Differentiating and Structuring Debt – Your Pathway to Healthy and Wealthy Finances

The first step my wealth planning team and I follow to simultaneously reduce debt and build wealth for our clients is to identify their bad debt and take immediate action to restructure finances to reduce bad debt levels.

Assets and the Associated Debt…

For many Australians borrowing money from the bank is the only way they can afford to buy their own home… however not all debt is equal.

Non-income producing or lifestyle assets, such as the family home, when purchased with debt, act as a drain on personal finances with no income or tax savings to assist in the elimination of this bad debt.

Income-producing assets (investments) on the other hand contribute to reducing the financial drain debt can have on personal finances through the income generated and the tax-deductible benefits.

This highlights an important distinction between debts based on the purpose of the debt – being to purchase income generating investments, or non-income generating lifestyle assets usually referred to as bad debt or good debt.

Bad Debt is debt held against a lifestyle asset, and is not tax deductible

Good Debt is debt held against an income producing asset and is tax-deductible

Healthy finances have low levels of bad debt; wealthy finances often have serviceable levels of good debt attached to income-producing assets, and have favourable tax treatment.

[An example of tax-deductible debt is available in Strategy #1 – Negative Gearing in the Top 5 Wealth Creation Strategies eBook]

Are you after ‘healthy’ or ‘wealthy’ finances?

Recognising the type of debt you hold and transferring your bad debt to good debt is one of the most effective ways of improving your wealth position.

Transferring bad debt to good debt requires knowledge and a long term perspective.

This is where Debt Structuring contributes, serving four main purposes:

  1. Configuring your financial circumstances to reduce interest payable on debt
  2. Choosing debt products to reduce fees on complex lending facilities
  3. Structuring debt to reduce tax payable each financial year
  4. Balancing debt against income and expenses to improve cash flow

For more detailed information on the above debt structuring issues 1 & 2…

[Download] 5 immediate debt-structuring steps for reducing bad debt.

These recommendations address debt structuring issues 1 & 2 and have resulted in many of my clients cutting years, and $1,000s in interest from their non-deductible debts, improving the health of their finances.


With the right foundation turning personal finances wealthy becomes easier.
If you are not satisfied with just healthy finances and want to achieve wealthy finances, see how my team introduce serviceable levels of good debt to our client’s personal finances for the purpose of acquiring income-producing assets in the next post.
I will also cover debt-structuring purposes 3 & 4 in more detail… [click to read now]

What our clients say…

It has been a pleasure working with John. My first contact with him was over the phone when I was really overwhelmed with multiple decisions I needed to make to clean up my finances. He has provided clear and concise guidance to both myself and my partner reducing the stress around changing things for the future. His presentations are clear, he takes his time and really goes above and beyond what he needs to do in order to please his clients. I have since referred several of my close friends and family to him following my encounter, which is not something I do often. John has spent time ensuring we are happy with the service in order to keep us as long term clients and this is something that myself and my partner really appreciate and it is difficult to find these days.

When I was first introduced to Nexus, I was at a crossroads in my life both personally and professionally. I knew that there were ways to grow my wealth and I had an idea but didn’t have the knowledge to know where to start. I was afraid of making poor choices and risk scared me. On the first meeting, and every meeting after, I feel they truly understand my goals and dreams.

They are able to articulate strategy and raise ideas in ways that I can understand. I am always made to feel welcome and they have my back. I feel they have created an open door for me and I feel confident in keeping a long-term relationship with them. I’m excited about my future thanks to Steve and the team at Nexus Private Wealth Management.

John has been working with my partner Jarryd and I for roughly six months to one year now, we are both young professionals and were looking to buy our first house. Obviously not knowing anything about the property industry or setting up long term wealth in general we really wanted to set ourselves up for the best chance of success. After meeting with John and the team at Nexus there was no question in our minds that we were going to utilise their services. John has spent copious amounts of hours with us imparting his wealth of knowledge and carefully guiding us to now having just signed the contract on our first property. From the very first meeting with John we felt extremely comfortable. He has made making such a huge decision as easy as it possibly could be and we could not recommend his and Nexus’s services more. Jarryd and I are both looking forward to a long, mutually beneficial relationship with John and the team.

Our Clients

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