Debt Management

Staying in Control

While most of us prefer to concentrate on what we own, rather than what we owe, debt has become a perfectly normal and acceptable part of the modern world in which we live. It is considered a “necessary evil”. Without debt, it is unlikely that most of us would ever be able to purchase our own home (using a mortgage) or our car (using a personal loan).

In today's competitive financial services environment, there is a myriad of lending (debt) products on offer - with terms, conditions, options and interest charges to suit every need.

Comparing these products, and selecting the one that best matches our needs at the time, is a time-consuming and often perplexing task. But, choosing the most convenient rather than the most appropriate lending product, could have a substantial negative impact on your financial well being.

What is Debt Consolidation?

Put simply, debt consolidation is the process of replacing several separate loans (or debts), with one new loan (or debt). For example, you may have an existing home loan, a car loan and also some credit card debt. A new loan (secured against your home) is taken out which effectively pays out these three debts and then continues to operate as a normal home loan.

The potential advantages of debt consolidation include:

  • the annual interest paid on the new loan is usually less than the total annual interest paid on types of debt you may have. For example, credit card and personal loan interest rates are normally higher than those on housing loans;
  • annual repayments on the new loan will often be considerably less than the total repayments made on all your current debts;
  • the ongoing transaction costs associated with the one consolidated loan may be significantly less than the total costs currently incurred on the five existing facilities; and
  • ease of management - just one monthly statement and one monthly payment.

The potential disadvantages of debt consolidation include:

  • a loan which might otherwise be repaid over a shorter term (for example, personal loans are normally repaid over a one to five year period), will now be all repaid over the longer term of the new loan;
  • the longer term of the new loan means total repayments made will be considerably greater than the sum of the total repayments of current multiple debts (unless some early repayments of principal are made); and
  • there may be costs associated with the taking out of the new loan and the early repayment of the other facilities.

Why Consider Debt Management?

Debt is simply something owed by one person (the debtor) to another. However, it is most commonly associated with the obligation we accept to repay the lender both the original sum we borrowed (called the “principle”) and also any interest or other charges set out in the loan agreement.

It is incredibly easy to acquire debt - indeed, the banks (and other non-bank lenders) seem to be “falling over themselves” to lend us money.

Here at Sound Life we work closely with your lender or provider to ensure your debt meets your financial strategy needs.


Sound Life & Superannuation Agencies Pty Ltd trading as Sound Life Financial Services are
Corporate Authorised Representatives of Synchronised Business Services Pty Ltd
ABN: 33 007 207 650 trading as SYNCHRON
Principal address: Level 1, 65 Palmerston Crescent, South Melbourne Vic 3051
Australian Financial Services License Number: 243 313