We are not against debt, in fact it can be a powerful tool to amplify your wealth accumulation efforts. It needs to be used wisely though, and perhaps more importantly it needs to be used purposefully.

You have probably heard the terms Good Debt – i.e. tax deductible det, maybe associated with an investment property or a geared investment strategy; and Bad Debt – i.e. non-deductible debt associated with personal loans or personal cars or homes.

We think there is a third category of debt which can be either of these types, and this is Wasteful Debt – i.e. debt which is unnecessary or has been used for an inappropriate purpose.

Using debt to fund cash flow can be useful as a temporary measure, but if it is prolonged, some attention needs to paid to the cause of the problem, in this case cash flow.

Similarly using debt to purchase toys is rarely a wise strategy.

The most wasteful form of debt is borrowing long term to buy short lived assets. I have seen clients forced to redraw on their home loan to reduce credit card debt, and this is a terrible situation to observe.

There are mechanisms we can employ to help you reduce your debt, or at least bring it under control. We also have experience in negotiating with debt providers when the chips are really down.