Debt Strategies for Doctors: When Debt Helps and When Debt Hurts

Debt is a reality for most doctors. From university loans to mortgages and practice finance, managing multiple forms of debt simultaneously is common. The challenge is knowing which debt helps build wealth and which holds you back.

The Types of Debt Doctors Commonly Carry

Doctors often juggle:

• Home loans

• Investment property loans

• Practice or business debt

• HECS/HELP balances

  
  

Each behaves differently and should be managed with intention.

Understanding Good Debt vs Bad Debt

Good debt generally:

• Is tax-deductible

• Supports income generation

• Grows assets over time

  
  

Bad debt typically:

• Funds depreciating assets

• Carries high interest

• Reduces cash flow flexibility

  
  

The goal isn’t eliminating all debt, it’s structuring it intelligently.

Structuring Debt for Efficiency

Strategies may include:

• Using offset accounts to reduce interest

• Splitting loans to separate deductible and non-deductible debt

• Debt recycling to convert personal debt into investment debt

  
  

When executed properly, these strategies can significantly improve long-term outcomes.

Avoiding Common Debt Mistakes

Doctors often:

• Focus solely on paying down debt without considering opportunity cost

• Ignore tax implications

• Overextend during high-income years

  
  

A balanced approach ensures debt supports, rather than restricts, future options.

Key Takeaway

Debt should be a strategic tool. When aligned with a broader financial plan, it can help doctors build wealth faster while maintaining flexibility.

If you have questions about your Financial Planning requirements, please reach out to BFD Financial Planning today for specialist guidance and support. Your financial future deserves careful consideration, and we're here to help you every step of the way.

Contact us today. info@bfdfp.com

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The information contained on this website and in this blog-post is general in nature and does not take into account your personal situation or circumstance. It is recommended that you consider and use the information provided responsibly, and where appropriate, seek professional advice from a financial adviser.

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