Aussie Firebug

Financial Independence Retire Early



Today I’ve invited Terry Waugh back on the podcast to talk about a topic that’s very popular in the Aussie FIRE community. I recently published an article about how we (Mrs. Firebug & I) are Debt Recycling and have received a lot of questions from the community. Terry is one of the most knowledgeable people I know on this topic and he has kindly agreed to join me to answer as many questions as we had time for.

Some of the topics we cover are:

  • What is Debt Recycling? (02:28)
  • What are some of the ways you can DR and how does it work? (03:48)
  • What happens if you need to sell some shares due to an unforeseen event? (21:26)
  • What happens if you don’t have a lump sum to invest? Can you DR with dollar-cost averaging? (23:04)
  • Are there any products on the market that make DR any easier? (26:42)
  • Can you explain your tip “Repayment needs to be done once in full”? (28:30)
  • Can you use a fixed loan with DR or does it have to be variable? (29:30)
  • Is DR more or less effective if the interest rates were to rise? (31:27)
  • Can you still claim the interest if you redraw the money to increase leverage on a marginal loan to maximise purchasing power? (33:59)
  • Does the loan need to be in your name to get the total deductions? (35:37)
  • What happens if you refinance? (37:40)
  • What happens if you sell the PPoR later down the track? (41:07)
  • What happens if you convert the PPoR to an IP later down the track? (43:59)
  • Can you sell a chunk of your portfolio in order to pay down the loan, redraw it back out and then buy the exact same shares as before? (47:15)
  • What happens if the income from the trust is not enough to cover the interest on the loan? (49:14)
  • If your PPoR loan is P&I do you have to structure the loan agreement to the trustee as P&I as well? (51:06)
  • Can you DR with a trust if both the borrower and the trustee are the same person? (52:53)
  • Debt Recycling an investment property (54:03)


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