Financial Freedom Key Goal 1

I will share my opinion on the 6 key goal on financial freedom previously. This is series 1. My comment is at bold colour.

Key Goal 1 : Eliminating Bad Debts

Minimizing Car Loan Debts
These are debts that bring no value to your personal wealth or net worth. The most common bad debt everyone would face? Your car loan of course! 

While your car value depreciates over the loan period, you're still required to service your loan with the same amount monthly. What's worst is that by the time you finish paying off that 9 year loan, you will still be forking out that same amount (or more) for repairing a 9 year old car that's consistently giving  you problems. The solution? Get a new car and repeat the entire cycle all over again. 

Knowing how "comfortable" and "timely" our public transport can be, driving a car has somehow become a necessity for Malaysians. While you might not be able to eliminate this bad debt, you can always minimize it by buying a car that's within your means and taking a shorter loan period to reduce the interest paid to bank.. 

I do agree to minimize car loan debt. Normally I will buy SECOND HAND CAR because first 3 years the car will depreciated in big amount. Example: Proton Saga FL 2011 car, about RM 30k, new car 2013 about 40k. You save about 10k. Of course you need to have time, good and reliable mechanic that can test the car for you. Beside that, you can save on your car insurance for NCD, currently I am at max 55%. Currently, I am driving a 2nd hand car without loan. I never have a new car before.

Zero Installment Debts
This ranges from installments for a new phone, a new laptop, furniture, electrical goods, etc. However you want to look at it, I strongly feel that if you can't afford that item, then don't have it yet. Notice that I highlighted the word yet? That goes to say that if I really want that item, I will eventually own it but only when I have the means to pay everything with cash. 

Secondly, most of these items tend to be impulse buys in which we will be still paying the installment long after we lost interest of it. I know I have experienced that before, have you?

I do agree with zero installment debts. But if the company offer a 0% interest rate, I think it is no harm taking. Example: I bought my notebook with 0% interest, I need to pay RM 150 per month for 1 year. This is provided I need the notebook and I can claim income tax at the same time. I will do this for my LED TV also provided my current TV is spoil.  I am holding my needs on buying a LED TV for a year already. 

Zero Credit Debts
This ranges from accumulating credit card debts to borrowing money from the "Ah Loongs". These are debts that charges sky high interest if you default or late in paying the installment. 

I do agree with zero credit debts. However if you fully utilized the promotion from credit card, you can save a lot of money. Example: I pay petrol, groceries, utility etc by using my OCBC Titanium credit card which give me 5% rebate. I get rebate averagely about RM 40 per month. I wait for promotion to apply for credit card. Example: Standard chartered have a promotion with groupon, If you apply through groupon you get a Free Camera and cash of RM 250 (50 for government tax) and free annual fees for 2 years. My intention is take the Free gift and after 2 years I will cancel the credit card. Another example is Credit card will have some promotion on cash on card which use your credit limit as a personal loan for you. I just take up the personal loan with 3% interest for a year. My intention is take the money put inside my FLEXI house loan that charge me 4.5 % interest per month. I am still earning 1.5%.



Agreed on your point on credit card. BTW, which bank offers you personal loan of 3% p.a? That's really low and i would also consider to do you did to repay my housing loan..

Thanks CK. Any other T & C for this loan? So far I only get 5.99% from OCBC...

5.99% is not worth it.

standard T&C, same as the 5.99%.

You need to know your bargain power.


Yeah, agree with you. If you use the credit card extensively and have good repayment, it is easy to get good terms :D