Asked on 27 Jan 2019
Tuition Fee Loan: 14K, Interest: 4.75%
Study Loan: 14K, Interest: 0
CPF Loan: 12K, Interest: 2.5%
Am seeking for feedback/advice on how should I tackle this situation.
Thank you in advance!
1) Deal with the highest loan % first. This is the most correct issue.
2) For CPF payment to parents, you might want to do RSTU instead for tax savings. Hopefully they can start to drawdown their RA account. If not, it's a double whammy. They can't waive off if I remember correctly. Best to pay it off 2nd if you can't RSTU. (Retirement Sum Topping Up for parents.). This is because CPF earns 6%-4% interest (combined CPF, stepped down, from first 30k 6%, to next 30k 5%, then to 4% to 2.5% for the rest).
I am in a similar scenario (except that I have no loans to pay off). My mum could take her RA, so I top up while giving the rest in cash (to maximise tax relief and also maintain their monthly cash).