Debt Management

At Living Financial Solutions, we believe that good Debt Management is an essential part of a comprehensive financial plan.

Some of the strategies we can assist you to implement include:

1. Debt Consolidation

Inefficient debt is an obstacle to improving your financial position, and so it should be eliminated as quickly as possible. One way to do this is to minimise the amount of interest you're required to pay on your loans, so that more of your loan repayments are used to reduce the actual debt.

A simple solution is to consolidate all inefficient debt into the loan structure that has the lowest interest rate. As a guide, home loans generally offer the cheapest rate, personal loans for a car or holiday charge a higher rate, and credit cards are the most expensive (assuming the credit card is not paid within the interest free period each month).

2. Investing with Borrowed Money (Gearing)

There are a number of ways of using efficient debt to help you build wealth tax-effectively. You can either borrow personally (eg. via home equity or margin loan) or invest in a geared vehicle such as an internally geared share fund.

3. Negative Gearing

What is it all about? Well the term 'gearing' refers to the process of borrowing money to invest.

Negative gearing occurs when you are making an income loss on an investment. Because this loss is generally tax-deductible, your tax liability on other assessable income may be reduced, thus reducing the effect of the overall loss on your cashflow.

If you are interested in finding out how we at Living Financial Solutions can help you realise your investment goals please call on Ph: +61 (08) 9307 3677