Alterra Advisors

Debt Reduction Strategies in Detail

Education On Debt Load

By educating the Miller’s on subtle differences between their debt load—mortgage, student loans, and practice debt—allowed us to maximize debt benefits and minimize costs.

Our first objective was to teach them which debts helped reduce their taxes and which didn’t. Once they understood the impact on their taxes, putting an overall game plan for debt elimination became much easier.

We also helped them set a hurdle rate – the interest rate the we’d use to decide if a debt should be paid off on schedule or accelerated.

Long-term Investment Accounts

Our plan called for refinancing and accelerating the majority of their student debt. They were paying rates of 7-8% on the majority of their 400k, which could be immediately reduced by refinancing.

Their mortgage loan and practice loans all fell below 5% after tax savings, so we recommended paying these off on schedule and shifting focus to savings and investment.