u/DamnYouRohan

39M + 37F, both working full time with our first and only baby on the way.

Things have gone well financially so far, but we've never really had a detailed financial plan. We've mostly just saved, invested and tried not to do anything stupid.

With a baby coming, one of us taking 12 to 18 months off work next year, and a possible PPOR upgrade in the next few years, I'm starting to wonder whether we need to be a bit more deliberate about what we do from here.

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Income

• Salary #1: $190k + super
• Salary #2: $90k + super
• Business distributions: ~$200k to $300k per year, but variable
• Some distributions go to #2, bringing their total taxable income to around $160k
• The remainder generally goes into a bucket company

Partner will likely take 12 to 18 months off work after the baby arrives. During that time we have the flexibility to distribute more business income to them and put less into the bucket company.

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Expenses

• Mortgage repayments: ~$4,250 per month
• Other debt repayments: None
• Living expenses: 5,000 per month
• Annual Holidays: 25,000 per year

We've never really tracked our spending. We spend what we spend, don't carry any debt and have managed to save/invest a decent amount.

Obviously we've never had a baby before, so I'm conscious our expenses are going to change and we don't really know by how much yet.

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PPOR, Mortgage & Debt Recycling

• PPOR value: ~$775k
• Total mortgage: $730k
• Offset: $620k
• Debt recycled: $110k
• Joint share portfolio from debt recycling: ~$125k
• Other debt: None

The $620k non-deductible portion of the mortgage is fully offset. The remaining $110k has been debt recycled and invested.

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Other Assets

• Super #1: ~$400k
• Super #2: ~$130k
• Bucket company investment portfolio: ~$850k
• Crypto: ~$30k

The bucket company portfolio is roughly 70% ETFs / 30% individual shares. Main ETFs are IVV, BGBL, A200 and SEMI.

There is also an ownership interest in the business. It's profitable but difficult to value and not particularly easy to sell, so I've left it out of the numbers altogether.

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Net Wealth

• Excluding super: ~$1.67m
• Including super: ~$2.20m
• Business value: Excluded

Most of this has come from saving and investing over time. I've been with the same business for 17 years and bought into it just before COVID. The business doing well since then has obviously helped.

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Current Plan

The rough goal is $2.5m to $3m outside super over the next 10 years, with the option of retiring or becoming work optional around then.

At the same time, we want to enjoy life along the way. I don't particularly want to spend the next 10 years tracking every coffee and trying to optimise every dollar.

Our current thinking is:

• Max out super
• Invest around $10k per month through the bucket company
• While #2 is on leave, distribute more business income to them and accept that less may go into the bucket company
• Keep the non-deductible PPOR debt fully offset
• Otherwise enjoy whatever is left and stop worrying about tracking everything

We may also upgrade our PPOR in 24 to 36 months, probably to something around $1.5m to $1.6m.

Ideally we'd have around $800k cash available by then. At this stage we're thinking we'd keep the current PPOR and convert it to an IP rather than sell it.

If we're going to stay here for another 2 to 3 years, we'd also like to renovate the bathroom. We're thinking around $50k to $60k for that.

So there are a few reasonably large uses for cash coming up, plus the unknown of what having a child will actually do to our expenses.

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Questions

1. Is the overall strategy sensible, or are we missing something obvious?

2. With a goal of $2.5m to $3m outside super in 10 years, what would you be doing differently from here?

3. Given we may need ~$800k for a PPOR upgrade in 2 to 3 years, would you keep building cash in the offset/HISA or continue debt recycling and investing surplus cash?

4. Would you keep the current house and turn it into an IP when buying the next PPOR, or sell it and keep things simpler?

5. For those with kids, how much did having a baby actually change your spending? Anything we should be factoring in that we probably aren't thinking about?

6. Should we actually start tracking our spending? Or if we're maxing super, investing ~$10k a month and staying out of consumer debt, is there any real benefit in knowing exactly where the rest goes?

Interested in what others would do from here, particularly anyone who has been in a similar position.