Having the right view on debt

20th Nov, 2012

Today’s consumer buys debt along with every credit card purchase. Lurking underneath a shiny new laptop could be a debilitating credit rating and long term financial problems. Do we look at debt the way we should? This article helps bring perspective.

Debt reduction

Unmanageable debt is usually a sign of mismanaged finances and is also an indicator that your financial future may be at stake. It is obviously best to reduce any non-deductible debt as quickly as possible, to be free to pursue long term financial goals.

Most people who find themselves in debilitating debt spend a lot on items that depreciate significantly in value and don't offer any returns. This include items such as the latest and greatest smart phones. Debt, however, can have long term effects emotionally and physically. Payments defaults will tarnish your credit history and  remain on file for up to 7 years, making any future loans or mortgages almost impossible to acquire.

Is the short term euphoria of keeping up with the Jones'  worth such problems? Here are three simple and easy points that will help to alleviate the common burden caused by blind consumerism.

1. Only create debt that works for you.

Creating debt to invest in shares or managed funds, buy property, or even operate  a business could be considered the "right kind of debt' as this type of debt can actually pay for themselves. Even investing education is another good example. In the long run better skills and formal training will help to earn more money by allowing you to apply and secure better jobs. So avoid indulging too much in things that will only depreciate in value over time in the next few years.

2. Think long term.

If debt is already a problem, it is time to think about where you wants to be in 5 to 10 years financially, and then in your retirement. (Yes even if you are 15 years off your retirement age!). There is no better way to start planning for your future than NOW! Minimizing debt is a good place to start and you may be able to do this simply by consolidating your debt.

This may mean, taking one personal loan to settle multiple loans which then means one interest rate and one monthly payment.. This process alone could make managing your current debt easier.

3. Get professional advice

And finally, With so many different loans and providers out there promoting a cheaper rate when transferring your credit cards under a new or offering to "buy" your debt from you, how do you know which is best? How do you avoid making the same mistake again and getting even further  into debt? Easy! Get some GET SOME PROPER ADVICE! The cheapest interest rate doesn't always means its the best. There are a range of other factors to consider like ongoing fees and charges on the loan, penalty fees for early repayment, and other benefits and services you may have access to just to name a few.

At The Wealth Creation Group, our qualified financial planners can advice on a range of financial products and services including credit assistance. For more information or to speak with one of our Senior Financial Planners call (+613) 5221 8911 or email us at enquiries@wcgroup.com.au


This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.  Opinions constitute our judgments at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Nathan Griffith and  Samina Yip of The Wealth Creation Group Pty Limited are Authorised Representatives of Apogee Financial Planning Limited ABN 28 056 426 932, an Australian Financial Services Licensee, Registered office at 105 –153 Miller St North Sydney NSW 2060 and a member of the National Australia group of companies. 

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The Wealth Creation Group and its Financial Advisers are Authorised Representatives of WCG Financial Solutions Limited, Australian Financial Services Licensee 481610, Registered Office at 351 Moorabool Street, Geelong VIC 3220.
Disclaimer: The information contained in this website is of a general nature and has been sourced on good faith as such it should not be construed as personal advice. Whilst the writer has adopted care, diligence and competence, the information has not been prepared taking into account any particular investment objectives, financial situation or particular needs. The Wealth Creation Group and WCG Financial Solutions Pty Limited accept no responsibility for any content contained in external links on other company websites or externally sourced information.