Achieve your financial dreams

Whether you’d like to own your own home or take an overseas holiday, chances are you’ve devoted a bit of daydreaming time to a seemingly impossible aim. Sure, you can take out a loan (which is better than using your credit card at a higher rate of interest), but you don’t want to be overwhelmed by debt either. Don’t despair though. With a little preparation and planning you too can live your dream – it all comes back to some basic rules of money.

Recreation and retirement
A few years ago Jenni Gardiner, 49, found herself at crisis point. As a single mother of two children (Hermione, 20, and Darrell, 16), and living in Sydney, she felt her income was being shoehorned into a tight budget of mortgage repayments and living costs, with any unscheduled spending going towards her children’s needs, on things such as clothing and entertainment expenses (both children live at home).

“With a large home mortgage and a house that always needed repairs, I felt as if I was drowning in debt,” says Jenni. “I couldn’t see any way out.”

What Jenni really wanted was to live closer to the beach, to travel to India and, in the long term, to stop being a ‘wage slave’ to full-time employment. After attending a personal development course, she decided it was time to take a radical step and sell the family home of 14 years, in order to put her own wish list into action.

“The course gave me the push to sell the family home, which had been unthinkable beforehand. It took a year to sell because the market conditions changed but it was a big house and eventually sold. Since then, I’ve decided to rent close to the beach. Part of me really enjoys the freedom of not worrying about repairs and maintenance; I want my life to be more relaxed,” smiles Jenni.

The money from the property sale was a stepping stone to a new life, but Jenni also used some of it to buy new furniture, as well as achieving her other dream of taking a trip to India. Fortunately, before her spending got out of hand, she took stock and looked for some expert help to fulfil her remaining financial fantasies. Jenni’s current main goal is to retire from her executive job as a data quality manager in technology. In looking to achieve this goal, she initially sought guidance from a financial adviser, who told her she couldn’t afford to retire in the short term and would have to continue working.

Still keen to retire as soon as possible, Jenni sought a second opinion from Bernadette Haidar, a senior money manager with women’s financial specialists Superwoman. Bernadette suggested Jenni keep working for the next two years and then go part-time, supplementing her reduced income with investment income.

Due to the sale of her house, Jenni had a large lump sum that needed to be put to work rather than just earn interest. Bernadette recommended splitting the money into an unlisted property portfolio and to also put funds into direct investments through shares and a managed fund. (A managed fund is an investment product that allows an investor to hold shares without actively making decisions on buying and selling.)

As well as all this, Jenni decided to leave some money in cash for any emergencies, as well as putting some aside for her daughter Hermione’s 21st birthday party. She also rolled over her superannuation (changing funds) in order to get a better performing fund, and paid out the lease on her car to cut her debts down and increase her real income.

Saving for travel
The knowledge Jenni gained realising her financial dreams has also been put to good use by her daughter Hermione, who is currently saving for a trip to Europe. Rather than just save up for an overseas jaunt and then return penniless, the 20-year-old property officer is using a spending and savings plan.

With the help of Bernadette from Superwoman, Hermione has written down all her assets and outgoing expenses, limiting herself to the bare minimum to live on. To help herself
keep to her budget, she has an automatic debit from her regular cash account into an online savings account.

To further top up her savings, Hermione works on the weekends, doing bar shifts at a local yacht club. “I’m sacrificing my leisure time so I have enough money to be able to take off for up to a year,” she explains. “The first two months I’ll probably work in London and then I’ll travel for five or six months around places like Greece and Turkey.”
While she’s saving to travel, Hermione is living at home (she pays board when she can), and allowing herself just $100 a week for living expenses. She has had to adjust her spending habits, and has only bought one outfit in the past four months, but says the experience has made her realise she can live on less.

“Mum is taking over my car while I’m gone and paying me for my share so I won’t have a car on my return,” says Hermione.

“I’m thinking of leaving some money to be invested while I’m away. Being in real estate, I do want to invest in property. I plan to move into sales later and that will hopefully help to boost my income.”

 

Words: Julianne Dowling. Photography: Scott Hawkins. Hair & make-up: David Novak-Piper.