USE DEBT WISELY

When used responsibly, debt can add significant value.

Debt can either be classified as good or bad debt depending on how you use it, as well as its overall impact on your financial position over the long term.

How to use debt wisely

• Only borrow money to buy assets or investments that appreciate in value and provide an income. This way you can usually claim the interest on the borrowings as a tax deduction.

• Only borrow the amount that you can comfortably service i.e. make sure you can afford the repayments even if interest rates went up an extra 2% p.a.

• Pay down non-deductible debt (such as your credit card and owner occupied home loan) as quickly as practical

• Only use your credit card if you can pay it off at the end of each month in full.

• Seek advice before you borrow so that you understand the risks and have a plan in place to mitigate the risks.

FIDUCIAN

Financial Services