- 6 weeks ago
Juggling multiple loans can feel like a never-ending cycle of repayments and stress. In this episode, we break down the age-old question: should you pay off your debt first or start building your savings?
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00:00But I know some people, they just want peace of mind.
00:02It just makes them feel better because your cash flow is lower.
00:04If you lose your job, you feel more secure.
00:06Because then at least my PTPTN will settle, my car loan will settle, right?
00:09Some people have that goal.
00:10So like you cumpol everything and then put it into one.
00:13You consolidate it into one, right?
00:14Yeah, okay, for your scenario, terrible idea.
00:17They're very strict with you lah.
00:18I mean, they have to be lah, right?
00:19They're doing you a paver.
00:20They want to make sure that you actually commit to it lah.
00:23But will that affect your credit score though?
00:25Because you're doing this, you're sacrificing on your quality of life.
00:28I wouldn't do it.
00:30What's up guys?
00:34Welcome back to The Money Goal.
00:36My name is Ymir and today I have Aisha with me again.
00:39Hey!
00:39Aisha, so what's the issue today?
00:41Okay, last week I was just going through my finances.
00:48Okay.
00:48And I have some hutang, not big ones.
00:51Okay.
00:52You know, study loans, PTPTN, and my car.
00:56Okay.
00:56So I just bought a car seven months ago.
00:58Congrats.
00:59Yay!
01:00Big girl purchase.
01:02Yeah.
01:03So I bought a car.
01:04The car's okay.
01:07So far I went into my, you know, how excited can I paid like seven months on time.
01:12And you paid on time.
01:13Yeah.
01:13So I opened my higher purchase and went through the loan, the loan page.
01:20And then I saw that I have 49,000 to pay to go.
01:26Okay.
01:26How long is your loan?
01:27Nine years.
01:28Nine years.
01:28Okay.
01:28Yeah.
01:29So I have 49,000 more.
01:31Okay.
01:31And then I went back to my PTPTN as well.
01:33And I have 10,000 balance.
01:35Okay.
01:36Not too much.
01:36Yeah.
01:37So it's around 60,000.
01:38In total.
01:39Yeah.
01:40So I've been working for around six years and I've accumulated a good amount for my savings.
01:47Okay.
01:48And I was wondering, should I pay all of my debt, my car loan, my PTPTN, like hubbase, and
01:57then just start rebuilding my savings again?
02:00Okay.
02:00Okay.
02:01Like, is that a bad idea?
02:03Is it something that, you know, you would do?
02:05I don't know.
02:06Okay.
02:06Give me advice.
02:07Okay.
02:07So I think, first of all, how much savings do you have?
02:11I don't know.
02:12I took up to like pay my creator and my PTPN.
02:16Like just enough or like you have?
02:18Or is it like 10% of your savings?
02:20Then got like a bit left.
02:22A bit left.
02:23Okay.
02:23Okay.
02:24Is that scary?
02:25No, no, no.
02:25I mean, I mean, if you have that amount of savings, I think it's quite good.
02:28And it's not that you're, you're not overdue on your debt, right?
02:30You are paying both of those off like every single amount of time, right?
02:33Okay.
02:34So for me, I wouldn't.
02:36I think TLDR, TLDR, I wouldn't pay off my loan now.
02:40But let's just tackle one by one.
02:41So PTPTN, I think everyone should pay it off.
02:44I know some people will say, oh, you know, not really many consequences to not paying PTPTN,
02:49but I think everyone should pay it because, you know, you took a loan from the government
02:51to study, then you should pay it off.
02:52But PTPTN loan has extremely low interest.
02:56Do you know?
02:571%.
02:58Yeah, exactly.
02:58You know.
02:59Okay.
02:59Okay.
02:59I mean, I buy out like 185 a month.
03:03It's not, it's okay.
03:04How long was your loan?
03:0415 years initially, right?
03:05I have no idea.
03:06I've been paying since I finished bludgeon.
03:08So it's been six years I've been paying and then I nak habis 34 years, so 10.
03:14Okay.
03:15No, I think you said you have nine more years, no?
03:17Oh, yeah.
03:1810,000 new year.
03:18Okay.
03:19Sorry, sorry, sorry.
03:19But yes.
03:2020, 30 I habis.
03:21Yeah.
03:21It says there.
03:23PTPTN loan, extremely low interest, 1% a year.
03:25Right.
03:26To me, as long as you pay off monthly, there's no issues, like, there's no real need for you
03:32to pay it off immediately.
03:34Because if you think about it this way, the loan interest rate is 1% per year.
03:38ASB interest rate is what?
03:405%, 6% a year.
03:42And that's what ASB pays in dividends, right?
03:44And you can really just compare it to Apple to Apple like that.
03:46It's that straightforward.
03:47So, if let's say you had 10,000 ringgit now in cash, and you're deciding between paying
03:53off PTPTN or putting in ASB, and then just withdrawing monthly to pay off your monthly
03:58balance, then I think it's better for you to just put in ASB.
04:01Net-net, you will be better off, for sure.
04:04Guaranteed.
04:04Guaranteed.
04:05Okay, so this applies to all lower interest rate loans.
04:08In Malaysia, there are not that many.
04:10PTPTN is just one good example that a lot of people will have that has a very low interest
04:14rate.
04:14Like, sometimes banks will run promos where they do a 0% interest rate loan.
04:21Sometimes they will do.
04:22Yeah, yeah, yeah.
04:22Some of my banks do that.
04:230% interest rate.
04:230%?
04:24Yeah, so it's completely free.
04:25I will actually take it.
04:26I will take it and put it into ASB.
04:28So, I'm taking a loan at 0%, and I'm putting it into ASB at 5%, and I just withdraw from
04:33ASB to pay off monthly.
04:35Wow.
04:35Yeah, exactly, exactly.
04:36Never thought of that.
04:37Yeah, but whenever you're thinking about this, it's always how much are you paying, and
04:41then how much are you getting.
04:42And then the good thing about ASB is, of course, it doesn't fluctuate.
04:45So, it's not that if I put it into ASB, suddenly next year, my money is all gone, I cannot
04:48pay off my PTPTN.
04:49It's not the case, right?
04:50So, we have a very good option there.
04:52So, for PTPTN, I think, very straightforward.
04:54You don't have to, if you don't want to.
04:56Okay.
04:57So, I keep continuing paying monthly.
04:59If we think rationally, then I wouldn't, right?
05:02Okay.
05:02And then, on the car loan, I also wouldn't.
05:06So, I would say, for one, if you wanted to pay off the car in cash at the start, then
05:12I would say it's fine.
05:14It might be an okay idea.
05:16But the thing about car loans is that the way they charge you interest is a bit different.
05:21So, they will always front load the interest.
05:23It's going to be a bit confusing for me to explain, but they use this thing called the
05:25rule of 78, blah, blah, blah.
05:27I'm not going to go that deep into it, but typically, typically speaking, it's not worth
05:32it to pay off a car loan early.
05:33Just because you will already be paying a lot of interest, even if you pay it off early.
05:37Yeah.
05:38So, it doesn't make sense.
05:39Because you already charged me for the next nine years.
05:41Exactly.
05:41They don't charge you fully up front, but they bring forward a lot of the interest to the
05:46early part of the loan.
05:48Yeah.
05:48And now, if you want to terminate, you might be charged a penalty as well.
05:52Yeah.
05:53But I'm giving them money.
05:54Oh, I mean, if you pay the entire loan off.
05:56If you pay the entire loan, including interest, then they won't charge you a penalty, but
05:59then you're wasting money.
06:00Oh.
06:00Yeah.
06:01Because they won't let you off the hook.
06:03Even if you pay now, you will still have to pay some of the interest for the following
06:06years.
06:07Oh.
06:08Yeah.
06:08That's how car loans work.
06:10But it's okay.
06:10I don't think you're in a bad position because you're already paying it off, right?
06:13Yeah.
06:13The only loans that I would tell people to rush and pay it off immediately is number one,
06:18loans that you're not paying on time.
06:19Yeah.
06:19Okay.
06:19Credit cards.
06:20I'm changing.
06:21You stole my thunder.
06:22I was going to say credit card number two, but yeah.
06:24Credit cards.
06:25So credit cards, you have to pay on time, of course, every time.
06:27Okay.
06:28And then every other loan, as long as you're making your monthly payments, then you're
06:33completely fine.
06:33Unless you're behind on your car loan or something, then I would say, of course, try and catch up
06:37and make sure that everything is good.
06:40But otherwise, I would say you're okay.
06:43You're okay.
06:44So one, I'll mention one pro and one con, paying off loans early and just paying monthly.
06:51Okay.
06:51So one benefit that I think is undeniable to some people is they have a goal of being debt
06:57free.
06:58All right.
06:58They don't want to have that.
06:59Even though if I'm speaking rationally from a finance bro point of view, like, oh, you
07:05know, this one is lower interest rate, that one is higher interest rate.
07:07But I know some people, they just want peace of mind.
07:09I don't want to have that.
07:11It just makes them feel better because your cash flow, you know, is lower.
07:14Your monthly expenses are lower.
07:16If you lose your job, you feel more secure because then at least my PTPTN is settled,
07:19my car loan is settled.
07:20Right.
07:20Some people have that goal.
07:21And if peace of mind is very important to you, then I would say by all means.
07:26Right.
07:26You don't have to be rational all the time.
07:28Right.
07:29Sometimes you just want to have that peace of mind.
07:31So that is one of the pros of paying off your loan early.
07:34But one thing that you need to consider is that let's say your savings is 60,000 for
07:41your entire loan.
07:41Right.
07:42If you use the entire amount and pay off that loan, if you get into an emergency, you're
07:47going to get back into debt again, which is, you know, I have to take personal loan
07:52now.
07:52Exactly.
07:53Then your personal loan interest rate will be higher than your PTPTN interest rate.
07:55So you may as well just keep that, right?
07:57So I will only go the peace of mind option, which is to pay off your loan early.
08:02If you have enough money to pay off your loan and still have six months worth of expenses,
08:07then you can consider it if you really want to.
08:10Yeah.
08:10Okay.
08:11This is funny.
08:12We're talking about personal loan tadi, kan?
08:13Yeah.
08:14What if I take my personal, I take a personal loan, pay this two debt, so I only have one.
08:20Actually, some people do that.
08:21They call it debt consolidation.
08:23Yeah.
08:23So like you kumpul everything and then put it into one.
08:26You consolidate it into one, right?
08:27Yeah.
08:27Yeah.
08:27Okay.
08:27For your scenario, terrible idea.
08:31So again, if you just compare interest rates, right?
08:34PTPTN is 1%.
08:35Your personal loan is going to be like 6-7% at least.
08:38Yeah.
08:39So you're borrowing money at 6-7% to pay off a loan that's 7-7%, right?
08:45Some people do this.
08:46Okay.
08:47The scenario that you would do, people call it debt consolidation.
08:50And sometimes if you go to AKPK, which is some agency counselling for people who are struggling with their payments, basically.
08:57They would do this if, let's say, they have credit card debt.
09:00So credit card debt that I really cannot pay off now, I need some time to pay off, but credit card interest rate is 18%.
09:07So then, okay, I take a personal loan, which is 6%, pay the credit card off, and then I service this personal loan.
09:14That would make sense.
09:15Yeah.
09:15So you only take a personal loan to pay off a debt if that debt has a higher interest rate.
09:20Oh.
09:21Right?
09:21Yeah, so not to pay for a debt that is, the interest rate is lower.
09:28Correct.
09:29Okay, okay.
09:29And I would say cars, the interest rate is quite low also.
09:31Cars, the interest rate are quite low.
09:32Mine is low.
09:33Mine is 3.5.
09:34Yeah, that's good.
09:35That's good.
09:36Most of the times, cars are lower than personal loan.
09:38Because car loans, it is collateralized.
09:43Meaning if you don't pay, the bank will come and take your car.
09:45Right?
09:46They actually would.
09:47Whereas if you have a personal loan, if you don't pay, they don't have anything.
09:50They can't take anything from you.
09:52So that's why car loans, PTPTN, those are what I would consider typically good debt to have.
09:59Not that it's good for you to go buy a car that you can't afford, but PTPTN, car loans, mortgage, house loan, I think all these are fine to have.
10:07Okay.
10:07Yeah.
10:08So you've answered my question.
10:09Yeah.
10:10But we have some people who've submitted their question.
10:13Okay.
10:13Okay, they have stories as well.
10:15Okay.
10:15Okay, I'll start with the first one.
10:17I paid all my loans and had to swipe my credit card for a flat tire.
10:22Okay.
10:23That could be me.
10:25Wait, you mean pay off the loans and then like, what do you want to do?
10:27Okay, okay.
10:28So I was so focused on becoming debt-free that I threw every cent I had into paying off my personal loan early.
10:34I felt so accomplished until two weeks later, I got a flat tire and the repair cost me RM500.
10:42I had zero savings, so I had to swipe my credit card and start a new cycle of debt.
10:48That was my wake-up call.
10:50Being debt-free is great, but being cashless is dangerous too.
10:53So the question is, what are some tips to balance loan repayments while still setting aside a safety net for emergencies?
11:00Is this someone else?
11:01Is this you?
11:01Like, you submitted this story?
11:03I'm joking.
11:04This sounds like my future if I do.
11:07Yeah, yeah.
11:07Yeah, but I think it's exactly what I told you.
11:10So how do you find the balance?
11:12Number one, if you can just pay off the monthly payment if you're not behind in your loans, I think you're fine.
11:17You're fine, honestly.
11:18But like I said, if you want the peace of mind, as long as you have your six months worth of expenses saved up,
11:25you can use the rest to pay off the loan quickly if you wanted to.
11:27But at least you need to have that six months just for scenarios like this.
11:31So then now this person here, they're debt-free, but one week later, they're no longer debt-free.
11:35They're in debt again.
11:36Okay, so if you're in this situation, okay, she's not behind on any of her payments, right?
11:45But what if you are?
11:46Like you're behind like six months on your car and like a year on your PTPTN.
11:50Should you take personal loan to cover that or you should just like kerja balik?
11:56I wouldn't.
11:56I wouldn't.
11:57So I wouldn't try to manage this scenario by myself.
12:00Honestly, if you guys are in this situation, like I said, AKPK is an option.
12:03I think a lot of people have not heard of them.
12:05I can't remember exactly what it stands for.
12:07But if you just Google AKPK, you will find it online.
12:09It is a government agency, essentially.
12:12And they will help you basically consolidate all of your loans and it will help you negotiate with the bank.
12:17So basically, they'll take all of your debt, right?
12:20All the debt, like you have 10 different loans that you cannot pay off.
12:23They will consolidate it into just one bank's loan and they will negotiate with that bank for you to get a lower interest rate and a reasonable monthly installment for you.
12:30Wow, they can do that?
12:31Yeah.
12:31There are some downsides to it.
12:33They'll take control of your money a bit.
12:35But I mean, it's worth it.
12:35They're very strict with you.
12:36I mean, they have to be, right?
12:38They're doing you a paver.
12:38They want to make sure that you actually commit to it.
12:41But will that affect your credit score though?
12:43I mean, you really missed 12 months of your payments.
12:45I mean, you're right.
12:47That's the least of your concerns.
12:48I mean, you're right.
12:49Okay, second story.
12:52I felt guilty about my PTPTN loan.
12:55So I paid more than the minimum every month.
12:58RM300 instead of RM150.
13:00But I didn't budget properly.
13:02Some months, I barely had money for groceries or transport.
13:05I even stopped going out with friends just to be responsible.
13:09Eventually, I burnt out and defaulted on all my payments for two months.
13:13Now, I've learned that it's not just about paying more.
13:16It's about paying smart.
13:17So the question is, how can you create a repayment plan that's realistic
13:21and doesn't leave you financially drained?
13:24Yeah, I think in personal finance, a lot of it is about sustainability.
13:29So I think anything that you do, it needs to be something that you can do long term, right?
13:33So even if you're thinking about buying a new car or a new house,
13:36maybe you think, oh, you know, RM3,000 a month, I can do it.
13:39If I cut down here, here, here, here, here,
13:41if every day my meal is RM10 and stuff, but it's not sustainable long term, right?
13:45It's not something that you can do long term.
13:46So again, I think with this, what do you call it?
13:49Viewer, follower, whatever it is, they need to think about what's realistic.
13:53And again, it's not like they're behind on their loan.
13:54These people are super responsible.
13:56They're just like, oh, I'm just paying too much on my loans.
13:59I'm paying them extra.
14:00Exactly.
14:01So I would say if you're paying extra and because you're doing this,
14:06you're sacrificing on your quality of life, I wouldn't do it.
14:08Because it's not something that you can sustain long term, which is evident, right?
14:12They burnt out and then in the end, they just defaulted.
14:14So, you know, enjoy your life a bit.
14:16It's fine.
14:17It's fine.
14:17As long as you have all of your loans being paid off, I think,
14:21don't have to worry about, oh, I want to pay more now, stuff like that,
14:24if you cannot afford it.
14:25Even if you have to pay until you're 30?
14:28Yeah, it's fine.
14:29Oh, okay.
14:29I think a lot of people also have the mindset that debt is very bad.
14:32I have to still pay for my student loans.
14:35A lot of people have the mindset that debt is bad.
14:37And for sure, debt can be very bad, right?
14:39A lot of people are bankrupt because of taking personal loans to get married
14:42or to go on holidays and stuff.
14:44So it can be bad, but it's also not always bad.
14:48Like PTPTN, again, a good example of PTPTN.
14:51If you just pay it off monthly, even if it takes 15 years,
14:54it's fine because the interest rate is only 1%.
14:56But honestly, even I was tempted sometimes to pay off my PTPTN.
14:59Because the more that you've paid, the closer it is to the end.
15:04The amount is smaller.
15:06So you're like, you know what?
15:07I also have, I think, 10 or 15, no, I have 15 or 20,000 on my PTPTN.
15:12And I always get tempted to like, I'll just pay all of that.
15:16Pull the bandage.
15:17But then I won't be a finance bro anymore.
15:19I'm making the wrong decision.
15:20So I'm not paying it off just because I want to show people what's right.
15:24Okay.
15:25I've learned a lot.
15:27No problem.
15:28All right.
15:28Nice talking to you, Aisha.
15:29Hopefully you keep your savings and don't go cash broke to pay off all your loans.
15:34ASB.
15:36Exactly.
15:37Put it in ASB.
15:37Okay.
15:38All right.
15:39Thanks so much, Aisha.
15:40Thank you guys for watching.
15:40Hope you guys enjoy it.
15:42And see you in the next one.
15:43Bye.
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