Re: pay off debt or dragons...your advice

veryugly

veryugly

Active Member
Dear all

Currently, I owe the government institutional fee of $12,800 (HECS/HELP). By mid September, I would have save enough money to pay it all off. The government gives 10% discount if I pay $500 or more. Therefore, I would get $1280 discount. This offer will end 31st December 2011, from 1st January it will drop to 5% discount.

My question is, should I pay it all off in mid September or save it for the dragons?

vg
 
Why not go half-half? Pay off $6400 and get the 10% discount on half the loan, then use the other $6400 to buy the dragons. Your dragons would then just need to appreciate by more than 5% the following year for you to come out better than paying off the whole loan. That way you get to halve your loan and also the satisfaction of owning dragons.
 
Do NOT pay off your HECS debt it is indexed on inflation!!! Where else would you get a load of 13K @ CPI inflation?! Buy Silver if Ag does not beat CPI inflation + discount for paying off we're all in trouble :)
 
In that position I would pay off maybe $8000.00 of the loan and get the discount, spend the rest on metal.
 
thatguy said:
Do NOT pay off your HECS debt it is indexed on inflation!!! Where else would you get a load of 13K @ CPI inflation?! Buy Silver if Ag does not beat CPI inflation + discount for paying off we're all in trouble :)
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Well said - however, if you are earning enough that you will be paying it off when you lodge your tax return anyway then you may as well save 10% and pay upfront.
 
I have 60000 hecs debt and I'd still go for dragons. your debt doesn't change in value in real terms.
 
Clawhammer said:
Pay off the debt, pay off the debt, pay off the debt...
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hi clawhammer -

not having a go, just wondering why you suggest to pay off this debt?

HECS debt being indexed at CPI declines in real value every year since inflation is higher than CPI.. so the longer you keep it the smaller it gets.
 
Because debt is the alpha & the omega of the ruling class. It's their golden cage for us, it is a chain that we are persuaded to wrap our own selves in.
Get rid of the debt. Then post how it feels to owe no money to no man or institution.
 
The HECS debt is structure differently to debt from commercial sources and I'd say leave it for now. If it makes you feel better, pay off a portion but as many posters have said, the real value of the debt will decline over time and the compulsion to repay it is only dependent on: your decision or you earning over a certain bracket. The opportunity cost of not paying it is minimal unless we have a CPI of 5%+ but hopefully by then you have a high paying job based on your studies.

No other debt (I know of) offers this flexibility and should be taken advantage of...
 
Ouch said:
Why not go half-half? Pay off $6400 and get the 10% discount on half the loan, then use the other $6400 to buy the dragons. Your dragons would then just need to appreciate by more than 5% the following year for you to come out better than paying off the whole loan. That way you get to halve your loan and also the satisfaction of owning dragons.
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Sounds good - diversification is good + it's usually a good thing to have 2 extremes and take the path down the middle.
 
Fe Mike said:
Because debt is the alpha & the omega of the ruling class. It's their golden cage for us, it is a chain that we are persuaded to wrap our own selves in.
Get rid of the debt. Then post how it feels to owe no money to no man or institution.
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this is what i thought. you hit the nail on the head. of course the endgame (freedom) is always no debt.

but for a younger person buying dragons and keeping the cheap CPI indexed debt imho is financially the best move. i guess it's a trade-off.. personal preference.
 
thatguy said:
Do NOT pay off your HECS debt it is indexed on inflation!!! Where else would you get a load of 13K @ CPI inflation?! Buy Silver if Ag does not beat CPI inflation + discount for paying off we're all in trouble :)
Click to expand...

I also agree - Do Not touch the HECS debt -
Even if i had $1mill in cash i wouldnt pay it off.

Note: i also have around $30k in hecs debt
 
bsides said:
Clawhammer said:
Pay off the debt, pay off the debt, pay off the debt...
Click to expand...

hi clawhammer -

not having a go, just wondering why you suggest to pay off this debt?

HECS debt being indexed at CPI declines in real value every year since inflation is higher than CPI.. so the longer you keep it the smaller it gets.
Click to expand...

Fe Mike said it all in his post.

The feeling of owning dragons won't compete with the feeling of having no debt.
I didn't pay my HECS off until I was 30 and I still remember with joy the day I removed that millstone from my neck. I wouldn't have been able to go to Uni without it...but I did let it drag out for waaay too long.

A debt to the govt is a deal with the devil and something you don't want. Just as they are changing the terms for the better (via discount) they can also change it to the worse.

Baby bonuses, FHB Grants, HECS debt, Solar, Insulation and Water tank Rebates are all deals that will bite their recipients in the ass in the future.

My preidction is that there'll be plenty of Dragons to go around.... consider buying coloured ones and wiping the paint off with some acetone if need be.
 
My personal advice would be 'owe nothing, own everything' but thats just me.

If I was in your shoes though, I must say I'd find buying metals too hard to resist. That said, having NO debt whatsoever is an incredibly liberating feeling - its all wealth from there :D
 
somerset said:
fishball said:
I have 60000 hecs debt and I'd still go for dragons. your debt doesn't change in value in real terms.
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That's a lot of dragons ;)
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Doesn't mean I have 60000 lying around lol.

I just let them take HECS repayments out of my pay as a 'tax', I never let pay a cent more than required.

Yes debt is bad but HECS is a different kind of debt. It is an interest free debt which declines in value over time, why rush to pay? LOL

Also, if you leave the country or you earn less money that year you don't have to pay it....what a winner!!!!!
 
Thanks for the advice guys :). I think I'll go for the dragons and like Fishball, I'll just let them take some tax out of my pay.

"Also, if you leave the country or you earn less money that year you don't have to pay it....what a winner!!!!!" That's a good one fishball :D !
 
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