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Introducing the Voigtstr

Discussion in 'Introductions' started by voigtstr, 25th Jan, 2007.

  1. voigtstr

    voigtstr Well-Known Member

    Joined:
    24th Jan, 2007
    Posts:
    679
    Location:
    Hobart
    Greetings programs.
    The Voigtstr is a 38 year old aquarian computer geek. Graduated uni in 98 and been working with an I.T. company since 99 in unix operations and help desk support (since 2003 just doing help desk). In 2003 I moved to Hobart as my operations role had been replaced by a program (dang clever programs). Shortly afterwards I met a quirky red haired aquarian (8 years younger than me). At the start of 2006 I bought a house for 180k. In Feb this year we are getting married. (I expect kids will happen 2008-2009)

    I'm on approx 50k. My partner is on 39K

    We owe 171k on the house which is probably still at 180k.
    I owe 11k on a 14k motorbike.
    I owe 2k on a 3k low interest credit card
    I owe 2k on personal loan
    I have a 2k overdraft on my cash account (paid in full each month, but generally almost used in full just before a pay day)

    My partner has a personal loan (I think 6k)
    My partner has a credit card (extended to 5k to cover costs for the wedding)

    ATW (after the wedding) we were planning on paying that card down pretty quick, but looking at http://www.invested.com.au/81/how-save-effectively-4170/ I might advice my partner to pay down her loan first. I'll concentrate on my personal loan which has the highest payment rate.

    To asist with income and growth I'd really like to get into managed funds this year, initially as a savings tool to save quicker than if I was just saving into ING Direct (as we both were BTW (before the wedding)).

    As the banks let you borrow more on property, I'd like to get some investment properties going, but saving deposit monies is an issue. ATW we will both be saving into ING again I expect, but would it be worth saving into managed funds instead? Rather than super aggresive funds like Australian small caps and Asian emerging companies, would Australian Blue Chips (as Steve Navra recommends) be a better saving/growth vehicle over the next few years (or until kids are into school/after school programs and we arent paying full child care while partner and I are both at work). With kids at school, the money not spent on child care could be used for a negative geared investment property. (Have read through Navra's living on equity articles)

    I guess a good question is pay down all bad debt now, or pay some and get some savings happening in either ING or a fund?

    The payment/balance rates were
    0.088 personal loan
    0.042 motorbike loan
    0.027 anz card
    0.007 mortgage (partner is paying half of this one so it should really be 0.003)

    Cheers
    the voigtstr
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    Hi voigtstr and welcome.

    Looks like you've spent some time thinking about where you're going - which is great.

    Given the interest rate on your bad debts are often quite high (especially personal and vehicle loans and credit cards) ... and you have to pay them with after-tax money ... I'd suggest you'll get much better return for your money in the short term by paying them off. This will also free up cashflow (once they are paid off) which you can put towards saving for a deposit on an IP.

    The return you'll get from an ING account is about 6%, while you're probably paying more than 10% for your other loans (except the mortgage), so I don't think there's much point trying to save money yet - you'll still be going backwards after paying the interest on your debts. Kill them off as quickly as you can and then work hard to avoid taking on more "bad" debt - you should find it quite liberating once you are bad debt free.
     
  3. voigtstr

    voigtstr Well-Known Member

    Joined:
    24th Jan, 2007
    Posts:
    679
    Location:
    Hobart
    Thanks Sim.
     
  4. voigtstr

    voigtstr Well-Known Member

    Joined:
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    Location:
    Hobart
    An update:
    I've crunched the numbers in excel, and have included a payment plan in my budget that will have the personal loan paid for in April, and the motorcycle loan paid for by feb 2008 at the latest, and October at the earliest (this is dependent on shift allowances and overtime)

    I might add a few months to pay down an overdraft and a low interest credit card (which isnt used for purchases (it was used to purchase the computer I'm using now))

    I'll put off investing in managed funds untill those loans are out of the way.
     
  5. Glebe

    Glebe Well-Known Member

    Joined:
    15th Aug, 2005
    Posts:
    932
    Location:
    Sydney, NSW
    Voig,

    Best of luck, it sounds like you're on the right course. Sounds like tracking a 'what if' scenario would be good also, for your own experience and education.

    Keep us up to date with your progress and make sure you don't lose your focus.

    :)

    In my experience once you'd discovered the whole 'financial independance' mindset it's impossible to shake! Is this a good or bad thing? :eek: :)
     
  6. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    V

    The discipline involved in paying off your debts and the psychological benefits of achieving your goal to be bad debt free will be a great assistance to you in your future investing endeavours.

    Well done on deciding to take charge and make a change for the better!

    As Glebe says...once the bug bites your mind will become open to a whole world of possibilities.

    Cheers
    N.
     
  7. voigtstr

    voigtstr Well-Known Member

    Joined:
    24th Jan, 2007
    Posts:
    679
    Location:
    Hobart
    An update from the Voigtstr
    My Wife has had a Payrise. She's now on 48k :)

    We owe 168,502.02 on the house which based on the asking price of unit next to us is now worth 200K (at what stage would one refinance to draw out equity?)

    I now owe 8,566.91 on 10,100 - $12,000 Motorbike (Red Book AU : Your site for New and Used vehicle prices)
    I've budgeted it for it be paid off by December bringing me another $439.06 cash flow to pay off my remaining small debts, and then to invest into funds each month.

    Still in about the same place (paying off the bike loan first as it has the highest repayment)

    Not any more I dont! I paid it off today. Thats another $200 cash flow a month to put into the bike loan.

    My wife as paid her loan, and the credit card used to pay for wedding expenses is down to half what it was.

    I think I'm on track!
     
  8. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Way to go Voigtstr !! That's fantastic progress. Keep up informed.
     
  9. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
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    Ditto that.

    There's nothing like seeing some measurable progress to keep you motivated and on track!

    Well done. Of course the hard part is to keep up the good work ;)

    Looking forward to your next update.

    Cheers
    N.
     
  10. Glebe

    Glebe Well-Known Member

    Joined:
    15th Aug, 2005
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    Location:
    Sydney, NSW
    Like Sim and Nige said, that's great stuff. You'll find the repayments will have a snowball effect - starting slow and then with momentum the debts will be gone in no time. Looking forward to another update in 3 months...
     
  11. KevinH

    KevinH Well-Known Member

    Joined:
    6th Nov, 2005
    Posts:
    101
    Cool bike Voigster.

    I'm putting around on a YZF 750 and her name is "Stress Relief"

    One day I'll reward myself with a real bike, but for now she'll do while I practice the delayed gratification and zero personal debt programme.

    Good to see you have a plan and its unfolding favourably.

    Kevin
     
  12. voigtstr

    voigtstr Well-Known Member

    Joined:
    24th Jan, 2007
    Posts:
    679
    Location:
    Hobart
    What guidelines do people use as to when to refinance properties?