About the author xi Part I: the household debt explosion 1 Part II: first things first 11 1 Work out how far in the red you are 13 2 Compare debts with income 14 3 Work out your total loan repayment bill 16 4 Get the facts on all your loans 17 5 Check your interest rates 19 6 Add up all those extra fees and charges 20 7 Sort your debts 21 8 Prioritise your debts 24 9 Check your credit rating 26 10 Make a calendar and set targets 27 101 Ways to Get Out of Debt and On the Road to Wealth Part III: mortgages 29 11 Do the numbers 31 12 Increase your mortgage repayments 34 13 Make one-off extra payments 37 14 Use pay rises to increase your loan repayments 41 15 Shorten the life of the loan 43 16 Use your income patterns to pay off sooner 45 17 Pay fortnightly instead of monthly 47 18 Shop around for a lower rate 48 19 Keep repayments flat when rates fall 51 20 Don t keep switching loans 53 21 When refinancing, stick with your existing lender if you can 55 22 Always choose principal-and-interest loans over interest-only loans 56 23 Stick with floating mortgages 58 24 Avoid redraw mortgages 60 25 Be careful of offset accounts 62 26 Don t use line-of-credit mortgages 64 27 Beware the honeymoon rate nightmare 66 28 Don t capitalise loans 68 29 Upgrade your subprime loan 71 30 Consolidate debt at your peril! 72 31 Don t pay for features you don t need 75 32 Take into account all fees 77 33 All fees are negotiable 79 34 Don t count on your partner s income to borrow more 80 35 Mortgage brokers spot the double take 82 36 Check that you are getting the correct rate changes 84 37 Let a tenant pay the mortgage 85 38 Consider long-term house-sitting 86 39 Plan a mortgage-burning party in advance 88 40 Pay off the mortgage before investing 89 41 Don t bank on your superannuation fund to pay off the mortgage 93 42 Let grown-up kids pay part of your mortgage 94 43 Consider mortgage contributions instead of presents 95 44 Downsize smaller house, smaller mortgage 96 45 Trade up houses, but trade down debt 98 46 Try the payout two-step 101 47 Avoid complex mortgage-reduction schemes 102 48 If you have to sell, stay in control 103 Part IV: credit cards 105 49 Find out how much you spend on credit cards 107 50 Choose the right card for your needs 108 51 Avoid credit card surfing 108 52 Never use cash advances 109 53 Cut up your store cards 110 54 Never pay just the minimum amount 111 55 Keep payments flat 113 56 Use direct debits 114 57 Check every item on statements 115 58 Once you ve paid it off, cut it up 116 59 Consider changing to charge cards 117 60 If you have a charge card, don t take up the credit option 118 61 Reduce your credit limits 119 62 Do leave home without it! 120 Part V: car loans, personal loans, boat loans and store loans 123 63 Renegotiate, don t refinance 125 64 Always pay a cash deposit 126 65 Never buy new 128 66 Don t self-insure 130 67 Don t use store loans 131 68 If you fall into arrears, tell your lender as soon as possible 132 69 Get the credit bureau to limit more lending 134 70 Celebrate each win 135 Part VI: investment loans 137 71 Use principal-and-interest loans for investment properties 139 72 Avoid fixed-rate loans for rental properties 140 73 Avoid lines of credit for investment properties 141 74 Use your tax refund 142 75 Don t use deposit bonds 143 76 Don t borrow for the holiday house 145 77 Borrow in the same currency as your income 146 78 Beware the margin on share loans 149 79 Use dividends to pay off the principal on share loans 151 Part VII: small business debts 153 80 Get your personal finances sorted before starting a business 155 81 Keep business finances separate 156 82 Use your business plan 156 83 Don t make capital purchases using the overdraft 157 84 Don t extend your lease term too long 158 85 Avoid high lease residuals 160 86 When buying a business, do your research 161 87 Don t borrow to buy a franchise 163 88 Be careful of line-of-credit mortgages for business 164 89 Use supplier terms and customer terms sensibly 165 90 Sell your debtors 167 91 Maximise depreciation 168 92 Never pay full price for business equipment 170 93 Business succession to reduce debt 171 Part VIII: avoiding and minimising debt 173 94 Maintain an emergency cash fund 175 95 Use separate accounts for savings goals 176 96 No deposit, no mortgage 177 97 Renters, get a 10 to 15 per cent discount on your first home 179 98 Don t borrow to put money into superannuation 181 99 Avoid tax-based schemes 182 100 Be careful if guaranteeing other people s debts 183 101 Beware the lender who says you can afford a loan 185 Part IX: the final pay-off 189 Part X: useful resources 191 Index 195
Ashley Ormond was one of Australia s first PC-equipped mobile lenders , starting out in the early 1980s witha financial calculator, a dual-floppy drive Compaq portable PC anda portable Epson thermal printer in his car. This was before theage of mobile phones, the internet, Windows, Excel, or even harddrives. It was back in the days when: lenders actually analysed each borrower sability to repay borrowers actually had to have a job or othersource of income borrowers actually had to have proof of a savingsrecord, proof of income, proof of assets lenders had to actually think about how each debtwould be repaid, instead of just shovelling money out thedoor lenders actually retained the credit risk andretained the ownership of loans, instead of just selling them tounsuspecting bond-holders on the other side of the world. His banking and finance career included several senior executiveroles at major Australian and international banking and financegroups, including running branch networks, lending operations,product development, pricing and financial control. His formalqualifications include a Bachelor and Masters in Law, a Bachelor ofArts in Economic History and a Graduate Diploma in Applied Financeand Investment. He has also lectured for the Securities Instituteof Australia. Since retiring at 40, he has been adirector of several companies, including listed, private andnot-for-profit companies and a charitable foundation. Ashley is the principal of Investing 101 Pty Ltd, a specialistinvestment research firm that holds an Australian FinancialServices Licence. He is a sought-after speaker and commentator onfinancial markets and has written two best-selling books onfinance: How to Give Your Kids $1 Million Each! and $1 Million for Life.