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Ask an Adviser – What is Debt Recycling?

What is debt recycling? It sounds a bit like throwing out your old debt and taking on new debt, right? Exactly!

*Todd Burrows In a nutshell, debt recycling is simply borrowing money to invest but with a twist. The twist is that it’s a system that allows you to replace your ‘bad debt’ with ‘good debt’. ‘Good debt’ and ‘bad debt’ are terms coined by Robert Kiyosaki, author of the bestselling finance book, ‘Rich Dad Poor Dad’.... view article
January 19th 2022

Insights

Debt Recycling. How does it work, and can it help you get ahead?

Debt recycling is a strategy that aims to help you pay off your non-deductable debt (e.g., your existing home loan) as quickly as possible, while also building up your wealth in a tax-effective way over the longer term. But how does this strategy work, and can it help you get ahead?

For more information on good debt, bad debt, debt recycling and what does it all mean, click here.   How does the Strategy work? Traditional debt management and wealth creation strategies focus on paying off the home loan as quickly as possible by increasing the frequency and amount of the repayments. Once the home is repaid the... view article
June 18th 2021

RBA cuts interest rate to record a low of 0.1 per cent

Interest rates have been slashed once again in hopes of boosting the economy.

On 3 November 2020, the Reserve Bank Australia (RBA) cut interest rates to a new record low of 0.1 per cent down from the previous 0.25 per cent. The decision for the cut was made as an economic response to Australia entering a recession in hope to further boost the economy. This is good news... view article
November 5th 2020

How to manage debt when approaching or in retirement

Considering that financial security is the number one life goal for Australians, there's no doubt that we would all like to be debt free no matter what stage of life we are in.

Many events in life require us to take out a loan, and hence acquire debt; buying a home, a new car, education and so on. Although debt is seen to be bad at times, it isn't always bad and might be necessary to help you achieve your goals. However, you do need to have... view article
July 17th 2020

With all-time low rates, is debt stress an issue?

How are Australian's coping with debt stress, and what will happen when JobKeeper payments end?

With ongoing economic challenges due to the COVID-19 pandemic, the economies of almost all countries are struggling. People are losing jobs, businesses are shutting down, and the stress of financial stability is at its peak. The Australian government is taking all steps possible to support and boost the economy and its people; however, the... view article
July 2nd 2020

A guide to managing debt

There are many events in life which may result in you taking out a loan and as a result acquiring debt. From weddings, cars, your home, education, the list goes on. Although we may perceive debt to be bad, in some cases borrowing money could enable you to grow future wealth. It all comes down to successfully managing your debt, avoiding unnecessary bad debt and having a plan to reach financial freedom and security.

Your options around managing will vary depending on the type of debts you have, the interest rates attached to the debts and your current financial position. It’s important to review your debts regularly to ensure your debt is still working in your favour and you’re paying the lowest interest amount available to you. You... view article
June 22nd 2020

Is Debt Consolidation a good idea?

If you have multiple small debts, you might have wondered if debt consolidation is a good idea. There are benefits of debt consolidation like easier debt management and sometimes it may ease the financial pressure of having multiple debts. But before you go ahead, you should first consider the pros and cons, other available options and the long term impacts it could have on your financial position.

What is Debt Consolidation? The process of taking a new single loan to pay off multiple liabilities is termed as debt consolidation. It helps to combine multiple debts into one larger loan. Debt consolidation does not erase or reduce debt obligations. It simply places them with a single lender rather than various lenders. For instance, you... view article
June 19th 2020

Where to start when dealing with financial hardship

An action plan for facing financial hardship – what should I do first?

With a myriad of options on the table and a firehose of information being put out daily, where should you start? Coronavirus and the social distancing measures now in place to mitigate its impacts has lead to many Australians facing a loss or reduction in income. If that is you, where should you start... view article
April 7th 2020

HECS Part 2 – How to manage student debt

Welcome to part two of the good and bad of HECS debt where we interview one of our Financial Advisers to discuss what to be aware of when managing student debt.

Welcome to Part 2 of the good and the bad of HECS debt, how to manage your student debt. HECS or HELP debt (Higher Educational Contribution Scheme / Loan Programme) is a government program that has allowed millions of Australians to go to University by taking on a government loan. In fact, as of... view article
January 31st 2020

Spotlight on Personal Loans – trends and ways to repay your loan faster

With two in five Aussie adults having taken out a personal loan, they are a popular way of paying for major purchases. Paying them off can be a challenge however, and it may be worthwhile speaking with a Financial Adviser to consolidate your debt and work out the best strategy to get back in the black faster.

  A personal loan is a form of credit provided to you by a lender, such as a bank, credit union or other financial entity such as a peer-to-peer lender. These types of loans are usually taken out to purchase a vehicle, renovate a home, consolidate debt, take a holiday, a special occasion such as... view article
January 16th 2020

Credit Card debt trends and comparisons

How does your credit card debt stack up? We know there have been many examples of credit card debt disasters in the past, however have we learnt our lessons? Here we explore the current trends for, and comparisons between, credit cards in Australia.

  Carrying credit card debt is not uncommon, so how does your credit burden stack up? We know that over time there have been many examples of credit card debt disasters – maxed out credit cards, living on credit, owing to significant amounts across multiple cards. There is no doubt that access to debt via credit... view article
December 12th 2019

New Debt: The Rise of Buy Now Pay Later (BNPL)

Everyday we are becoming closer to being a cashless society, from payWave debit cards to Apple Pay Rings and Watches and now fintech Buy Now Pay Later (BNPL) services changing the way we spend and manage our money. What exactly is BNPL and is it a negative or positive payment system?

We’re living in a fast-growing forever evolving “new world” with the rise of eCommerce stores drastically changing the face of retail. Rapid growth in tech industries is also changing the way we live our everyday lives. It feels like every month a new device or app comes out that you suddenly couldn’t imagine living... view article
December 5th 2019

The good and the bad of HECS debt

HECS debt can make a huge positive difference to someone’s life if it gives them the start to the career of their dreams. But it is a debt and will form part of your financial life for years to come.

According to research by Goldman Sachs, the Millenial Generation are our digital natives. They are social and connected with new technology. They also have less money to spend, are encumbered with debt, and have different priorities. One of the debt challenges many Millenials face is a Higher Education Contribution Scheme (HECS) debt. As this article... view article
November 15th 2019

What info is on my credit card and why does it matter?

Find out what info is likely to be on your credit card report, how it could affect your ability to borrow money, how you can get a copy of your report and flag potential errors if you happen to find any, and some other things you’ll want to be across.

  Your credit report reveals whether you’ve been paying your bills on time and it matters because it could affect your ability to borrow money. If you’ve got a credit card, personal loan, mobile phone plan or utility account, there’s probably a credit reporting agency out there that has a file with your name on it. Credit... view article
June 21st 2019

Why we are compelled to throw good money after bad – psychology of money part 3

Cost avoidance is real. We are built to want to make meaning of the past. How does that impact our decisions with money?

In Psychological terms, ‘avoidance’ is a coping mechanism we humans deploy when we are trying to avoid or escape particular thoughts or feelings. It’s a defence mechanism we attempt to save ourselves from experiencing unwanted stress. The result, however, often leads to greater anxiety, reduced confidence and worsening problems. How does this relate to... view article
March 28th 2019

10 ways to save on your mortgage debt

10 ways to save money on your mortgage debt

Mortgages are a double-edged sword. While they're the best way to secure potentially the most valuable asset you'll own, they can be very expensive and slow down your wealth creation. In part, this is because too few of us are utilising the best ways to manage our mortgages. Fortunately, there are a number of easy... view article
May 8th 2018

Am I a debt Rockstar?

How well are you managing your debt?

Most people have debt. In fact, in the last 30 years, the ratio of household debt to disposable income has almost tripled from 64% to 185%1. The good news for Australians is that the vast majority of our debt is considered ‘good debt’; that is debt used to build wealth in the long term... view article
January 11th 2018

5 tips to prevent debt stress from getting you down

Debt is one of the leading causes of stress in Australia, but don't let money worries get you down. Follow this guide to take a more proactive approach.

Money worries are not a new phenomenon in Australia. The leading cause of stress in the country is often strained personal finances, according to the Australian Psychological Society's (APS's) Stress and Wellbeing survey. Sadly, the APS said a growing number of people are turning to potentially risky behaviours to alleviate stress. Respondents who reported high... view article
December 13th 2017

How can I retire without debt in Australia?

Nearly half of the population are asking themselves 'how can I retire without debt in Australia?' according to recent research. Do you have a financial plan?

Whether you're looking to pay off a mortgage in retirement, or you've relied too much on your credit cards, many Australians face entering their golden years with debt hanging over them. REST Industry Super recently revealed that 46 per cent of Australians predict they will retire with debt. Of these, 25 per cent will still... view article
August 9th 2017

4 ways debt can help you build wealth

Properly managed debt can be a powerful way for Australians to generate wealth. Let's take a look at four key ways to turn the tables on debt.

Talking about debt is embarrassing for many Australians. Yet, we hold some of the highest levels of personal borrowing worldwide, according to OECD figures. The ratio of household debt to income is around 189 per cent, meaning the average individual owes almost twice what they earn each year. But debt shouldn't always be seen as a dirty word. There... view article
August 1st 2017

What’s your debt age?

The types of debt we have largely depends on our age and stage in life.

For most of us, having debt in some form or another is an inescapable fact of life. And despite its reputation, debt is not necessarily a dirty word. If managed well, it can be a powerful tool to build wealth, and good debts, such as those used to invest in an asset which increases in... view article
March 15th 2017

Good debt, bad debt, debt recycling

What does it all mean?

For some people, the notion of ‘good’ debt is inconceivable. But by including debt recycling in your investment strategy, you could discover new possibilities for your financial future. The word ‘debt’ can invoke a range of reactions. For some, it is terrifying and to be avoided. For others, it is a means to an exciting end.... view article
March 20th 2016