Recently graduated. Earning 3.3K before CPF deduction. Have 3 loans to pay up. Please shine some light on my path on what's the best way to tackle my situation? - Seedly
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Anonymous

Asked on 27 Jan 2019

Recently graduated. Earning 3.3K before CPF deduction. Have 3 loans to pay up. Please shine some light on my path on what's the best way to tackle my situation?

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.

  • Is there any way to waive off the CPF Loan, even if my parent's CPF is below the minimum sum as I'm giving them cash monthly.
  • Let's say I have 15K, after putting 5K aside for emergency, to pay off the Tuition Fee Loan, am I making the right choice to pay it all at once?

Thank you in advance!

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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).

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