5. Sub-optimal Debt Structures

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There are six common mistakes that doctors make that are negatively impacting their financial future and are hurting them both now and when they retire.


Over the next six weeks we are going to look deeper into each mistake. Last week we looked at 4. Incorrect Asset and Income Structures


This week: 5. Sub-optimal Debt Structures


The next most common mistake is Sub-optimal Debt Structures. What we mean by that is doctors having an excessive amount of non-deductible debt. This includes things like car debt that’s on a personal nature, non-deductible person debt and worst of all – credit cards, where the interest cost can be over 22%!


What we want in terms of debt structures is the majority of debt being deductible because it effectively halves the cost for most of our doctors, maximising the income that is reducing non-deductible debt. In other words, income of doctors going into their offset account to reduce their net non-deductible debt, and where possible borrowing using things like the line of credit against their house, in creating deductible debt that further lowers their taxable income. This was what was essentially used by the Pediatrician who came to us (read his story here) to result in a very, very significant reduction in his taxable income.


Poor debt structures are also around not having debt in the right place. By clever restructuring having your debt in the right vehicles makes a huge difference in terms of our doctor’s tax burdens in years to come. Do you need to have your debt structures analysed to see if they are doing you justice? Simply click here for a Complementary Wealth Assessment with one of our Private Wealth Managers.

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