Millennial’s Financial Challenges

JC Project Freedom Eliminate Financial Challenges

Millennial are losing sleep over money related stress, they have fears about saving enough for retirement. They are worried over student loans, credit card debt, housing loans and stress from work. Let’s look into how we can eliminate some of these financial challenges.

How to Pay Off Student Loans

Paying off your student loan takes a lot of hard work when you are living paycheck to paycheck. The general trend of increased debt per borrower per year is increasing over the years. We need to understand the student loan details such as fixed rate or variable rate, what is the balance, the interest rate payable and loan term. By understanding the details, you can understand what the student loan will cost you and how to pay off the loan.

After understanding the details, it will be worthwhile to consolidate the loans into one loan program. Refinancing will allow lower monthly payments but it will increase the payment term period and interest rates. Increase the frequency of your student loan payment will help you to save money on total interest you will be paying. Make lumpsum payment on your principal balance, this will reduce the interest payable. Stay focus on paying off one loan at a time. Do a small celebration with every small success.

How to Eliminate Credit Cards Debt

To eliminate credit cards debt, there are two methods, first is to pay off the card with the highest interest rate and the second approach is to pay off the smallest balance first.

The general approach is to list and understand the Credit Card debt balance for each individual card. Then list down their individual interest rate. List the minimum monthly payment. Sum up all the minimum monthly payment, direct any surplus fund to pay down either the highest interest rate balance or the smallest balance.

How to Pay Off Property Loan

Using Singapore context for discussion here, you can use CPF Ordinary Account (CPF OA) to pay your monthly HDB loan. You can use up to 120% of the valuation limit of your house with a bank loan, after which you will need to pay loan in cash. CPF monies need to be repaid at 2.5% interest when you sell the house. We are not going to discuss what you can do with cash and investment opportunity here. The context is to reduce the property loan amount. If you are tight on cash, then it is advisable to max out your CPF OA repayment.

If possible, borrow lesser amount when you buy your house. 75% can be from loan, 20% covered by cash or CPF and 5% in cash. Try to keep $20,000 in your CPF OA as an emergency fund to pay mortgage if you are retrenched.

Do not commit 60% of your monthly income to debt repayment, there’s a high chance you will be living paycheck to paycheck. Try to keep your debt ratio to 30% or below.


Debt when use correctly can be a strategic tool to grow your wealth, if not it can be stressful. Do not lose sleep over money. Gain control of your finances and reduce your debt accordingly.

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