Everyday SYD Sider-Want to Hear Your Advice on Financial Opinion

Lmango-tango on 04/07/2025 - 10:26

Hello fellow OZ bargainers

I have been browsing forum and playing with ChatGPT (and whatnot…) lately to gain some idea about my financial situation. I know forum isn’t best place for advice, however I do believe in mass crowd opinion 😊. I want to hear from other people where I am financially and what may be suggested to way to make my family more financially secure.

My goal : to retire at 60 (or early 60’s) hopefully with paid off mortgage. May look into work part time just to get out of boredom….

Current situation : Myself 40 yr (IT – 140k) , wife 35 (teaching - 70k), 2 kids at 6 and 3
Half of our earning goes to the bank… spend around 4.5-5k monthly on living expense, almost living month by month

Asset : Own 1.5M property in SYD
37k stock in ASX (kept over 10yrs)
15k in offset account (everyday and emergency fund)
200k in my super, 120k in my wife’s super (projected to be 1-1.2m by retirement)

Debt : 900k mortgage 30y term with Interest rate of 5.6% (paid off two years, 28 more yrs to go…)
70k borrowed from family while purchasing current property (will have to pay back in next 5 yrs)

I know it was a bit of stretch to get such a big loan with our income; however my plan was

  • Interest rate will come down eventually
  • Both kids will go public school (no more day care) which will allow us to save over 1k a month

There are numerous strategy to invest, save up and etc… but I want to know what people reckon will be the more effective outcome

  1. Refinance to the bank lower interest rate periodically (with occasional cashback) OR fully transactional account with redraw – continue to payback aggressively
  2. Concentrate on paying off mortgage OR leave couple of hundred dollars aside monthly for saving (eg towards kids account) and investing like ETF
  3. What other strategy could be out there which can be more effective?

Any comment, advice, criticism (not a rough one) is welcome

Financial

Comments

  • TheBilly on 04/07/2025 - 11:13
    +7

    Any comment, advice, criticism (not a rough one) is welcome

    What are you doing to actually live an enjoyable exciting content life? Just in case you don't make it to 60 and on your last days you are filled with regret

    • mango-tango on 04/07/2025 - 11:39

      True true, me and wife loves travel, however its been restricted due to financial commitment. We may enjoy occasional oversea trip (once every 2-3yr), and more trip locally.

    • Dr Phil on 05/07/2025 - 09:26
      +3

      And why this?

      "Interest rate will come down eventually"

      Historically interest rates are at record lows.

      Dont expect much of a drop and when it happens dont expect it to stay there for long.

      The long term decline of interest rates has come to an end.

      We appear to now be in a long term increase in interest rates.

      That means they will come down less each time and go up more when the do.

      What has caused this change?
      1. Central bank Interest rates went down to ZERO during COVID-19 . You cant get any lower.
      2. The massive amount of both private and public debt around the world (take OP's own debt of almost $1M)
      3. Specifically the massive amount of government deficits and debt which is forecast to grow.
      4. More debt around the world equals more risk equals a higher premium on interest rates

      BEST ADVICE: Pay down your debt as quickly as possibe then grow your superannuation account

      PS: From what I see, as they currently stand, your super accounts wont do much to support you in retirement
      Furthermore $1.5M in property assets in Sydney is nothing these days so that wont get you far apart from guaranteeing a roof over your head

      BTW: 2 kids at 6 and 3. Your expenses haven't even started yet. Kids cost a fortune these days.

  • Gunnar on 04/07/2025 - 11:14
    +8

    This year I invested in pumpkins. They've been going up the whole month of October, and I've got a feeling they're going to peak right around January. Then, bang! That's when I'll cash in!

    • mango-tango on 04/07/2025 - 11:40
      +1

      Thought about getting some chickens for egg supply. Might give it a go

    • Muppet Detector on 04/07/2025 - 18:03
      -2

      I got the gist of October, but don't know how January is significant?

      • SlickMick on 05/07/2025 - 10:12

        I presume the market will crash in November.

        TBH until you asked and made me think about it, I thought he was growing pumpkins and January was harvest time,

        • Muppet Detector on 05/07/2025 - 16:22

          Well that might make sense except for his reference to October.

          From that I presumed he was alluding to Halloween which would involve harvesting the pumpkins in October.

          • SlickMick on 05/07/2025 - 18:22

            @Muppet Detector: Nah you were on the right track. Investing in pumpkins in October to make a killing for Halloween, but need to sell by EOM. Holding till January would be a disaster.

            Nice subtle dig. I'd better give an uptick.

  • skid on 04/07/2025 - 11:24
    +1

    Salary sacrifice into super starting now - about $800/month for you and about $1000/month for your wife. Come 60 years, pay off your mortgage with your super.

    Or continue as you are today and downsize your PPOR when you stop working.

    • mango-tango on 04/07/2025 - 11:42
      +1

      This is an idea I have not thought of. Thank you I will take it into consideration

  • [Deactivated] on 04/07/2025 - 13:04

    forum isn’t best place for advice

    Correct! If they know they would not waste $80K cash for a car w/o a roof and undie to cover head and ass! Now that you already asked, at least better not to follow what they say; listen to what your wife says, instead!

    • mango-tango on 04/07/2025 - 13:58

      its not the worst place either… some valid point taken

  • OMGJL on 04/07/2025 - 14:10

    my situation is VERY similar to yours, except I am younger and wife's job is a bit worse.

    here is the thing - your mortgage interest rate is above 5%, and any investment you made need to be significantly higher than that.

    because if you think about it: by just put savings into your offset gets you 5%+ guaranteed
    and any other investment have risks associated to it, will you be risking the loss for just 1-2% extra yield?

    as for super, it is a good way to dodge income tax, but also remember to consider you'll lose the cashflow, since you can only dip your hand into it by 60 y-o. I personally would only put maybe 5k into super, as your earning is 140k, anything 135k+ get taxed at 37% making this worthwhile (assume your tax-return is 0, not more not less)

    • mskeggs on 04/07/2025 - 16:49
      +1

      This is riddled with errors.

      • OMGJL on 04/07/2025 - 21:27

        please enlighten me, I would love to know what's wrong?

      • OMGJL on 04/07/2025 - 22:01

        I throw my point to chatgpt, and I think I might have overly simplified my understanding.

        summary of my logic by AI:

        liquidity matters, especially when you're juggling a mortgage, kids, and uncertain life events. While super and ETFs may offer tax or long-term growth advantages, they come with trade-offs: reduced flexibility, delayed access, and risk. By comparison, money in an offset account gives a guaranteed, tax-free return (equal to your mortgage rate), and full control. Regarding salary sacrifice — it can be worthwhile only to the extent that it helps you avoid the 37% marginal tax rate. For example, if you're earning $140k, sacrificing just $5k brings your taxable income down to $135k, capping your marginal tax at 30% and saving around $950 in tax. That’s a good balance — you take the tax win, but still keep most of your income liquid. It's not that super or ETFs are bad — but for many people, cashflow and optionality now can be more valuable than a theoretical upside decades later.

        • SlickMick on 05/07/2025 - 10:28

          lol whenever I use chapgpt, I have to point out the errors in what it tells you, and it keeps changing it's answer to satisfy each additional point you provide. e.g. just yesterday I was asking what universities offer CSP for master of Cyber Security. I gave it one example from it's list that does not, it apologised and gave me a new list. I spent an hour and am no closer to an answer, so will resort to plan b and do it myself.

          Back on topic, you're right re PPOR offset being a great investment. After other investments pay tax on earnings + CGT on half of growth, I don't imagine any investment is worth the risk…. except super.
          The tax advantages of concessional contributions should not be ignored, and $30Kpa is the correct amount (i.e. max concessional) that should be contributed. The cashflow comes from the offset account on the PPOR until it's fully offset. Then it's good to have a separate investment loan with an offset for the cashflow without paying non-deductable interest.

          • flagger on 06/07/2025 - 15:09

            @SlickMick: There is also carry forward concessional contributions which means you can use up unused concessional contributions from the previous 5 tax years, provided you had under 500k in super for the current tax year. Worthwhile if you can spare extra contributions as your salary increases later in life.

  • sumyungguy on 04/07/2025 - 15:36
    +1

    You own the $1.5M home or it's mortgaged?

    • brendanm on 04/07/2025 - 16:28
      +1

      Debt : 900k mortgage 30y term with Interest rate of 5.6% (paid off two years, 28 more yrs to go…)
      70k borrowed from family while purchasing current property (will have to pay back in next 5 yrs)

      • sumyungguy on 04/07/2025 - 16:36

        Asset : Own 1.5M property in SYD

        Confusing but could be just me…

        • mskeggs on 04/07/2025 - 16:50
          +1

          $530k in equity.

        • brendanm on 04/07/2025 - 17:15
          +1

          Most people say they "own" their home if they aren't renting. Read the whole post and it's even more obvious.

  • mskeggs on 04/07/2025 - 16:55

    If your wife returns to full time work when the kids are older you realistically don't have to do anything at all to retire in your 60s.
    Your compulsory super over the next 20years and hers for 25years will result in a comfortable retirement income.

    Over time, your incomes will grow faster than inflation, and the mortgage will feel increasingly manageable, and you will be able to pay it off earlier than 28 years. If you then direct the mortgage payment into savings for the period between when you pay it off and when you retire, you will be fine.

  • onetwothreefour on 04/07/2025 - 18:19
    +1

    spend around 4.5-5k monthly on living expense

    Does this include your mortgage payment?

  • sumyungguy on 04/07/2025 - 20:39

    Assuming OP there are no omissions in your balance sheet your cashflow situtation is stretched. With mortgage repayments calculated at 28 years, living expenses and the additional cost of your two offspring you have pretty much nothing leftover. At age 40 you've statistically reached peak income and finding higher paying jobs isn't easy; more likely you're facing income loss via redundancy or ill health at some point in the years ahead. If you're not doing this already, get elbows deep into household budgeting and saving to understand where you can find some headroom. Super balances are sound.

  • ForkSnorter on 05/07/2025 - 08:13

    My goal : to retire at 60

    Unlikely.

    200k in my super, 120k in my wife’s super (projected to be 1-1.2m by retirement)

    In 20 years, $1.2 million will be worth very little.

    Your best prospect is your kids. In 20 years, they will be old enough to support you.

    Otherwise, in 15-20 years, downsize to a cheaper rural property and put your leftover money into your super.

    • Grunntt on 05/07/2025 - 10:45

      In 20 years, $1.2 million will be worth very little.

      Using figures from the past 20 years - $1.2m in 2005 is equivalent to just over $2m today. ie you need $2m to have the same spending power as $1.2m 20 years ago. So you probably need to factor in inflation when you do your forward projection OP.

      Plugged the dates and amount in here for a rough guide

  • Bob Svargis on 05/07/2025 - 08:16

    Cash flow at your stage of life is challenging.

    Ride it out. Consider salary sacrificing some money into super. You will need to work out how much you're comfortable sacrificing. I would put everything into offset at this point while interest rates are high.

  • morse on 05/07/2025 - 08:39

    Is your wife working full time? If so I reckon that 70k salary could go up if she did more training/looked for higher pay.

    All income should get paid into offset account and sit there. Don’t have a seperate kids account - when you owe $70k to family you can’t afford a seperate kids account and there’s no point anyway, everything should be going into offset.

    Make sure you’re not overspending on things like groceries, subscriptions etc.

  • BigBirdy on 05/07/2025 - 09:38

    We’ve just had 15 years of near record low interest rates, caused by GFC and a global pandemic, but you expect

    Interest rate will come down eventually

    Realistically, rates will bounce around in response to inflation, budget, political rhetoric, trade issues, etc, but long term trend is more likely a drift upward.

    Having 1-1.2M in super in 20 years time? In today’s dollars that’s maybe 400K, nowhere near enough to support a decent retirement for one person, let alone a couple. You’d be depended on the age pension, post age 67.

    • Protractor on 05/07/2025 - 10:55

      In 20 years time, IF there even is a pension, it will be applicable later than 67 YO.

  • hiancc on 05/07/2025 - 10:51

    It doesn't need to be complicated. Nothing much wrong with your situation except I don't see why you need to have 35k in ASX when it should be in your offset account which return is effectively your mortgage rate ATax. When I had a mortgage, all my cash is in the Offset (basically used it as my savings/transaction account) to min mortgage interest which is ATax. Your 50s would be your wealth creating era when you can both work FT and build up your super. (don't forget to equalise} I had a finance career in mid/senior positions and had 3 wealth creation strategies - super, super, & super. I don't waste time on shares, smsf, trusts, etc. They are there to make money for Fin/Tax advisers. There are other things in life to enjoy. For us, salary earners, it doesn't need to be that complicated.

    • Grunntt on 05/07/2025 - 11:00

      Your 50s would be your wealth creating era when you can both work FT and build up your super.

      All good unless you have something major that impacts just as you hit that 50's wealth creating era.

      Nobody likes to think about negative things happening to them - but, for example, how many couples end up divorced nowadays?
      Have you visited an oncology department and noted the ages of many of the unfortunate people there?
      Visited a cemetery and noted the age of death of many there?
      Checked your, and your wife's, family history for health issues, cause and age of death?

      Plan for the worst and work towards the best. (and make sure you insure against most of those negative impacts).

  • SlickMick on 05/07/2025 - 12:13

    1. Refinance if costs < savings. Releasing additional equity provides more of an emergency fund/ provides the option to catch up on concessional super contributions. An offset account minimises interest and is great for cashflow, but the higher interest rate might erode the advantages. Definitely continue to payback aggressively.

    2. Definitely concentrate on paying off mortgage. The offset or redraw is your savings (emergency fund). DO NOT leave couple of hundred dollars aside monthly for saving (e.g. towards kids account) or invest in ETFs or anything else until you've paid off debt and maximised concessional super contributions.

    3. Consider selling shares to put into offset/ contribute to super. I suggest might as well bite the CGT bullet now rather than let it get worse. What interest rate are you paying on the family loan? In theory you should clear the debt with the higher interest rate first, but ethically the family loan should be your focus. (That loan would at a minimum have earned x% in a bank account, so compensate accordingly if not already in the agreement.)

    PPOR and super are the 2 best ways to increase wealth, but PPOR can't provide an income in retirement. The goal is to maximise super. The day you turn 60 you can retire and super becomes income tax free, CGT free, and you can finish paying off PPOR and pay yourself a pension.

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