Debt can help or hinder your financial growth plan …
Debt may be used as leverage to accelerate wealth but when debt goes wrong and becomes unmanageable, it is detrimental to families and businesses. Assets are lost, dreams are delayed or never come true, families and business break up.
Different types of debts. Some fit into more than one category:
- Secured Debt – this is money borrowed, which is backed by a physical item. Common examples of this kind of debt are car loans and home loans.
- Unsecured Debt – this is money borrowed without any collateral. Common examples are credit cards and student loans.
- Revolving Debt – think of this as an open line of credit. You can borrow up to a certain amount and as long as you are making the minimum payments by a specific date, you can keep spending. Think credit cards and Buy Now Pay Later (BNPL).
- Nonrevolving Debt – you borrow a specific amount of money which must be paid back in instalments by a certain date.
The key to managing debt is CONTROL!
Now whether you believe in ‘good debt’ or ‘bad debt’ or no debt, the key is that you must have your debts under control. A loss of control in this area of your finances can have some serious consequences. If you don’t control debt you can lose your assets, you can delay your dreams and you may be putting your family and your business at risk.
At Wealth of Advice, our aim is to ensure you reach your goals and dreams. If that means borrowing some money, then so be it. We are here to help you understand your borrowing capacity, how you can best structure your loans to minimise your tax and maximise your asset protection. Finally and most importantly, we develop a strategy to pay off those loans as soon as possible.
If you already feel out of control and not sure how to reduce your debts, please reach out. Our Team is available to help you and guide you in the right direction.