Strategy:

  • We implemented a debt consolidation strategy where with the help of the clients mortgage broker we;
    • Reduced the interest rate being charged on their home loan by 0.52%
    • Consolidated all other personal debts and created a new loan against the home for these debts.
  • We moved the superannuation balances to a low cost super provider and updated the investment asset allocation to a higher growth investment strategy.
  • With monthly savings from the debt consolidation strategy put in place, we implemented a debt repayment plan focused on paying off the consolidated debt balance within 5 years.

Advice Outcomes:

The debt consolidation strategy saved our clients $1,250/month in repayments. We then used this money for the client’s debt repayment strategy, leading to clients paying off a $60,000 consolidated debt loan in 3 years and six months.

Superannuation advice will lead to an annual fee savings for our clients of $2,500/annum between their superannuation accounts.

Our clients feel comfortable having a short-term financial strategy focused on reducing their debts. This strategy will put our clients in the position over the next three years to focus on their bigger-picture financial goal: setting themselves up financially for retirement.

Ryan Porter is a Wealth Coach at Catalyst Wealth Group. His mission is to help his clients achieve financial success and live their ideal life.

Any advice or information in this publication is of a general nature only and has not taken into account your personal circumstances, needs or objectives. Because of that, before acting on the advice, you should consider its appropriateness to you, having regard to your objectives, financial situation or needs.