4. Key Needs of Financial Planning
Priority
Debt Management
Objective
- Financing needs at the lowest cost in the long term
Purpose
- A Maximum of 35% of the debt service ratio
Principle
- A maximum of 15% of the non-mortgage debt service ratio.
How to achieve?
- Prioritize paying off high interest debts (e.g., credit card), to avoid high interest
- Consider topping up the loan principal to reduce high interest charges (when cash surplus is available).
- Prioritize low effective annual interest rate for loan, taking into account the effects of compounding.
Timeframe
- Medium-term goal is to meet financing needs at the lowest cost within one to three years
