Though the question been asked about 4 years back, I still find it relevant and it's important to highlight how best to manage our personal debt. The decision making is certainly simple to understand, but the action might not be easy to execute. So it's always advisable to consult a qualified financial planner to set up a financial plan that tailor-made to your unique situation.The Question!"I just graduated from a local university with a interest-free tuition fee loan when I was a full-time student. However, my loan which is about S$50,000 will be interest-bearing from 1st August 2012.The interest rate will be at prime lending rate (board rate) at 4.75% per annum.I can choose to pay a minimum amount of S$100 monthly for a maximum of 5 years.I can also choose to defer payment till August 2014, which means I can start to pay S$100 monthly from 1st August 2014, but interest will still be incurred during the 2 years when I didn't make any monthly payment. (But of course I cannot choose to pay minimum of S$100 as this amount is not sufficient to fully repay everything within 5 years) Currently, I have a total liquid assets of S$100,000 including:S$35,000 cashS$15,000 fixed deposit (matured in July 2013)S$50,000 of stocks (most of them are blue chips, high-yield such as Singtel, Starhub, SPH, Singpost and REITS which are now all above at least 10% above the price I had bought).I would like to ask if I should pay all the S$50,000 before the interest commence, or should I do otherwise? Thanks!"If Mr. X want to be debt free, then I would suggest he fully paid off his loan.This is one of the options. Debt free is a important criteria of...Read More
