Ben and Liz are a married couple in their mid-30s and have twins at an early school age. Both business executives, their combined annual salary is around $400,000.
Ben and Liz were originally introduced to baldwinwicks in 2008 by an existing client as they were planning the purchase of a family home on Sydney’s North Shore. We sourced the best mortgage for them and they purchased a $1.3M home in late 2008.
Ben and Liz were not reaping the rewards of their hard work. In early 2013, after owning their family home for 5 years, Ben and Liz felt that the $430,000 equity they had built up in their own home was not reflective of the hard work they had put into their careers and the sacrifices they had made. At their current repayment levels, the existing mortgage was going to take another 22 years to pay out.
In the longer term, Ben and Liz had a very clear objective to stop working in their mid-50s, however we pointed out to them this was impossible if they were to have a self-funded retirement. Projecting their current financial position, we showed them that they would enjoy a well-deserved self-funded retirement for a maximum of ten years.
We met with Ben and Liz to outline MAP. We reviewed their current situation and made forecasts based on their current budgets and repayments. From this initial meeting we reviewed their existing budget management disciplines and debt arrangements across all facilities (the mortgage, a car loan and credit cards) and from this we were able to pinpoint $3,500 of monthly surplus income.
This “new vision” of their situation, combined with restructuring various bank accounts and a commitment to better budget management, meant that Ben and Liz are well on their way to taking control of their financial future.
As clients of the baldwinwicks MAP solution, the results being achieved by Ben and Liz are remarkable. They are clearly taking control of their families financial future.
Based on their current incomes and spending patterns and using their surplus income, Ben and Liz will:
- Reduce their mortgage repayment schedule by 14 years
- Save in excess of $388,105 in interest costs
- Replace the out-dated kitchen of their family home in the first year
- Purchase new furniture for the reception room in year one
- Purchase a new family car debt free in year 3
- Set-aside an additional $40,000 for the twins’ education in year 10.
“MAP meant we will be able to pay-off our loan in around half the time,
with savings of around $380,000. We are doing this with certainty via ongoing
budget management, our MAP monthly reports and comprehensive annual reviews.”
Ben, 36, Sales Executive
Ben and Liz are now also assessing an alternative scenario outlined by MAP where they are able to purchase an investment property for $600,000 which they will be able to purchase the full purchase amount plus borrowing costs. If they pursue this investment strategy, they will pay off all debt in 12 years and have saved in excess of $602,000 in fees and charges.
Through the savings in interest costs, fees and charges, Ben and Liz are making and their ability to pay out their debt much quicker which means that they will be readily able to redirect monies into their superannuation funds. This financial strategy will mean that Ben and Liz will be able to enjoy a self-funded retirement even quicker than they had originally hoped for, with unencumbered assets and an income in retirement that matches their incomes received throughout their working lives.
As for the twins, Ben and Liz will be able to leave them each a healthy estate and a great financial start in life.