At 33, Jamie Murrie is starting to think about buying his own home. First, he has his sights set on a trip to the United States.

Name Jamie Murrie
Income $57,000
Occupation Learning and development consultant
Debts $1300 credit card
Investments $6500 in two managed funds contributing $200 a month
Super $33,000

First, he has his sights set on a trip to the United States.

He hopes that by knocking his budget into shape and getting some better performance from his managed fund investments he can achieve both goals.

"At the moment I don't really budget very well. I start off with the best of intentions, then I just start throwing money around."
He has some lingering debt on his credit card, but is confident he can get rid of it quickly and concentrate on cranking up his saving. "I can see that contributing $200 a month to my managed funds is not enough."
Adviser Nathan Franks is an authorised representative of Count Wealth Accountants.

Strategy Murrie has indicated he has surplus cash of about $1350 a month. We suggest his first step should be to pay off the $1300 outstanding debt on his credit card.

We also recommend he stops salary sacrificing 4 per cent of his pre-tax income into super because his primary goal is to save for a home. Money going into super will be locked up until age 65 and he would have to borrow more to achieve his home ownership goal.

For the time being, he should focus on his short- and long-term financial goals of taking an overseas holiday in the US in 2005 and saving a deposit for a home.

He is thinking of spending between $300,000 and $350,000 on his first home and he should aim to save a deposit of 20 per cent to avoid incurring mortgage insurance costs.

To save a deposit of that size, we have assumed that his savings will remain invested for at least five years.

With a time frame of at least five years, we recommend he redeems the $3000 in his balanced managed fund investment and places it in an Australian share fund. This should give him a higher return as well as improving the tax-effectiveness of his investment through imputation credits. Setting up a monthly direct debit of $500 from his bank account into the managed fund should help him achieve his goal of home ownership.

He should save an additional $500 a month into a high interest savings account for his overseas trip and have more than enough to cover any unexpected short-term expenditures.

Under the budget we have set, he will have $700 a month for discretionary spending after covering necessary costs such as rent, transport and groceries.

Importantly, he should take out income protection insurance to ensure that his financial plans are not placed in jeopardy by illness or an accident. His surplus funds should cover the monthly premium of about $65.70 and this will be tax deductible.

Because he is still a long way from retirement, he should also consider changing the investment focus of his super savings from its current emphasis on fixed interest and cash assets to one weighted towards growth-style assets.

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