4 Good Debt Solutions to Create Your Wealth
The term “debt” has developed a bad reputation among many people, but actually, taking debts can give you the power of good if done wisely. It is a good way to start leveraging the power of your money and creating passive income streams that will help you create wealth. Here are four solutions to consider for debt to serve you well without putting your financial future in danger:
Consolidate your debt.
Of course, servicing multiple debts can cost you more in terms of paying for fees and interests, but it can also benefit you in many ways. For instance, you can increase your mortgage and then use the extra money to pay off other debts, such as personal loans and credit card balances.
Manage your cash flow better.
This is key to minimizing bad debts, with the main idea is to lessen interest payments. This can be done by increasing payment amount and frequency on a mortgage, using an interest-free period on your credit card to pay for your daily expenses or paying your entire salary into an offset account.
Recycle your debt.
This can be done in a way like paying off your home loan while redrawing its equity to invest in other property or shares. The bad debt here would become a good one that will earn you income that you can use to pay back your loan or provide tax breaks. Also, any excess in your income can be fed back into your loan to pay it off quicker, making further interest savings.
Make your savings work harder.
You can wisely keep the money in your cash savings bank account in an offset account that is linked to your mortgage. By doing so, you can earn higher after-tax returns and reduce your home loan term, without locking up your funds.
Along with the solutions above, it is also important to get quality advice to better understand the potential returns and risks that come with them.