What is debt management? What is its importance? What are the types of debt? And how does debt affect cash flow? 

Continue reading to learn about the best debt management strategies for you, the benefits and disadvantages of debt management, and how you can start managing your debt today. There is no need to feel alone in this fight against debt. Take action and improve your financial situation today. 

What Is Debt Management?

Owing money or falling behind on repayments can be stressful. The good news is that you can take steps to relieve the financial pressure.

Debt management reduces your debt, including credit card debt, by consolidating your payments and taking over negotiations. A good debt management plan considers how much you earn and what you can afford to pay back at a reasonable rate while maintaining decent living standards.

The Importance Of Debt Management

Several factors make up debt. Understanding your debt situation is crucial. Paying down mortgages, car insurance, and personal loans are essential aspects of your debt management, but so too is leveraging debt to grow your wealth or achieve lifestyle requirements. A good debt manager will build a plan that accomplishes your goals while ensuring your debt gets paid.

Types Of Debt

Debt is generally classified as “bad” or “good.”

Bad debt refers to purchases that do not generate income for you or lose their value once purchased or used. You cannot claim tax deductions on these types of debt and have to use your resources for the repayments. Examples of bad debt include credit and store cards and home or personal loans. 

Good debt refers to assets that can help accelerate wealth over time and increase in value. The interest accrued on these assets is also tax-deductible. A good example is property investment. 

Debt And Cash Flow

Cash flow is your capacity to service your debt. Better utilisation of surplus cash flow can help reduce the interest payable on debt by increasing the repayment frequency or repayment amount. 

One of the most important things you can do to improve your cash flow is to consolidate your debt. Suppose you are over-indebted and falling behind with your debt repayments. In that case, a debt manager can protect your assets by arranging a structured, affordable repayment plan for your outstanding debt. A debt solution company consolidates all your debt into one monthly payment. It reduces your interest rates based on your circumstances.

Does Debt Affect My Credit Score?

Using a debt management plan through any company will affect your credit score. However, your credit score is already suffering if you don’t know how to manage your repayments and organise your debt. Using a professional debt management company can get your debt under control and gradually improve your credit score.

If you’re concerned about the effects on your credit score, get in touch with a professional that can provide the correct information.

Some things that affect your credit score that is within your control:

• Your current loans
• The lenders you used in the past and whether you paid back those debts on time
• If you defaulted on any bills or repayments, this would negatively impact your score
• Whether you have multiple applications for credit within a short period is a negative indicator when viewed by a credit provider
• Whether you have been bankrupt or had to negotiate an agreement to change how you repay the debt through legal channels

How Precept Financial Services Can Help

Debt can cripple your cash flow. There are many ways to owe money for one thing or another, from mortgages to credit cards. Sometimes debt is manageable; however, if you have a lot of debt and difficulty paying it off, you need to find a financial planner to help with debt management.

An adviser at Precept Financial Services can help you explore your options around managing and reducing debt. Contact us today to get started.

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• Why Is Financial Planning Important

Once you land your dream FIFO gig, you then need to create a financial plan for your FIFO money. A financial plan provides clarity and reduces uncertainty around your finances. It can even give you direction and purpose in your life. 

If you do not have a financial plan for your FIFO money, you can end up in a worse financial position. Do not spend your money carelessly thinking your FIFO gig will last forever. It might not!

Also read: Why Is Financial Planning Important?

Here are 5 top financial tips for FIFO workers: 

1. Debts

• It is almost impossible to avoid some debt. However, there are bad debts and good debts. Generally, bad debt is not tax-deductible; while good debt, on the other hand, is tax-deductible. 
• Do not fall into the trap of borrowing too much for purchasing lifestyle assets. They mostly depreciate in value. In addition, the interest is not tax-deductible. 

2. Superannuation

• If you have commenced FIFO work it is likely that your salary will have increased and in turn your superannuation contributions.  It is therefore vital that you are making the most of these contributions and they are going to an appropriate fund.
• If your super is invested wisely, it is in the best position to grow. It is, therefore, essential to talk to a financial adviser to ensure you have invested appropriately. 
• A financial adviser can help you understand the superannuation fund and how you can make it work for you. 

3. Investing surplus income  

• There are a number of options of what to do with your surplus income, including paying down debt, superannuation contributions, or investing outside super.  A Financial Planner can help you compare these different options and work out what is best for you.  
• You can establish a regular savings plan and accumulate an investment over time and have something to show for the extra income you have been earning.   
• It is much better to choose an investment you are comfortable investing in. A Financial Planner will help you invest in a portfolio that you are comfortable with.  

4. Insurance cover 

• It is very important to ensure that you have appropriate insurance cover to protect your most important asset, which is your ability to earn an income.  
• Precept Financial Services specialize in finding comprehensive income protection policies for FIFO workers.
• These policies can be paid personally in which case they may be tax deductible or can be paid from superannuation if preferred.    

5. Talk to a Financial Adviser

• A lot of people do not know their financial health. If you have just started working FIFO, you can now evaluate your financial health. It is essential to talk to a financial adviser. 
• A financial adviser can help you know your financial health and set financial goals. Once you set your financial goals, your financial adviser can help you develop a plan for achieving your financial goals and can help you monitor your progress in achieving those goals.
• Precept are specialists in this area and have many years of experience helping fly in fly out workers in the mining and oil and gas industries. 

FIFO workers earn good money. However, a lot of FIFO workers do not know how to plan their finances and end up just spending the extra money that they earn. A financial adviser can help you manage your finances and set achievable financial goals. 

If you are a fly in fly out (FIFO) worker looking for a financial adviser, then contact Precept Financial Services to plan your financial future. We have advisers available in Perth, Kalgoorlie and Busselton or can work remotely with you.

Here are some related blogs about financial tips you might like:

• Tips For Living Within Your Means
• Financial Tips for Your Teenager
• Tips for Increasing Your Superannuation
• Property Investment Tips
• Tips for Property Investment

The latest edition of our quarterly newsletter, Your Money Your Future, is now available.

Read it here

In this edition we discuss: the superannuation guarantee (SG), types of retirement pensions and how dividends work.

Our articles cover a range of topics which we hope you will find interesting. We aim to
keep you informed of changes as they happen, but we also want to provide ideas to help
you live the life you want – now and in the future. If you would like to keep up to date with our latest videos and information, please consider following our Facebook or LinkedIn pages.
If you would like to discuss any of the issues raised in this newsletter, please don’t hesitate to contact us or call our office number (08) 9204 2222.

If you want to boost your retirement savings, you may be eligible to make a carry-forward super contribution. However, many people overlook this opportunity since they do not know about it and miss out on the opportunity.  

If you want to build your retirement savings, talk to a financial planner in Perth from Precept Financial Services. A financial planner can help you manage your finances and achieve financial freedom and security.

Also read: How to Choose A Financial Planner For Retirement?

Here is what you need to know about carry-forward unused concessional contributions: 

What Are Carry-Forward Unused Concessional Contributions?

Carry-forward contributions allow super fund members to boost their concessional contributions with extra contributions above the usual annual limits. Therefore, the super fund members can make concessional contributions higher than the concessional contributions cap. And they do not even have to pay more money in taxes. You can “carry forward” up to 5 financial years’ worth of unused contributions.  

Who Is Eligible?

You must meet two conditions to be eligible: 

Firstly, at the end of the previous financial year, which is 30th June, your Total Super Balance must be under $500,000. 

Secondly, you need to have made the concessional contributions during the financial year. And the concessional contributions you made need to exceed your concessional contributions cap. 

Want to know if you are eligible? It is helpful to talk to your tax accountant or financial planner. They can help you know if you are eligible. 

What Are the Benefits/Advantages?

Boost Your Retirement Savings 

The purpose of the carry-forward contributions is to help people boost their retirement savings by contributing above the usual limits. 

Reduce Your Tax Bill  

If you have a larger income in a financial year or a capital gain from the sale of investments or property then you may be able to make use of the unused concessional contributions cap to reduce your taxable income and resulting tax.   

Where to get started?

You can use carry-forward unused concessional contributions to boost your retirement savings. However, it is difficult for most people to understand if they are eligible. Therefore, you will need to seek professional advice. 

If you are in Perth, Western Australia and you are looking for a financial planner to help you to determine if you are eligible, do not hesitate to contact Precept Financial Services. They can help you secure your finances and boost your retirement savings.

Source – https://www.ato.gov.au/individuals/super/in-detail/growing-your-super/super-contributions—too-much-can-mean-extra-tax/?page=6    

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

Please see our Financial Services Guide for more information.

Precept Financial Services Pty Ltd (ACN 140 538 147) as trustee for SF Unit Trust trading as Precept Financial Services is an authorised representative and credit representative of Charter Financial Planning, Australian Financial Services Licensee and Australian Credit Licensee No. 234665

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• The Best Investment Strategy For Retirement
• Understanding the Downsizer Super Contribution: Eligibility and Benefits

Ageing brings several financial challenges, especially amid a pandemic. Whether you have been saving up for your retirement or already living your golden years, you need to get your finances in order. So if you’re unsure of how to begin, a financial advisor can come in handy,

And with October 1, 2021, a few calendar ticks away, it’s essential to find out what changes to expect in your Income Protection Insurance.

Income Protection Policy Changes

Because significant changes are about to be made to the policies, it is advisable to approach your financial planner as soon as possible before those take effect.

If you are an existing policyholder, you have nothing to worry about because your insurance continues until its contract ends.

But if you are not, here are the significant changes that you should know:

Limitation on Income period to be assessed

The period to be assessed to determine your insurance will only cover your income for the last 12 months instead of potentially up to three years previously. This has a major effect, especially for self-employed and business owners whose incomes fluctuate, especially during the Covid-19 pandemic.

Limitation on Income Replacement Ratio

The income replacement will now be limited to 90% maximum during the first six months and only 70% afterward which is potentially much lower than current policies allow.

Shortened Contract Terms

Insurers can cease the guaranteed renewable policies for life, offering a maximum contract duration of up to five years.

No more ‘agreed value’ income protection cover

The concept of ‘agreed value’ income protection has been removed. Pursuant to Australian Prudential Regulation Authority (APRA) requirements, insurers can no longer offer ‘agreed value’ income protection products. Instead, benefits will be computed based on the claimant’s income at the time they claim them.

Consult Experts at Precept Financial Services

Before these income protection policy changes take effect, get yourself covered. Don’t hesitate to reach out to our panel of financial advisers. We at Precept Financial Services can guide you so you can approach the future confidently.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please see our Financial Services Guide for more information.

Information sourced from https://www.ldb.com.au/wealth-management/changes-to-insurance-premiums-and-income-protection-policies-explained/

Life can be unpredictable. That is why every person, especially the elderly, needs financial advisers to ensure they’re ready for whatever lies ahead. Dealing with complex financial issues for the elderly, at a time when their main concern is their wellbeing can be daunting. This does not even include the difficulties of handling confusing and time-consuming details. 

With the help of a financial adviser, your loved ones may concentrate on their health and well-being while knowing that their financial concerns are in good hands. A financial planner in Perth can help you manage your money and guarantee financial security. In this way, they make it easier for the elderly to achieve their financial goals.

How Can Aged Care Financial Advisers Help You?

First and foremost, financial advisers will take into account all of your available financial assets. As a result, they will assess your business investments, family home, cash flow, and investment strategies.

Furthermore, they will examine your accommodation payments and care fees to place you in the best financial position now and in the future. With all of this in mind, financial advisers can help with:

• Retirement planning
• Budget planning
• Superannuation
• Wealth creation and management
• Income protection
• Insurance
• Portfolio administration 
• Savings planning

Financial planners also give advice on managed funds, and financial products, and can help organize your finances. They help you negotiate with your creditors if you have debts. Note that it is vital to choose the right financial adviser for your situation. 

Precept Financial Services can provide advisers tailored just for you, depending on your needs. Our financial advisers can help you focus on the information and issues that are important to you and your specific financial situation. As professionals in finance, we understand the rules and how to make them work for you and your unique situation.

Also read: How to Choose A Financial Planner For Retirement?

Things An Aged Care Financial Adviser Can Assist With

Of course, everyone’s situation is unique, but there are a few key areas to consider when seeking financial advice for elderly care. These are some of them:

• How to maximise government pensions
• How to minimise your nursing home fees
• Funding accommodation payments
• Negotiating with aged care facilities
• Financial strategies for multiple care options
• Selling your home against the impact of the age pension and care fees
• Reviewing and planning for any tax implications

Speak To One Of Our Accredited Aged Care Specialists

Do you want to manage your finances better? Is your loved one having difficulties navigating their aged care costs against their finances? Worry not! Precept advisers are qualified, certified, experienced and budget-conscious. 

Please contact us today and ask to speak to one of our aged care specialists Ryan Sullivan or AC Bosch for a complimentary meeting to help you make informed decisions about investments and financial issues for your current and future needs. 

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

Please see our Financial Services Guide for more information.

Precept Financial Services Pty Ltd (ACN 140 538 147) as trustee for SF Unit Trust trading as Precept Financial Services is an authorised representative and credit representative of Charter Financial Planning, Australian Financial Services Licensee and Australian Credit Licensee No. 234665

Related Posts:
– The Best Investment Strategy For Retirement
– Costs of Residential Aged Care

The latest edition of our quarterly newsletter is out now. This edition talks about: how insurance can help protect your loved ones, what capital gains tax is and the increased super contribution caps that started 1 July 2021.

Read newsletter now

Our newsletter articles cover a range of interesting information. If you would like to keep up to date with our latest videos and information, please consider following our Facebook or LinkedIn pages.
If you would like to discuss any of the issues raised in this newsletter, please don’t hesitate to contact us or call our office number (08) 9204 2222.

The downsizer superannuation contribution allows qualified older Australians to sell their property and use the proceeds to make a superannuation contribution. This way, they have more money as savings when they retire. Moreover, the contributions made to this scheme are tax-free, making it a perfect investment for senior citizens. Notably, the government allows savings of up to 300,000 dollars for citizens aged 65 and above.

Related read: Tips for Increasing Your Superannuation

Eligibility

Unfortunately, not every Australian qualifies to contribute to this scheme. Those who qualify must have the following characteristics:

• Must be 65 years old or more.
• The home being sold must have been the contributor’s (or their spouse’s) primary residence at some point in the past, and they must have owned it for at least 10 years.
• Caravans, mobile houses, and houseboats are not permitted for the scheme. Additionally, the said house must be in Australia.
• Within 90 days of receiving the sale profits, a downsizer contribution must be provided.
• Before or at the time of the contribution, the contributor must give their super fund a downsizer contribution form.
• Contributors shouldn’t have made a downsizer contribution to super before.
• Even if the contributor bought the property before September 20, 1985 (when CGT was discontinued), it must have been their primary residence at some point throughout their ownership.

Related read: How to Maximise Your Age Pension: Tips From a Financial Advisor

Benefits

Contribution will not count towards superannuation caps

Downsizer contributions do not count towards your superannuation contribution caps, whether they are concessional or non-concessional. Regardless of your total super balance, you can still make a downsizer contribution. Your downsizer contribution amount will, however, be included in your overall super balance when it is recalculated at the end of the financial year.

Work test isn’t required

This contribution does not require a work test or a work test exemption, making it perfect for persons between the ages of 67 and 74. It’s even more enticing if you’re 75 or older because you won’t be able to make voluntary donations until you participate in this programme.

Reduces Tax Liability

Because the downsizer contribution is made after taxes, no tax is paid on the way in. It is also tax-free when people withdraw money in the future because they are over 65.

There are No obligations to Purchase a New Home.

Contributors are not obligated to buy a new house with money they might make on the property sale. This is if they sell their primary residence and make a downsizer contribution to their super.

Contact Precept Financial Services to Help You with Downsizer Super Contribution.

Financial security is important, especially in old age. This is because after retiring, seniors do not have many sources of income. That said, it is very wise to have a financial advisor like us to walk with you. Call us today and let’s get you started on a downsizer super contribution

The latest edition of our quarterly newsletter is now out. Read it here.
In this edition we discuss: planning for retirement, the transfer balance cap and reviewing your personal insurance.

Our articles cover a range of topics which we hope you will find interesting. We aim to
keep you informed of changes as they happen, but we also want to provide ideas to help
you live the life you want – now and in the future. If you would like to keep up to date with our latest videos and information, please consider following our Facebook or LinkedIn pages.
If you would like to discuss any of the issues raised in this newsletter, please don’t hesitate to contact us or call our office number (08) 9204 2222.