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Drowning in debt?

How you could save yourself thousands…

There’s a dirty four-letter word keeping many Australians awake at night: DEBT. Before they know it, many clients we see have racked up property loans, personal loans, car loans and credit cards… it can quickly become too daunting to deal with. Rather than ignore it (no, it won’t go away), take heart: by consolidating your debt you can save yourself thousands, and free yourself from debt.
We specialise in debt consolidations, and have helped many clients free themselves from debt and get back in control of their money.
I want to share with you a brilliant real-life result we had with Sue and John (not their real names). They were drowning in debt and interest, with no way out. Their financial situation was becoming more unmanageable by the day – and they were faced with the very real threat of losing their home, or even going into bankruptcy.
This example has been altered to protect Sue and John’s privacy.
Existing loan type Amount       Interest  Monthly 
rate repayments
Home loan $532,000 6.60% $3,398
Investment property loan $206,000 6.60% $1,133
Car loan $41,000 9% $850
Personal loan $50,000 15% $1,189
Credit card – Visa $60,000 18% $900
Credit card – Visa $27,000 18% $405
Credit card – Mastercard $20,000 18% $300
Credit card – AMEX $10,000 20% $166
Totals $946,000 $8,341
Sue and John were drowning under this huge debt, and the waves of repayments kept pushing them further under. They were living off credit cards, and using one to pay debts on another. They were stuck in a debt trap.
After working with them to understand their biggest issues, we identified improving cash flow as their key priority.
As they owned two properties with a decent amount of equity, we were able to consolidate all loans into two home loans – and we secured better rates for the loans, which provided significant savings. We also extended the loan terms to reduce monthly commitments, thus improving cash flow:
  • $740,000, variable 5.60%, principal and interest over 30 years, repayments of $4,250
  • $206,000, variable 5.60%, Interest only 5 years over 30 years, repayments of $962

Sue and John’s overall repayments were reduced from $8,341 per month to $5,212 per month – a saving of $3,129 per month or $37,548 per year.

With these savings, Sue and John were able to get back on their feet and take control of their financial situation.
This is an extreme example; but it shows what we can do for those wanting to reduce their debt. If you think debt consolidation could improve your cash flow, contact the Finance team at The Practice today.
The Practice Financial Solutions holds an Australian Credit Licence (ACL # 388041) and is governed by ASIC.  We are accredited with over 30 lenders which means we’re independent and unbiased – so we find the loan that’s right for you. Contact us on (03) 8888 4000 orloanupdates@thepractice.com.au
Written by:
Daryn Heffernan