HECS - Upfront or defer (1 Viewer)

[Rezix]

I have more than enough money for first semester, and am a compulsive saver so will easily save enough (from my casual job) to pay all of my HECS upfront at the 25% discount. This will mean every dollar I put towards HECS will be worth 1.33 dollars after the census date.
Thing is, HECS does not have to be repaid for a while and, although it is adjusted yearly according to the CPI (or for inflation for those who dont know of it), investing my money elsewhere could possibly result in 33c+ to the dollar profit, after inflation being made by the time I pay my HECS off, if deferred.

What you think? Anyone else even considering paying it off upfront? I am almost sure I will.

 

[freaking_out]

yeah, paying upfront is a much better option- u save thosands if not more (since the amount is adjusted according to CPI) of dollars...but then again, its only for ppl. who have a lot of money.

 

[Tenax Propositi]

Deferred.

 

[Wildmage]

I deferred it 'cause I'm poor... lol... and 'cause I can't save money... I am a compulsive spender...

And I don't want my parents to have anything to do with my uni fees, 'cause they went through HELL with my private education fees and tutorial classes.

I really don't care, 'cause I know that I'll make voluntary repayments anyways and get a 15% discount. I know it's not 25%, but that's better than nothing...

 

[Malazn Pleasure]

upfront coz its liek 25% discount

plus i dont want to be in debt after i graduate

 

[Leanne]

deferred....i have to pay for it cos my parents dont have the money..................its fine if ur rich to pay up front and get the discount.............

 

[alman]

i read an interesting article in the SMH about this...

because hecs is pegged to inflation (aka CPI), you would be better off putting money for hecs debt in a cash management account...

think about this...cash mgt account grows at 5% p.a. whereas CPI is at 3% p.a. (assuming current economic management)..so it would mean a 2% in you pocket deal...

hows that for spare change?
please note: im not taking into consideration management fees or other costs...but that 2% should cover it - try and find a low cost fund...and one that pays the 5% too

anyone else got other ideas?

 

[Malazn Pleasure]

get an ING account

 

[alman]

Originally posted by Malazn Pleasure
get an ING account

the only problem with this is that it is a fixed 5%...you would rather find a fund that is low cost and offers the chance of capital growth and a reasonably high return...after all, the high the return, the more money in pocket after paying hecs or less time in paying off overall hecs debt...i think its simple maths

once hecs debt is gone, there is a lump sum that can be used for other purposes...i recommend something like a money market fund that invests in bonds and shares...

 

[SoCal]

I deferred my HECS and I don't have any money to invest, because I don't have a job.

 

[Malazn Pleasure]

Originally posted by alman
the only problem with this is that it is a fixed 5%...you would rather find a fund that is low cost and offers the chance of capital growth and a reasonably high return...after all, the high the return, the more money in pocket after paying hecs or less time in paying off overall hecs debt...i think its simple maths

yeah i know bout the higher IR theory

but atm ING is prolly the best thing to do right now if u want to save. its 5% fixed rate but it has no fees or charges, other banks were offering like 3% PA

thats my opinion

 

[alman]

Originally posted by Merethrond
I deferred my HECS and I don't have any money to invest, because I don't have a job.

wouldnt that mean to get a job???

 

[SoCal]

Originally posted by alman
wouldnt that mean to get a job???

You need a job so that you have money to invest, and then investing becomes your job.

 

[alman]

Originally posted by Malazn Pleasure
yeah i know bout the higher IR theory

but atm ING is prolly the best thing to do right now if u want to save. its 5% fixed rate but it has no fees or charges, other banks were offering like 3% PA

thats my opinion

id have to admit that i am in favour of a well managed fund than letting money grow at a tiny rate - for more info, read peter lynch's "beating the street" for my reasons about choosing a shares fund...

 

[alman]

Originally posted by Merethrond
You need a job so that you have money to invest, and then investing becomes your job.

whilst that is true, your job is also to not spend TOO heavily with the money...which is why im advocating shares and money market funds - because a savings account does not allow capital gains (and may not provide for the 5% to cover the 3% increase in hecs debt)....and the gains can make up for the spent money...

 

[SoCal]

Originally posted by alman
whilst that is true, your job is also to not spend TOO heavily with the money

I don't actually understand what you are saying here?

Originally posted by alman
which is why im advocating shares and money market funds - because a savings account does not allow capital gains (and may not provide for the 5% to cover the 3% increase in hecs debt)....and the gains can make up for the spent money...

What is a money market fund?


This old saying pretty much sums up what I am trying to say:

"You have got to have money to make money".

 

[alman]

what i am trying to say is that never ever fizzle away all you hard earned money...so...your job is to never spend too much money on things like clothes, etc..if it still fits, why spend more on the same thing?

"you've got to have money to make money" : i find that this is not necessarily true...there are a lot of good examples out there...e.g. virgin and richard branson..

there are lots of funds out there...the best place to ask is a financial advisor or planner....otherwise, stick with a fund you know..i recommend platinum international...but i do all my own investing..

 

[xiao1985]

uhm, if u r a good investor, cash flow would mean everything... so scenario may be that yes u save hellota of money now (25%) but if u kept if for investments, u can receive more than that...

but then again, if u really DO haf few thousand dollars to spare, upfront is not a bad idea... ^^

i deferred tho, cuz i dun wanna rely on my parents to pay of my tertiery study... =)

 

[alman]

maybe if you read my earlier posts, you would see that i am advocating deferring the hecs and parking the money in an interest generating and capital gaining asset like a managed fund..

 

[SoCal]

Originally posted by alman
what i am trying to say is that never ever fizzle away all you hard earned money...so...your job is to never spend too much money on things like clothes, etc..if it still fits, why spend more on the same thing?

Understood and agreed. Although, personally I believe it is human nature to want better and newer.

Originally posted by alman
"you've got to have money to make money" : i find that this is not necessarily true...there are a lot of good examples out there...e.g. virgin and richard branson..

I am not familiar with this story but he must have has some money to begin with.