Time to Reduce Debt

We have all heard about the difference between “bad debt” and “good debt”.

“Good debt” is borrowed money that has been applied to productive assets that are making money for you - business assets, rental properties, share portfolios. The interest you pay is typically tax deductible.

“Bad debt” is borrowed money that has been spent on private stuff. That’s not necessarily a bad thing, but it’s dead money that doesn’t pay its way and the interest isn’t subsidised by the tax system.

So which debt should you reduce first? It’s a no-brainer really.