Deferring loan payment is not helping me. Any advice?

The StayAtHome period impacting all people around the world. The purpose of the loan relief is to help cash flow, but all working class productivity dropped significantly, therefore income will drop significantly. And the loan relief and with our without higher interest will kick in after the relief period too. It somehow still does not balance - with the income drop, we still need to pay the principal and interest. It's confusing. Can someone give some light comments?

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Pang Zhe Liang

13 May 2020

Lead of Research & Solutions at Havend Pte Ltd

Cash Flow

Firstly, we need to have a complete understanding on our cashflow. Through this process, we will understand our earning ability and spending habit.

Here is a Guide:

Understanding Your Personal Cash Flow

For the most part, brainstorm on ways to increase your income, e.g. part-time work, and reduce your expenses.

Loan

Next, we will need to understand the nature of the loan. In detail, we need to find out informaiton such as the total outstanding loan amount, interest rate, repayment amount.

Budget

While the loan deferment allows us to stop paying the loan repayment for a short period of time, this doesn't mean that we should use the entire fund for other purpose. Instead, we should conduct proper planning to channel part of this fund into saving up for the loan repayment, and use the rest for immediate expenses. This is especially important since you are required to continue repaying the loan after the deferment period.

The best way to create a budget is via automation.

How I do My Budget:

How to create a Monthly Budget

Overall, you need to have a proper system to ensure that you do not fall into the interest trap thereafter. Above all, do not take up additional loan to repay the existing one. Otherwise, you will simply sink deeper into the loan trap. Instead, work with your existing resources. What you really need is to do proper planning and execute the plan to this end.

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