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Your Money

Building houses and wealth

I am in my early 30s and am married with two kids. My wife and I are planning to buy a house and would love to get financial advice but feel it is too expensive given what our cash flow will be after we buy our house. Do you have a basic plan that we could use until we have the money to have a tailor-made plan for our circumstances?

There’s no general plan I recommend as advice as we’re all different but if any of my two sons asked me this question, this is what I would say.

Select the worst house in the best street in a suburb that’s not too popular now but has the potential to be the next big thing place to live. When I bought my first place is Paddo in Sydney, people thought it was a dump in a bad suburb!

Buy a place that you can add value to. My first place was a two-bedroom cottage with a steep roof. It was easy and cheap to build two bedrooms and a bathroom into that space using four wide dormer windows. It’s great if there’s no garden because you can build it up. Do handyman or – woman courses and read building guides on painting and other trades you can apply to improving your house.

Try to pay off your mortgage as quickly as you can by putting tax refunds against the loan but make sure you have a redraw on your loan so you can respond to cash crises as they occur. Think about second jobs or extra training to boost your income or even a home-based business.

When I was a teacher, I had a coaching school to add to our revenue. This became the nucleus of our media and financial services business that is at the core of Switzer Group nowadays.

Along the way, you can trade up to bigger and better houses. I can recall selling the finished Paddo house – we had bought a wreck on a big block of land, done it up and sold it for more than three times what we paid for it. Sure, we put a lot in to renovate it but it coincided with much more income coming into the household because of our age and our business success. And, as the cash flow improved, we did a financial plan and diversified into shares and other investments.

That said, if I had my time again I would have done a financial plan at a much younger age because you learn insights about investment and tax that can both save and make you money. I was lucky as I have been doing personal education information in newspapers, on TV and radio since 1985 and so I was across these important insights but I do worry that too many people wait too long to get advice and as a consequence could be missing out on opportunities for 10 to 20 years.

Making money is all about doing the right thing for the longest possible time.

One last tip – get into budgeting early so you know where you’re spending your money. If you don’t keep track of your money, you won’t manage it effectively.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Friday, October 08, 2010

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