We have a couple in their early forties. Kevin has his own IT business, which he runs from home, and grosses $85,000 after business expenses. His wife Alex works as an executive in media grossing $190,000 p.a. Alex expects to receive a bonus of $20,000 which she intends to put into her superannuation as a concessional contribution.
It is Alex’s second marriage and there are no children from the previous marriage.
They are paying off a mortgage of $850,000 on their own home which is now worth $1,050,000. The mortgage costs them $6,978 per month at a rate of 7.75% over 20 years. It is a standard principal and interest loan. They have owned the home for 3 years.
They own, as joint tenants, an investment unit, worth $210,000 which they paid $105,000 for 8 years ago. The tenant pays $175 per week. There is a fully drawn, interest only line of credit for $110,000 costing 7.5% p.a.
They have three children a 17 year old, 15 year old and a 10 year old. They all go to private schools at a total cost of $65,000 p.a. Payable at the beginning of each term. There are 4 terms in the year. There is an arrangement with the school that they receive a 10% discount if the fees are paid monthly.
He has a Self Managed Superfund with $65,000 in cash. He contributes $13,000 p.a. as concessional contributions.
Her superannuation has $267,000 in a Capital Guaranteed Fund. She also salary sacrifices an additional $10,000 p.a.
They have a joint savings account with $20,000 for emergencies.
He has a bank deposit for $10,000 in case he needs cash for the business.
She has a share portfolio valued at $47,500 which has a capital gain of $11,250. The dividend yield is 4.0% p.a.
She has a listed debenture with a FV of $25,000 and a coupon of 8.5% paid quarterly and with 27 months to maturity. It is currently trading at a yield of 7.75%.
There are two car loans; her car, 2 years into a 5 year loan with $50,500 outstanding & costing $1,557 per month, his with $40,000 outstanding and costing $1,244 per month with 3 years to run. Her car is worth $45,000 and his $32,000.
Alex also owes $11,000 to her parents who are now having some financial difficulty due to losing heavily in the Global Financial Crisis and also heavy medical bills.
Their credit card has an outstanding amount of $17,965 and they make the minimum payment of 3.5%.
They are concerned that although they feel they should be doing better the credit card keeps getting worse each month and that schools fees are due for next term and they do not know where the money will come from.
He has younger brother (21) who is living with them but does not contribute to the household expenses as he is trying to save to buy his own property. He is an apprentice earning $21,500.
Kevin’s father is quite ill and it is expected he will be incapacitated and hospitalized within the next 12 months. His mother has asked Kevin to be executor of their wills. Both Kevin and Alex have wills executed prior to their marriage.


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