Structuring and managing debt is an important part of wealth creation…
Advice on the most effective methods of controlling debt, reducing interest paid, and saving on tax is an area often neglected by financial advisers.
Debt structuring works the same as any other initiative taken to improve a financial position – Requiring careful consideration against the backdrop of all other financial matters relating to individuals and their circumstances.
Debt serves a single purpose for wealth creation:
- Enabling the acquisition of income producing assets that will appreciate over time.
Debt Structuring serves four (4) purposes for wealth creation:
- Structuring debt to reduce tax payable each financial year
- Choosing debt products to reduce fees on complex lending facilities
- Configuring your financial situation to reduce interest payable on debt
- Balancing debt against income and expenses to improve cash flow
For more information on debt structuring and how different structures can impact your personal finances, see Differentiating and Structuring Debt – Your Pathway to Healthy and Wealthy Finances.
Simple structural changes to your non-deductible debt can produce great results
Compound the above results with a tailored debt structuring plan incorporating tax minimisation measures, debt recycling, investment acquisition, and put available equity to work for significant wealth performance improvement.
Caution, not all debt is good debt!
- Bad Debt
Debt used to purchase non-investment, or lifestyle assets, such as cars, boats, or the home you live in, is usually referred to as Bad Debt as it is not tax deductible. This means you can not off-set the interest costs against your personal income to reduce the income tax you pay.
- Good Debt
Debt used to purchase income-producing assets such as Property or Shares is usually referred to as good debt. The interest costs associated with holding these assets can off-set the amount of income tax you pay. This reduction in personal tax goes someway to funding the holding costs of the assets making further investment possible. Good debt is an effective tool in the process of wealth creation.
Nexus Private (as part of complete review) investigate the most efficient methods for replacing bad debt with good debt, improving your financial position through reducing loan terms, reducing tax payable and reducing interest payable.
Top 5 Debt Management Mistakes Explained
Stephen Vick (Director of Nexus) demonstrates how the right debt management strategy can reduce interest payable, reduce fees payable and reduce tax payable by highlighting the costly mistakes a good majority of Australians make when structuring and managing their debt.
There are a range of different strategies available depending on individual situations and long-terms goals, these include:
An integrated approach is vital, as one or several, of these strategies may be an appropriate contributor to dramatically improving a financial position.
How we position your finances for scalable wealth building
The interest, fees and tax savings achieved from structuring your debt correctly are used, along with the incremental increases in asset value to contribute to achieving your optimal wealth position.
Debt structuring is only a single strategy, utilising interest, fee and tax savings to build your financial position requires thorough cash flow analysis, equity analysis and an asset acquisition readiness plan – This analysis forms part of the forensic approach used by Nexus in optimising your personal wealth.
See why debt structuring improves your financial growth substantially when combined with the right financial structure…