Who's in debt and by how much?

Discussion in 'Money' started by jozeph, Dec 19, 2008.

Put it out there
  1. JohnW

    JohnW Team Captain

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    look up tax avoidance (part 4a)

    It explains why you cant restructure your loans to produce a better tax position.

    The mortgage broker should of set up your first loan with an offset account, in stead of paying off your house. This would of allowed you to use the fund in the offset account to purchase the new property and also be able to now claim the interest on the first property as a deduction.
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  2. Eastern Rangers

    Eastern Rangers BFSC Platinum

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    That sucks, my sister lost her job last week for no good reason and has a similar level of debt.
  3. Scotland

    Scotland Club Legend

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    Have never really understood credit card debt, or car loans for that matter.
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  4. bunsen burner

    bunsen burner Norm Smith Medallist

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    Yep. See post #126.
  5. Samsara

    Samsara Senior List

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    Own my car
    Rent
    No credit card
    Only debt is HECS
  6. raskolnikov

    raskolnikov BFSC Platinum

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    Currently have an investment property for sale. Once it goes through I'll only have the mortgage on my first property, which after I put the money from my investment property into it will be bugger all.
  7. Visions

    Visions Team Captain

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    Even if a new loan was taken out on the ex-PPOR (now rental) to repay the current PPOR loan, it still wouldn't be tax deductible as the funds would be ascertained as being used for non-investment means (i.e paying out the new PPOR).

    There is however a loophole that may be exploited if they own the ex-PPOR jointly with a spouse, in that they could borrow 50% of the value of the ex-PPOR and buy the spouse out, and after the tranaction, the spouse happens to use the money to pay down the new property. The 50% borrowed could then have been used as a tax deduction if you can claim it was for "asset protection" purposes. This however might have stamp duty implications and might not be financially effective. Could have CGT implications as well, but as the property recently became an IP, would be negligible.

    As it stands, they might consider claiming depreciation on the ex-PPOR which is allowed, along with the standard costs that will now be incurred as a result of renting it out.

    Agree with the above. Offset accounts for the above reason are much better than redraw facilities.
  8. Upgrayedd

    Upgrayedd BFSC Gold

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    about 15 grand, however i could pay it off tomorrow if i wanted to from my savings
  9. raskolnikov

    raskolnikov BFSC Platinum

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    Why don't you? You would be saving a lot of money on interest.
  10. PAUR

    PAUR Team Captain

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    I missed a connection flight in Copenhagen at the end of my trip (i.e. spent my planned savings) without a c/card I would have been stranded.

    I bought my recent flights to Europe on my credit card as the sale ended before my monthly pay cycle. If I had waited 3 days I would have paid 400 dollars more

    Other reasons for a loan are to enjoy things now that would take time to save for (car, house). Therefore you value your enjoyment now over the interest payments spread over time.

    Some people use credit card features like insurance or frequent flyer points (especially small business owners) which they pay off at the end of the month.

    You could make a small differential in interest by buying things on your credit card at the start of the month, leaving cash in savings and then paying at the end of the purchase interest free period.

    These are just off the top of my head reasons, other people will have more.

    tl;dr: conveniance and diversification
  11. Scotland

    Scotland Club Legend

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    I said credit card debt, not credit card usage.

    There are any number of reasons why credit cards are a good thing, but being able to run up $10k or $20k in debt on one and chip away at it over time at 20% interest isn't among them.

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  12. PAUR

    PAUR Team Captain

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    Fair enough. Then I would say it is people that want to have things now and value their enjoyment of it now more than the cost of it over time (or are ignorant of the cost of it and want it now)
  13. Pilchard_Adams

    Pilchard_Adams Team Captain

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    I need a credit card for business matters. Many of my suppliers only take credit card payments. I also have a 2nd credit card for emergencies. If my car breaks down and needs massive repairs, I have the card...
  14. bballscout

    bballscout Account Cancelled by User

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    Good points with the credit card. What card would you guys recommend? I don't have one but want one for insurance etc.
  15. poweredup

    poweredup Account Cancelled by User

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    cannex.com.au good comparison site, does all the shopping around for you and is independent
  16. Lyyynnnchy

    Lyyynnnchy All Australian

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    My house settled last week.

    My debt last week
    $332,000 mortgage
    $14,000 credit card (needed to finish off renovations)
    $20,000 deposit for the hosue from my mum

    My Debt this week
    $0

    My Bank account this week
    $100,000

    Time to get in some more debt. US real estate here I come
  17. bballscout

    bballscout Account Cancelled by User

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    Nice work mate, did you renovate and resell? Are you in the building trade or employed others? Sorry for the questions, just trying to increase knowledge for myself.
  18. Lyyynnnchy

    Lyyynnnchy All Australian

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    Nah not in the building trade, far from it, I just learnt as I went. Learnt a lot and would definitely do things different

    Had a builder knock out 2 walls and install by-folds in place of 1 of the walls
    Plumber changed the location of the laundry and also put in a new toilet and vanity
    Electrician changed the location of the kitchen and added new light fittings
    Tiler tiled the bathroom
    Carpet put in upstairs
    New Shower screen

    I did the rest ie

    Put in an IKEA kitchen
    Installed flooring downstairs
    Painted the whole inside
    Timber decking in 2 courtyards
    General tidy up
  19. CranktheAnchors

    CranktheAnchors Team Captain

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    Lads,

    Need some advice or getting a loan to buy shares. I know a bit about margin lending but i don't really have much capital to make the most of it. Is there anywhere that loans debt to equity on shares? Any advice would be muchly appreciated
  20. xyakks

    xyakks Team Captain

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    My advice. Don't do it. Only put into the share market what you can afford to lose.
  21. cleveland

    cleveland Club Legend

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    $148k mortgage on a unit valued at $300k-$320k

    Bought back in 2004 for $177k

    Gonna sell soon and purchase a 3 bedroom townhouse for $390-$400k hopefully............

    A lot of poeple get in trouble by tryng to buy something flashy that they cannot afford without building up some equity first.

    no other debt and i just use a debit mastercard instead
  22. Scotland

    Scotland Club Legend

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    Could you expand on this a bit?
  23. Lyyynnnchy

    Lyyynnnchy All Australian

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    It's a bit hard to explain

    The kitchen was originally an L shaped kitchen, with the shorter part of the L looking out to the courtyard and a wall seperating the the longer part of the kitchen and the lounge

    I tore out the shorter L section of the kitchen and replaced with bifold doors so the the courtyard flowed through to the kitchen and you could open it all up.

    I also tore out the wall seperating the longer part of the kitchen and lounge. Overhead cupboards and smarter storage were added to make up for the lost cupboard space from removing one side of the kitchen. This meant the courtyard flowed through the kitchen and into the lounge. Pretty much 1 big rectange with no seperating walls. The bottom floor of the townhouse was incredibly dark so this also helped allow light to filter through.

    In regards to the laundry, as you walked into the front door you had a small laundry space on your right and the L shaped kitchen on your left. This laundry section was removed (all seperating walls removed) and the plumbing redirected into the kitchen cupboard (opposite side to the kitchen). Washer and dryer are now located in the kitchen cupboard. The space where the laundry was now contains the fridge (the fridge was originally on the longer side of the L, moving the fridge from there meant more cupboard space) and 2 cupboards.

    [​IMG]
    [​IMG]

    Click on pics to get a larger version. Doesnt really show where the laundry was though
  24. Scotland

    Scotland Club Legend

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    Oh yeah I see what you mean. Open plan FTW.

    Makes a big difference to knock out all the unneccessary walls that older houses tend to be filled with.

    My neighbours house is near identical to mine except has a bloody great (non supporting) wall separating the kitchen from the living areas. Really closes the place in.
  25. bulldogsfan

    bulldogsfan Draftee

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    I was in some heavy debt about a year ago - worked very hard to get out of it, weekly spreadsheeting, managing my budget etc.

    I've recently come across Pocketbook: https://getpocketbook.com which makes that process heaps easier for me now. Weekly income / spending email on Sunday helps me understand that I'm right on track - week to week.

    I'm so glad I'm now out of the debt.
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