Debt reduction
Paying down debt is one of the few financial moves with a guaranteed return: every dollar of interest you avoid is a dollar earned, with no market risk attached. The difference between doing it well and doing it by feel is usually measured in years and tens of thousands of dollars.
Is this you?
If more than one of these lands, it is worth a conversation. None of them are unusual, and all of them are fixable.
A home loan, a card, a car loan and a buy-now-pay-later balance all charge different rates. Paying them down evenly costs you money compared with paying them down deliberately.
Loans written years ago are rarely still competitive, and lenders reserve their best pricing for new business. Interest rates are the largest single expense most households never renegotiate.
Money in a savings account earning a modest rate while a credit card charges a high one is a guaranteed loss. It feels prudent and is mathematically backwards.
Carrying a mortgage into retirement changes how much income you need and how much risk you can afford. Working backwards from your retirement date tells you what the repayments need to be now.
What we actually do
No open-ended retainer and no vague scope. You know what you are getting and what it costs before we begin.
Every debt, its rate, its term and what it is actually costing you a year. Most people have never seen the total in one place, and the total is what motivates the plan.
The order that clears your debt fastest, balanced against the order most likely to keep you going. The mathematically optimal plan is worthless if it is abandoned in month four.
Offset versus redraw, fixed versus variable, interest-only versus principal and interest, and whether your accounts are arranged to actually reduce interest rather than just hold money.
We model the interest saved and the time cut from your loan term, so you are deciding against a number. Where refinancing makes sense we introduce you to a broker we trust locally.
Worth understanding
Not a sales pitch: the handful of things that genuinely change the outcome, including the ones that are expensive to discover late.
The instinct is to attack the biggest balance, because it feels like the biggest problem. Mathematically you should attack the highest interest rate first, regardless of size, since that is where the money is leaking fastest. The exception is behavioural: if clearing one small debt entirely is what keeps you committed, that momentum can be worth more than the marginal interest.
Both reduce the interest you pay. But money in an offset account remains your savings sitting beside the loan, while money paid into redraw has repaid the loan and is borrowed again when you withdraw it. That distinction can matter a great deal for tax deductibility if the property ever becomes an investment, and it is very hard to unwind after the fact.
Clearing non-deductible debt gives you a certain, tax-free return equal to the interest rate. Investing offers a higher expected return with no certainty at all. Which wins depends on the rate, your tax position, your timeframe and how you would genuinely feel in a bad year, not on which produces the better spreadsheet.
Converting non-deductible debt into deductible debt while building an investment portfolio can be very effective. It also requires the right loan structure, clean separation of accounts, disciplined record-keeping and a genuine tolerance for investment risk while still owing money. Done casually it creates a tax mess and an uncomfortable amount of leverage. This is one to do with advice or not at all.
Common questions
General information only, and not personal advice. What applies to you depends on your circumstances.
It depends on your interest rate, your marginal tax rate and your timeframe. Extra repayments give you a guaranteed, tax-free return equal to your loan rate. Concessional super contributions offer a tax advantage now but lock the money away until preservation age. Higher earners closer to retirement often favour super; someone with a high rate and a long time to go often favours the mortgage. It is worth modelling both rather than following a rule.
Get started
Tell us where you are with debt reduction and what you would like to sort out. If we can help, we will explain exactly how and what it costs.
