A Real Case-Study.

Introduction.
James and Ngaire asked for help from FORTIfi because they were worried that they might be going backwards with their finances.  That may sound strange to some but the reality is, in New Zealand today the average person is spending $1.17 for every $1 they earn.^*  What that means for most people is a life-time of debt - there is a better way.

Let's look more specifically at James and Ngaire and what we were able to do for them.

Income.
Together James and Ngaire earn $86,000 or, after tax, $62,308.

Assets.
James and Ngaire's major assets are:

► Home = $450,000
► House Contents = $60,000
► Car = $6,500

Liabilites.
James and Ngaire have liabilities (money they owe) of $306,000.  This is made up of:

► Mortgage = $300,000  (6.5% over 29 years)^#
► Car Loan = $3,000  (15% with one year to go)
► HP Loan = $500  (25% with one year to go)
► Credit Card debt = $2,500  (20% which they want to pay off in one year)

What's troubling James and Ngaire.
James and Ngaire's net worth (assets minus liabilities) is $210,500.  That seems pretty good but...

...there is the matter of interest payments.  This is what cripples many Kiwi couples.  Let's look at the interest James and Ngaire are paying on the money they owe:

► Mortgage = $367,388
(this is the amount they will pay on their $300,000 loan over 30 years at 6.5%.  Chances are interest rates will rise and this will be significantly greater).
► Car loan = $450
► Hire Purchase = $500
► Credit Card = $500
(we've simplified this calculation and assumed they will pay the amount owing off in a year and not add any more debt to their card).
 

Remember - these are just the interest amounts.  Add these to the $306,000 principal owing and, if they do not incur any more debt, James and Ngaire owe $674,838.  But that's okay - they'll have it all paid off in 2040!

There must be a better way!
And that is where FORTIfi's range of financial solutions come in.

The first thing we did was to do a complete financial analysis of James and Ngaire's current position.  It turns out their fear that they may have been going backwards was correct.  A quick appraisal of their income and expenditure revealed the following:

► Income = $62,308 per annum.
► Debt repayments = $24,087 per annum.
► Household expenses = $40,184 per annum.

James and Ngaire are going backwards with their finances to the tune of $1963 per year.  That's only $37.75 per week - but it is still a deficit and what it means is that they are adding to their debt not decreasing it.

And remember, they are not atypical.  Like we said already - on average New Zealanders spend $1.17 for every $1 they earn.

What about James and Ngaire's dreams?
Not only did James and Ngaire want to be debt-free, they also had a couple of items on their "wish-list."

► An overseas trip = $10,000
► House renovations = $12,000

Many people in James and Ngaire's position would simply take out another loan or put these items on their credit card resulting in greater debt that they may never repay.

What James and Ngaire were able to do.
Having analysed James and Ngaire's financial position FORTIfi were able to show them how to restructure their finances so that they were able to;

► Save $175,000 in interest.
► Pay off their loan in 16 years saving 14 years of repayments.
►  And they were able to go on their overseas trip AND complete their house renovations without going into greater debt.

A final check list.

What James and Ngaire wanted.

What James and Ngaire got.

► They were sick of feeling like they were always playing catch up with their finances. ► They were bothered by the amount of interest they were paying. ► They were bothered that they had no real system to monitor their finances. ► They had a feeling they were going backwards with their finances. ► They were unable to cope with sudden expenses or crises without going into further debt. ► They wanted to get on top of their finances and feel like they were in control.

► Their debt was consolidated and they had a plan to pay it off in about half the expected time. ► They saved around $175,000 in interest repayments. ► They have a system in place to monitor spending and saving. ► They turned their $1963 yearly deficit into a saving of almost $9,000. ► They were able to save for both the overseas trip and house renovations and still have a buffer for unexpected expenses. ► They feel they are in control of their finances - because they are!

Too good to be true?
We know it sounds too good to be true and we know you will wonder if you could make similar savings on your mortgage.  The answer is simple - you'll never know unless you try!

It worked for James and Ngaire, and it's worked for many others who have chosen to become FORTIfi Clients.  Check out some of the testimonies on this site - all are written testimonies from actual clients - the originals are held at our head office.

If you'd like to find out if FORTIfi Insurance Ltd can help you with your finances simply contact us;