Hi AceyDeucy
I have recently returned from the UK having spent 6 months there to show off our newborn
Anyway, before heading back (I'm British, but have emigrated to this wonderful country) I was working as a contractor in the IT industry, had been doing so for 7 years, and earned very well. The problem was I had nothing in the bank as savings, other than high equity locked up in my home. I knew this situation was not the best but never made the time to change it (I think most people have the time if they make it a priority). During my 'time-out' in the UK I made a decision not to return to the same way of life when I got back to Au. Since returning I have taken up part-time consultancy that covers bills etc.. and have just completed a first cut of a financial roadmap that will allow me/my family to create a more wealthy environment for our future. I've found that I won't have to work any harder than I used to, just smarter. I also found that investing the time to think about the areas that can be improved is a 'must do' (for me at least), and has made my goals specific and measurable. Below I've cut & pasted the Table of Contents from my plan, just in case anyone is interested in the type of content.
Basically the document covers :-
Past earnings, future projected earnings (conservative and optimistic);
Where we are at with our mortgage, along with an analysis of 'what ifs' - which outlines the savings in interest payments through increased contributions;
Where we are at with Super (One of my funds has been left to 'rot' with BT for years and has lost >30% of it's value !!).
It then goes into the more interesting stuff, like how to build a propoerty portfolio, the rationale for the type of investments I am most interested in, along with a projection for buying IPs (pace). This varies over time, and ventures into higher risk territories as I gain experience.
I then look at our plan for starting up our own business (which my wife is currently gaining industry experience), and investing in shares (which I believe is a good diversification stratgey, but predict I will not be ready for this until Year 3).
Finally I've added an action plan - a short-term plan (what needs to happen in the next 3 months, so that I can get to that first IP), and a longer-term projection, which shows the high-level timing for the above topics.
For me this has helped crystallise what needs to be done, and has been a great way of outline my thoughts for my wife (it gets things down in a sensible way, rather than my cluttered ramblings !), and, now that it's down on paper, will act as my self-measurement. The document is rather comprehensive, and is a living document - I would be very disappointed if I find in 6-months time that it is a legacy of 'what could I have done'.
I'd encourage all out there that has NOT YET STARTED to at least make a few bullet points outlining their goals along with a timeline so that they can measure their progress against short term goals. Most of us have read that they should write things down, but this is often not done (I suspect), which may well be a prediction of how they will fare in the future. For what it's worth, here is my TOC (hope it helps someone...)
TABLE OF CONTENTS
1 ABOUT THIS DOCUMENT 4
1.1 PURPOSE 4
1.2 DOCUMENT AUDIENCE 4
2 INTRODUCTION 5
3 HISTORICAL FINANCIAL PERFORMANCE 7
3.1 OVERVIEW 7
3.2 JULY 1999 – JUNE 2000 8
3.2.1 Profit & Loss July 1999 to June 2000 8
3.2.2 Balance Sheet at June 2000 9
3.3 JULY 2000 – JUNE 2001 10
3.3.1 Profit & Loss July 2000 to June 2001 10
3.3.2 Balance Sheet at June 2001 11
3.4 JULY 2001 – JUNE 2002 12
3.4.1 Profit & Loss July 2001 to June 2002 12
3.4.2 Balance Sheet at June 2002 13
4 CURRENT FINANCIAL POSITION & FUTURE PROJECTIONS 14
4.1 OVERVIEW 14
4.2 JULY 2002 – MAY 2003 15
4.2.1 Profit & Loss July 2002 to June 2003 16
4.2.2 Balance Sheet at April 2003 17
4.3 JULY 2003 – JUNE 2004 PROJECTIONS 18
4.3.1 Conservative estimates 19
4.3.2 Optimistic estimates 19
4.3.3 Budget – Outgoing Expenses 20
5 FINANCIAL GOALS 21
5.1 OVERALL GOALS 21
6 FINANCIAL STRATEGY 22
6.1 THE ‘DAY JOB’ 22
6.2 THE MORTGAGE 23
6.2.1 Overview 23
6.2.2 ‘Do-Nothing’ Scenario 23
6.2.3 10 Year Clearance 23
6.2.4 Alternative Scenarios 24
6.2.5 Additional Mechanisms for Reducing Mortgage Duration 24
6.3 PROPERTY INVESTMENT STRATEGY 28
6.3.1 Overview 28
6.3.2 Education 29
6.3.3 Preferred Investment Type 30
6.3.4 Securing & Retaining Tenants 31
6.3.5 Location - State Vs Suburb 32
6.3.6 Target Number of Properties 33
6.3.7 Raising $s 33
6.3.8 In Whose Name ? 34
6.3.9 Fixed Vs Variable Interest 35
6.3.10 Tax structure 35
6.3.11 Blaker’s Road Options 35
6.4 SUPERANNUATION 37
6.4.1 Overview 37
6.4.2 Dave’s BT Funds 37
6.4.3 Dave’s Zurich Funds 38
6.4.4 Karen’s Zurich Funds 38
6.4.5 How to Manage Super in the Future 39
6.5 BUILDING CASH RESERVES 40
6.6 BUSINESS START-UP 41
6.7 SHARE INVESTMENT STRATEGY 42
7 SUMMARY 43
8 ACTION PLAN 44
8.1 HIGH-LEVEL PLAN – LONG TERM 44
8.2 HIGH-LEVEL PLAN – SHORT TERM 46
9 DOCUMENT CONTROL AND APPROVAL 48
9.1 VERSION CONTROL 48
9.2 REFERENCE DOCUMENTS 48
