🏦 Advanced Debt Management Strategies

David Guerrero -

Video by Nexus Private Wealth Management.

Found this very educational. Definitely worth a watch!

Debt Management Strategies:

  1. Consolidate debt - e.g. refinance credit card debt into your home loan.
  2. Debt reduction - using offset accounts.
  3. Debt washing - convert bad debt (non-deductible) to good debt (deductible).
  4. Debt transfer - move to cheaper debt.
  5. Debt structuring - ownership split for favourable after-tax outcomes.
  6. Negative gearing - benefit from depreciation (non-cash deduction).
  7. Debt recycling - repay the home loan and then reborrow.
  8. Limited recourse lending - secured loan in SMSF.
  9. Debt elimination - pay off debt.
  10. Margin lending - asset-backed loan requiring a certain LVR.

I love how the strategies work together to create a cycle of wealth creation. e.g.:

Diagram by Nexus Private Wealth Management
  • Borrow on the equity of your home mortgage (leverage) for a deposit on an investment property or managed funds (i.e. 100% debt-financed).
  • Use an offset account (against the home mortgage) to store excess cash from rent repayments, distributions (debt reduction on bad debt).
  • Use excess cash to repay the home mortgage, reborrow the equity and then invest (debt washing and debt recycling). * Genius! *
  • Repeat.