There’s good debt and bad debt
Good debt is when you borrow to invest and your investment produces more income than the cost of the borrowing. It’s also good debt if, despite the borrowing costs, the investment is likely to increase in value after you have invested, like property or shares. An education loan is also generally considered to be good debt, as it should enhance your career prospects.
Bad debt happens when you borrow to invest but the value of the investment declines over time, or if you borrow to fund your lifestyle. Bad debts include things like a car loan or borrowing money to pay for an overseas holiday.
It isn’t always possible to avoid bad debt, but it’s worth trying to minimise it. And if at all possible, avoid credit card debt that can easily spiral out of control with such high interest rates.
Spending and borrowing money is easy; it is the repayment which is difficult. If you are facing difficulty in managing debt seek professional help. An unmanaged debt issue could easily spiral out of control and can cause significant financial and emotional trauma.
Some common clues to help identify debt issues –
- Fear of opening the mail
- Still paying last year’s bills or making minimum credit card repayments
- Maxed out all your credit cards
- Financial tension between you and your partner
- You just can’t STOP SPENDING
We understand debt really well and have helped our clients pay off their debt sooner and save thousands of dollars in interest and fees. Whether your goal is to extinguish your credit card debt or pay off your mortgage sooner. At Wealth Connected Financial Solutions we are here to help and make a difference in your day to day life.