BRUNEI - Paying off debt and investing for the future are both essential elements of a healthy financial life.
Yet, these two tasks seem to conflict with each other when it comes to setting the priorities.
Is it best to be debt-free the soonest you can? Or should you just pay the minimum and set aside the extra money for your savings? Here are several factors to consider:
Compare the earnings
One of the most common approaches to tackling the question of debt repayment against investment is by comparing the interest rate of the debt to the returns on investments.
Basically, high-interest loans that exceed investment earnings should be paid off first.
Likewise, if you have low-interest debt, greater benefit may come from making the minimum payments and putting more money into investment accounts.
"Whichever is better and financially beneficial, I would go for that," says Hjh Siti Zuraihah Hj Sulaiman, who works for the Information Department.
However, her priority goes to settling off her debts.
"If I still have a lot of debts, then I cant possibly do savings. So I would finish them off first," she says.
Enforcement Officer at Tourism Development Department Pg Azmanishah Pg Azmanishah Pg Hj Abd Rahman says that he would do a bit of both but more sided in paying debts.
The civil servant says he still manages to save B$100(S$100) on a monthly basis while paying his debts consistently.