Debt Reduction & Debt Recycling

For some clients, paying off their home loans, credit cards, personal loans and car loans is their main focus.  Lyn Eddy is able to show them how to identify the difference between “good debt” and “bad debt”.

 

Good debt has some important characteristics:

  • The underlying asset will produce an income
  • The underlying asset will grow in value over time
  • The interest charged on the debt can be claimed as a tax deduction

Bad debt has none of the above characteristics and typically includes car loans, credit cards, personal loans etc. 

 

Some advisers also describe a home loan as being in this category.  While it does not have all the characteristics of bad debt, at least the value of the underlying asset (the family home) will rise over the long term.

 

Debt recycling helps use good debt to invest and the income generated to pay off the bad debt.  This concept of using borrowed funds to invest is also known as a gearing or leveraging.  Most people are happy to use this strategy when buying an investment property but some clients are unaware that it can also be used to buy more “liquid” investments such as managed funds and shares. 

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We can help you with a range of financial services.

About Us

 

Lyn Eddy runs her own financial advice business, after working at the highest level in three financial planning businesses over the past 20 years.

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PO Box 644 Hamilton Central QLD 4007

 

Call us today:

(07) 3868 3287

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0412 710 119

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General Advice Warning

 

The information/advice provided in this website is general advice only. It has been prepared without taking into account any person's individual objectives, financial situation or needs.

 

Before acting on anything on this website you should consider its appropriateness to you, having regard to your objectives, financial situation and needs. You should obtain a Product Disclosure Statement relating to any products mentioned, before deciding whether to acquire any products.

Alexmar Pty Ltd ABN 34 131021808 trading as Lyn Eddy Financial is an authorised representative of AIW Dealer Services Pty Ltd (AFSL 414256).

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Call us today: (07) 3868 3287 or 0412 710 119