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465 | How This Family Can Afford their Year-Long Holiday While Building Their Portfolio

The Property Couch

Wed Oct 18 2023



Buying a New Home in the Southern Highlands:

  • Linda wants to buy her own home in the Southern Highlands for retirement
  • She is unsure if she can afford it and needs guidance on how to get there
  • The plan shows that she cannot afford to hold onto her Sydney investment property while buying the new home
  • She needs to sell the investment property now or later, but selling sooner may be more beneficial
  • Linda also realizes that she needs strong money management skills and clarity on where her money is going

Retirement Planning:

  • Linda wants to stop working at the zoo by age 65 and retire comfortably
  • She needs a clear roadmap to financial peace and a plan for achieving her retirement goals
  • Three scenarios are considered: buying an investment property and then a new home, selling the existing property and buying a hybrid, or selling the existing property and buying a new home sooner rather than later

Cash Flow Management:

  • Linda had credit card debt and a car loan, indicating weak money management skills
  • The plan helps her understand where her money is going and how to control it better
  • Cash flow analysis shows potential gaps between income and expenses that need to be addressed
  • A focus on reducing debt and improving cash flow will help achieve financial stability

Property Investment Options:

  • Linda was pitched the idea of investing in land with house-and-land packages but felt unsure about it
  • She wanted clarity on how this option would address her issue with money management

Retirement Income:

  • Linda needs to plan for retirement and ensure she has enough income
  • The plan helps her determine the optimal timing for selling her investment property and buying a new home

Optimization and Sequence:

  • The plan helps Linda optimize her financial decisions based on her goals and timeline
  • It provides different scenarios with varying timelines for buying properties and achieving financial stability
  • Linda chooses the scenario that aligns with her preferences, such as buying a hybrid sooner rather than waiting until 2034

Financial Confidence:

  • Linda gains confidence in her financial planning through the detailed roadmap provided by the plan
  • She realizes the importance of money management skills and clarity in order to achieve financial peace
  • The plan addresses missed opportunities and ensures that Linda can retire comfortably while enjoying current lifestyle choices

Overall Value:

  • Linda's story highlights the importance of seeking help at any age or stage of life, not just for young investors
  • It demonstrates how proper planning can lead to confident decision-making and optimization of resources
  • Through this process, Linda gains clarity on her goals, improves money management skills, and creates a clear path towards a comfortable retirement

Retirement Scenarios for Linda:

  • Scenario 1: Keep existing property and buy a smaller investment property in the Southern Highlands.
  • Scenario 2: Sell existing property to buy a more realistically priced home in the Southern Highlands. Chosen scenario aligns with Linda's retirement location preference.
  • Scenario 3: Sell existing property to buy hybrid home at lower price point, invest in additional property in 2025.

Benefits of owning principal place of residence:

  • Principal place of residence offers government support services and protection from means testing.
  • Owning own home was prioritized due to potential benefits earned over years of working and paying taxes.

Considerations for choosing retirement location:

  • Distance between Taronga and Southern Highlands is approximately two hours.
  • Desire to retire in preferred location influenced decision-making process.

Importance of timing for owner-occupied purchases:

  • Delaying purchase can lead to increased costs due to capital gains tax on investment properties and higher debt levels for later purchase.
  • Highlighted importance of prioritizing owner-occupied purchase sooner rather than later.

Linda's chosen scenario:

  • Chose scenario 2, selling existing property and buying more realistically priced home in desired retirement location.
  • New home would cost around one million dollars, allowing her to maintain income through part-time work during retirement.

Financial outlook for Linda:

  • Minimal debt on principal place of residence, comfortable savings expected in 20 to 30-year period after purchasing new home.

Feedback from Linda:

  • Expressed gratitude for seeking professional advice and creating a plan aligned with retirement goals.
  • Wished she had started the process earlier but felt confident about financial future with advisor's help.
  • Using tools like Money Smart and more platform helped her feel in control of money and plan execution.

Importance of finishing books:

  • Life hack: Finish chapters instead of stopping in the middle to maintain momentum and positive reinforcement.

Rental market insights:

  • Hobart experienced 24.5% increase in total rental listings over past year, resulting in lower median rents due to increased supply.
  • Canberra also saw increase in total rental listings (9.9%), leading to decreased rental yields and median rents.
  • Rental markets influenced by supply and demand dynamics, as well as government policies such as rental caps.

Closing remarks:

  • Hosts emphasized passion for helping people make informed decisions about property investing and retirement planning.
  • Encouraged listeners to take action, seek advice if they want to transform their financial situation.