It’s composting awareness week! What eco practices can we all do to save money as well?

Debt-recycling-geared-investments“Cash-a-can, cash-a-can, it’s lots of fun to do!”

My first inkling that being a tree-huggin’ hippy could be financially rewarding was via that 70s TV jingle. Every kid I knew would fight over aluminium cans to earn extra pocket money.

Trawling around school fetes with a plastic bag was particularly profitable.

Later in life, the little greenie tries to save money. I turn on about 15 lights/fans/heaters a day around the house … but turn off more than 100.

Bob the Builder educated our kids to give deathly scowls if we fail to reduce, reuse and recycle.

The albatross around Gen X’s necks is our mortgage. We’d love to recycle that.

We can. It’s called “debt recycling”. And it’s the practice of turning non-deductible debt (your mortage) into deductible debt (investment).

Essentially, sell an asset, pay down your home loan, then repurchase other investment assets with debt.

For example, say you had $100,000 worth of shares and a home loan of $250,000. You sell the shares and pay down your home loan by $100,000. Then you borrow $100,000 to purchase more shares.

You still have $250,000 worth of debt. But now you have a home loan of $150,000 and you have $100,000 worth of tax-deductible debt.

Because interest on an investment loan is tax-deductible debt, it is far cheaper to service the loan.

The ATO watches debt recycling arrangements closely. It’s not as simple as stated above and don’t forget caital gains tax. There are rules and conditions and the penalties for getting it wrong can be hefty. See a financial adviser if considering this strategy.

Bruce Brammall is the principal adviser with Bruce Brammall Financial ( and author of Mortgages Made Easy.


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