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What did you learn about debt when you were growing up?
If your school or parents taught you anything at all, it was probably this:
All debt is bad debt.
That seems to make sense. If you don’t have any debt, you don’t have to worry about bills. You can use your money to live your life instead of paying other people.
But there’s a problem.
Avoiding all debt means you can do enough to get by. But it’s not going to help you to build wealth.
The simple fact is that not all debt is bad debt. But the belief that it is holds many people back from investing. The idea of taking on any form of debt may make you anxious and stop you in your tracks.
That’s the position that Stephen and Monika Jurcevic found themselves in. They had spent their entire lives avoiding debt. Now in their mid-40s, they took a look at their finances and realised something terrifying.
They would find themselves well short of the money they needed come retirement.
That’s when they came to Wealth for Life.
How Did Wealth for Life Help?
The Jurcevics came to us with a conflicted mindset.
On the one hand, they had worked hard to clear all of their debt. They had paid off their mortgage and didn’t owe a penny to anybody. They strongly believed that avoiding debt was the way to go.
But despite all of their hard work, their future looked bleak. Their money just wasn’t working for them. They knew that unless they changed something now, they would find themselves working well into their retirement years.
Should they trust an advisor that they didn’t even know?
Or should they go with what people had told them to do their entire lives?
Our first task was to help them find stability in all of this confliction.
We spent time with the couple and demonstrated that the way they had always done things wasn’t working. While avoiding debt is a smart idea to an extent, they had hit the limit of what they could achieve financially.
They needed to invest to start building to their future.
To show them how we built a 20-year plan that addressed every financial goal the couple had. Most importantly, we showed them how to build this plan while protecting their home from every investment action they would take.
The Jurcevics worked with our financial planning team to buy two investment properties.
The first used their existing home as security. But we also used the savings they had to offset the debt they had now built against their home. They would have access to this money whenever they needed it. But keeping it in place allowed them to buy an investment property at a low cost.
Their first investment cost them just $28 per week for the first year.
We then created a self-managed superannuation fund (SMSF) to help them secure their second property. Again, the focus was on keeping the costs low while ensuring the family against any issues.
Through it all, we worked with the couple and explained every single step of the strategy.
When they had a question, we provided the answers. And we did it without all of the mumbo-jumbo that a lot of other advisors use.
With Wealth for Life, the Jurcevics overcame their fear of debt and started building a portfolio. Today, that portfolio contains four properties with a combined value of $2.346 million.
They’re generating $1,690 per week in rent and have enjoyed capital gains of $521,542 across all of their properties.
And here’s the best part.
They only started in 2013. They have a long way to go with their 20-year plan. They’re securing their financial future while creating a better life for their three children.
By the end, they’ll have financial freedom and they’ll be completely debt free.
Perhaps you find yourself in a similar position to the Jurcevics.
Maybe you’ve spent your life believing that there’s no such thing as good debt.
How do you overcome those fears?
These tips will help you.
Tip #1 – Learn from the Right People
This is the key step.
All of the stuff you learned about debt growing up isn’t serving you. Mom and dad imparted a lot of valuable lessons. But they didn’t get it quite right about avoiding all types of debt.
The simple fact is that some debt can help you as long as you learn from the right people.
Great advisors won’t just tell you that debt can help you build wealth.
They’ll show you exactly how it works. Plus, they’ll build structures that ensure you still have access to your money if you need it.
That’s what we did for the Jurcevics. We spent time on building a relationship and providing all of the answers that they needed.
We worked with them to create a structure that suited their needs and made sense for their situation. In this case, that meant protecting their home and giving them access to their savings.
The point is that they found the right advisors. Find someone who educates you in the same way.
Tip #2 – Take Your Time When Creating Your Strategy
You don’t have to rush into the first investment opportunity that you see.
In fact, doing that will just make you more anxious. You’re taking on a big risk so it just has to work.
That’s not going to make you feel any better about your debt.
The key is to go into investing with a clear strategy. Most importantly, this strategy has to mitigate the risk that you’re taking on.
When it comes to picking a property, it’s all about finding the right property type and location. You have to work out if the property appeals to the location’s tenants. You also have to figure out if you want an old or new property. Plus, you have to decide if you’re going for a long or short-term strategy.
Hint… a long-term strategy carries less risk.
Each time you answer one of these questions, you dilute a little bit more of the fear you have about debt.
Tip #3 – Take Steps to Protect Yourself
Wealth for Life helped the Jurcevics take several steps to protect themselves.
The use of an offset account against the first investment meant that the couple protected their home and lowered their costs.
They worked with a great accounting firm to take out insurance that protected them further.
Finally, we worked with them to create finance structures that protected them and didn’t sacrifice their quality of life.
You don’t have to just take on any old debt. There’s plenty that you can do to protect yourself when you enter the world of investing.
And again, each step you take increases your confidence and helps you overcome your fear.
The Final Word
It’s the risk that debt presents that makes so many people fear it.
Couple that with all of the lessons you learned growing up and it’s hard to break out of that fearful mindset.
Stephen and Monika show you that it’s possible to escape your fear. And once you do, the door opens for the creation of an amazing wealth building strategy.
That’s where we can help you. We work closely with our clients to ensure they understand every aspect of their strategy. We’ll also help you to protect yourself through clever finance structures and insurance.
We’re all investors, which means we’ve had to face these fears ourselves.
Now, we can help you do the same.
You just need the courage to take the first step.
Book your one-on-one session with a Wealth for Life advisor today and learn how you can escape your fear and build an amazing future.