| In Ireland the Celtic Tiger brought with it | | | | burden that most of us are faced with. This debt |
| unprecedented access to credit facilities, which | | | | is very expensive due to the high rates of |
| were gladly lapped up by the Irish public. However, | | | | interest payable and therefore, clearing this debt |
| the legacy of poor financial planning from this era | | | | should be high on your priority list. |
| is now plain to see. | | | | Using the money that you have been able to free |
| During this boom, many people found themselves | | | | up, you can now focus your attention on paying |
| owning multiple rental properties without ever | | | | off any short-term debt. By clearing this debt as |
| examining how these portfolios should be | | | | soon as possible, you can help to free up even |
| structured to maximise efficiencies in all areas | | | | more cash-flow, which can in turn be used in |
| including cash-flow, tax planning, wealth creation | | | | other areas of your personal economy. |
| and wealth protection. Now that the economic | | | | Once you have managed to clear the short-term |
| conditions have changed so dramatically in tandem | | | | debt and have been able to free even more |
| with a tightening of cash-flow, the lack of planning | | | | cash-flow, you can now look at clearing longer |
| is having a direct impact on how people are | | | | term debt such as the mortgage on your home. |
| managing their own personal economy and | | | | Your home is the most important asset that you |
| possibly limiting chances to generate future wealth. | | | | own, as it provides shelter for you and your |
| Take the example of an individual who has found | | | | family. Therefore, you should look to remove any |
| themselves owning multiple rental properties, but | | | | threat to this security and as such, clearing the |
| who has never taken the time to put appropriate | | | | mortgage on your family home should also be |
| financial planning controls in place. Poor planning | | | | high on the priority list. By using the improvement |
| may have resulted in a situation where the | | | | in cash-flow to pay off your mortgage early, you |
| individual has to use some of their own money to | | | | will not only increase your security but could also |
| help cover the cost of owning these properties. | | | | save thousands in interest repayments. |
| Where an individual owns investment properties, | | | | There is also an element of long-term planning |
| these properties should be self financing assets. | | | | that needs to be implemented as part of any |
| This means that the money receivable (rent) | | | | balanced financial plan, and the area of retirement |
| should be greater than the costs associated with | | | | planning should also be addressed. |
| owning the property. If the property is not self | | | | Many people are currently underfunded in their |
| financing and you have to contribute some of | | | | pension arrangements and while this is not a |
| your own money to cover the costs, it becomes | | | | short-term problem, it is important that you look |
| highly inefficient as the money that you will be | | | | to the future so that you can enjoy retirement. |
| using will most likely be coming from your salary | | | | Freeing up your cash-flow in one area may enable |
| on which tax has already been deducted. In such | | | | you to increase pension contributions and help to |
| a situation you have not only tied up your wealth | | | | ensure a secure retirement. By contributing to the |
| in an illiquid asset, but have also created a drain on | | | | pension, you can also take advantage of the |
| your cash-flow. In most cases, it is possible to | | | | generous tax reliefs available and therefore |
| create a situation whereby you can improve your | | | | increase your efficiency in the area of tax |
| cash-flow position through restructuring the | | | | planning. As mentioned, each individual will require a |
| finance arrangements and also ensuring that you | | | | different plan to suit their needs. |
| minimise any tax liability. | | | | However, you will now see the knock-on effects |
| If, through appropriate tax and financial planning, | | | | that improving the efficiency in one area of your |
| the individual in question can create a situation | | | | finances can have on all other areas of your |
| where the rental properties are now self-financing | | | | personal economy. You will also see how the |
| and possibly providing a surplus income, the whole | | | | improved efficiency can snowball through your |
| picture changes. In this situation, you have now | | | | personal economy to save money, improve |
| freed up your cash-flow, which allows you to use | | | | cash-flow and develop your wealth. This is just an |
| this money to fund other areas of your personal | | | | example of how you can develop and grow areas |
| economy and implement plans to generate future | | | | of your personal economy by maximising |
| wealth. | | | | efficiency in just one area of your finances. |
| So what should you do to help develop your | | | | There are many other areas where efficiency can |
| personal economy now that you have freed up | | | | be improved through sound tax and financial |
| some of your cash-flow? The answer to this will | | | | planning, resulting in the same opportunities for |
| be different for each individual. However, there | | | | growth and wealth creation. You can therefore |
| are a few fundamentals that all people should look | | | | see how vital it is to take a holistic approach to |
| at. | | | | your financial planning in order to maximise |
| Credit card debt and other short-term debt is a | | | | efficiencies in all areas of your finances. |