Debt Management

In financial advice, debt management refers to understanding all your debts, their term, interest rate (level, and fixed or floating), tax deductibility of interest, and associated risks. In managing your debts, your objective will be to understand how these debts are going to be repaid and prioritising which debts are to be paid first to try to optimise your position. It is understanding how your debts and their management fit into your financial plans and strategies, and involves understanding how different debts work and impact wealth, and often involves financial modelling and projections.

We find that with many clients, without an understanding of their current debt situation and a plan to manage debts, will find it difficult to meet wealth accumulation and retirement plans. Even relatively moderate levels of personal debt, can limit a client’s ability to have the capital in retirement to meet their objectives.

There are a variety of considerations such as the type of debt and its terms, interest deductibility, and your stage in life. Your other objectives need to be considered such as whether you hold or will hold insurance in your superannuation account. Once these are understood, financial advice involves making assumptions then doing financial projections and scenarios to ascertain the better strategy.

Subject to caps, when you are over the age of 60 years you can access your superannuation in a tax effective manner and there are strategies to reduce your debt and in some instances limit the reduction in your superannuation balance through recontribution as a salary sacrifice. It is important that as a person approaches retirement and that may be over a 10 year period that they are managing their debt to reduce its balance quickly in preparation for retirement.

Setch Group is a national financial advice and financial planning practice that is dedicated to providing clients with advice that is in their best interests, and helps clients on an ongoing basis to make wise financial decisions to gain control of their financial future. Our clients have a wide range of goals and objectives and we customise our advice accordingly. In the particular case of debt management we have had considerable success in showing our clients how debt both good and bad impacts their financial position.

This is the first step to developing a plan for wealth accumulation, which may mean financial independence, potentially the option of early retirement, funding a comfortable retirement or something more, individual and family financial security and a range of other long term objectives. As our role is ongoing, where that is what the client wants, we help to implement our advice including debt management plans and review and adjust them over time.

Whether it is providing debt management advice or evaluating Australian super fund performance comparatively to construct a portfolio for you, Setch has the breadth and depth of experience.