quote:

---

Hi Mosquito,

This is one major problem with positive and negative cash flow when you are paying child maintenance.

You have probably already experienced the calculation for every extra dollar you earn. $1 at the marginal tax rate (say 50% with Medicare), then 18% of gross paid from nett for the first child leaves you with 32 cents in your pocket. So, $50 passive income a week, leaves you $16.

If you buy a negatively geared investment, the loss is added back to your income for the purpose of child maintenance calculations.

I still like the idea of positive cash flow, but it needs to be substantial in this case, as you can’t afford a marginal income in a low growth area. Your break even point will be realised sooner with an interest rate rise. So what does that leave you with? Say, neutrally geared and no growth? Don’t sound too good to me.

It’s a tough one, but perhaps the answer lays in the long term ownership of a PPOR in a growth area. Your work commitments may restrict where you wish to buy also.

Your child or children are being cared for and you can look forward to building equity to use once your child maintenance commitment is nearing it’s end.

Regards, Phil

---