Walking the economic tightrope with care

Reports are that many Aussies are saving money and cutting spending contrary to what the government thinks will lead to a recovery.

By the same token Aussies are said to be among the most indebted people in the world. So Aussie Debt Solutions are important to develop.

Corporate profits and executive salaries are booming while workers’ pay rates have stagnated. That is not likely to drive consumer demand.

Federal government laws now put prime responsibility on the borrowers to ensure they can service and repay loans, so do your homework.

It is debt that has created the economic challenge that now exists where many people do not have the income to service and repay their loans.

There is much logic in reducing debt where possible so that lenders are less likely to seize your assets. There is also much logic in saving, in case we do go into a depression. Best to spread savings widely so that if one lot of money is lost, the rest will still be safe.

When borrowing large amounts, do a Loan Impact Statement for yourself, or have someone like GBAC do one for you. It should set out your debt servicing and repayment program until the debt is cleared, with space for you to mark off payments made and check that the balance is reducing as expected.

It should also show the impact that loan, interest and charges payments will have on your disposable income in the years you hold the loan. Be cautious!

Check all loan terms very carefully. Many lenders do not give you all their terms but simply refer to some document somewhere. Ask for a complete set of loan terms and make sure you get a copy of the loan agreement signed by the lender. Keep it safe because you may need it if a dispute arises. If you don’t understand every term, ask for an explanation.

The smiling banker who lends you money will most likely be replaced by a ruthless debt-collector if you fail to meet loan terms, so be prepared. If you need a loan consultant to help you, call GBAC and we will be happy to help.

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