Let’s tackle debt 💰

It’s a big one. Debt can hang around your neck, and impede your path to financial freedom. It can be a constant state of worry. But equally, it can be a tool to build wealth, and it’s surmountable with the right strategy.

This episode, we guide you through actionable steps to break free from debt.

1. Assess your debt situation. List all your debts and their interest rates as a foundation for your repayment strategy.

2. Be clear in your priorities. Choose between the financial and psychological approaches to debt reduction. Prioritize high-interest debts or pay off small balances first, creating a repayment plan that integrates with your budget.

3. Seek help if you need it. It’s important when you’re overwhelmed. Financial counsellors provide valuable guidance and resources.

You see, debt isn't inherently good or bad; it depends completely on usage. Good debt, like mortgages or education loans, leverages investments for future returns. Bad debt, such as credit card debt for consumables, erodes wealth.

Before you go around town saying ‘Equity Mates told me that debt is fine…’ We need to be clear that using debt as a financial tool demands careful consideration. Here’s some thought starters:

• Do repayments align with your cash flow?

• Does this debt have reasonable interest rate?

• What is the potential or likely return on this investment?

• Does this debt align with your financial goals?

• Do you have an emergency fund for security?

It’s great to conquering debt, or use it as a tool so it works for you. Assess your situation, choose a strategy, seek help if needed, and differentiate between good and bad debt. Listen now to find out how we think about this process!

3 ways to smash that debt in 2024…

Here’s three actionable takeaways that you can take to manage your debt:

1. Assess your debt: Take a deep breath and be honest about how much debt you are in. Look at all of it - including credit card balances, loans, and mortgages. Then create a detailed debt payoff plan. We recommend paying off high-interest debts first and allocate a specific portion of your income for debt repayment. Or, knock over your smallest debt first, so you can get an early win!
   

2. Distinguish between good and bad debt: Not all debt is created equal, and there’s good and bad debt. Good debt is used to invest in assets that appreciate or increase in value, while bad debt typically involves high-interest consumer loans. So while you might be in debt, it might be good debt! Focus on eliminating bad debt first, and consider the potential returns of good debt, such as investing in education or appreciating assets.
   

3. Embrace financial resources and tools: If you’re feeling overwhelmed or stressed, you don't have to navigate your financial journey alone. Seek out financial resources and consider getting expert guidance. You could consult with financial counsellors or advisors who can provide valuable insights into managing debt and making informed financial decisions. If you need assistance, don't hesitate to contact organizations like the National Debt Helpline at 1800 007 007.

What actions are you taking this week to have a brilliant 2024? Let us know at [email protected].

Happy investing!

Equity Mates team

Taboo money conversations with YIGC

Here’s a question… Has anyone ever asked you how much you have in your savings accounts? Would you be willing to show someone the figure if they asked?

Money is STILL a taboo topic, and we aren’t properly educated on how to approach conversations about our finances. You’re In Good Company are tackling the conversations starters you need to broach money chats in your own life for their summer series.

Last week became one of the fastest downloaded episodes ever for YIGC, so if you haven’t listened yet, why don’t you catch up now?

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