Getting started with a financial plan Choice Case Study
When Anna came back to us for a review, she had one clear objective...
“I want to set myself up financially so I can travel for six months next year and then rent a place with a friend near the beach for a while, without my Dad thinking I'm irresponsible”
Challenge accepted! Anna was 28 and we had already helped her with the finance to purchase her first home in the suburbs in her early twenties. She had saved relentlessly in her offset account over the years, which in turn had heavily reduced the interest now payable each month, and the property had increased substantially in value. She had built a successful career in marketing but felt it was time to “live a little” before she approched her thirties, without undoing all of the hard work she had already put in.
She met with both a mortgage broker and a financial planner from our office to discuss her options in regards to renting out her existing property and define the impact that would have on her future goals. After some extensive projecting, forecasting and goal setting sessions, we arranged the following for her:
- Refinanced her home loan to another lender saving over $2,800 in interest and fees per annum
- Fixed the interest rate for two years on some of her loan amount to give her certainty around her repayments whilst saving to go overseas and during her trip
- Set up a new loan split for $50,000 which would be cheaper than racking up credit card debt for emergency maintenance and travel costs, but wouldn’t attract interest until spent
- Arranged a fee free platinum credit card so she could collect rewards points on purchases, benefit from free travel insurance which she'll clear in full every month
- Worked out an achievable budget for before her trip, and realistic savings goals to aim for on her return, in order to purchase a new home within five years
- Consolidated her four existing superannuation funds, which were all attracting administrative fees, into one manageable fund
- Aligned the investments within the new fund with her current risk appetite which she had previously not considered
- Reviewed her personal insurances and discovered she was actually over insured for life and total & permanent disability (TPD) insurance but her income protection level didn’t cover her whole salary, leaving her vulnerable if she were to ever to suffer a serious illness
- Restructured her insurances to ensure the levels of cover were appropriate to her personal circumstances ,without impacting her cash flow so she would be protected against life's uncertainties without jeopardising her other personal and financial goals.
We will be reviewing Anna's future financial security on her return to ensure she stays on the right path to realise her goal of purchasing a new home in a desirable area as soon as possible. It's also fair to say that we have now firmly secured a spot on Anna's Dad's Christmas card list - in fact we are now advising on his transition to retirement!