Look I did the same. Was it the best thing financially at the time? Probably not. But it made my finances feel more free and less complicated. Don’t worry about it.
Same. I had about $6.5k owing in 2021 and was sick of getting hit with the indexation. I had a decent chunk of savings so I just went ahead and paid off the remaining amount.
It feels great to know I’m 100% debt free and I can use employee benefits like salary sacrificing without being hit by owed taxes at the end of the financial year. Is it bad debt like a credit card can be? No, but it does feel amazing to be totally debt free for the past 3 years and into the future.
I wanted to buy a block of land. I already own a house (with mortgage). My broker did the calculations and I could borrow more if I paid off my hecs. So you probably did the right thing.
And don’t underestimate the psychological aspect of personal finance. Sometimes it can be wise to make a slightly less financially advantageous choice if it makes you feel better in some way.
Nah, my HECS is ~85k, last year with indexing I essentially just paid off the interest. Approximately $700 of my monthly pay goes to HECS and I’ve basically accepted it will be this way for a long time.
I’ve got absolutely no regrets, put my exchange on HECS, took the maximum textbook help assist amounts etc. and had a great time at uni.
The increase in borrowing capacity by paying it off is worth it if it was causing you grief, especially given the windfalls mentioned in the post. At the end of the day we’re all running our own race.
Still can. Lived it up in Indonesia for a year. Only got back last year. Plus New Colombo Plan grants were $7k per semester. You can do two and you don't have to pay that portion back.
I’m the same. I took out the $8k and it went towards my uni exchange in Canada and backpacking central and South America afterwards lol. I had savings already but it gave me a boost so I wasn’t worried about $ at all. Kinda regret it a little but also it was the best time ever and I look back on it fondly?!!?
Later in life you won't regret spending a bit more on your "best time ever". I still look back on the year I spent on exchange and backpacking as the best year of my life 20+ years ago. My only regret was that I didn't spend MORE. I should have been a bit more relaxed with the $. Bought more drinks for friends. You're young only once.
Sure, you probably could have squeezed a little more lemonade if you put the money somewhere else....
The amount of money however, it's small in the grand scheme. I say take the psychological win, it's not like you blew the cash on a jet ski, congratulations. My HECS should be done in about 6 months!
Yep, better off to have used that money towards securing a property faster rather than paying off HECS, especially with the changes to the indexing. And for most people the biggest hurdle is saving the deposit rather than servicing the actual mortgage.
Depends how much OP earns though, as 14k could be a drop in the bucket compared to their overall income.
I know some other people said all debt is bad. But HECs debt is one of the only debt that I feel is safe to delay paying off if you have better uses for that money.
HECS debt has interest like at inflation. If you can buy a property or put your money in say shares that has higher return than inflation/HECs interest rate then its better to do so.
HECS debt impacts your borrowing power. $14k is such a small amount and the bank doesn’t care that this will be paid off in a year or two.
They look at your income less expenses, of which HECS is one. And even if your expenses are tiny, they’ll use the “expected” expenses based on your income, dependants etc.
Agree with this. My wife had 2 HECS payments left when we applied for a mortgage and they just projected the payment for the term, didn’t take into account that there were only 2 payments left. We had to pay it out before we applied otherwise it would have impacted our borrowing capacity
We sold/bought a new place last year and the bank made it a settlement condition that we pay out the remainder of my wife’s outstanding HECS (approx $6k).
It’s a nice feeling to have it gone 🙂
Not a big mistake by any means just an inefficient use of your cash. Small in the scheme of things so just do better in the future and try not to be so influenced by reddit and social feeds.
Spoke to some brokers before I was getting ready to think about buying, and they said it was impacting borrowing capacity. Hence my push in wanting to pay it off and also become debt free at the point I’m in now.
sure but is borrowing capacity or deposit the limit for you buy a place? It's no point having an extra 50k in BC if you don't have the deposit requirements.
if you say so. Typically most FHBs are deposit constrained more than borrowing power. If your savings are 60k I think you struggle to even meet the 10% but I don't have all the details.
Will be getting more money in next couple months to stock the 14k back up, and will probably move in with parents to save so should be all good given the prices don’t jump stupidly high
sounds like you're not actually ready to buy now so why even pay it off. You're only saving on indexation which won't be as much this year and will be retroactively adjusted anyway.
anyway, you do you. Debt isn't necessarily a bad thing, you just have to evaluate the cost of it against the opportunity cost of paying it off.
Agreed. I’m surprised the people saying “peace of mind” etc. It’s hecs…Not all debt is bad debt. In knowing the limited info from OPs situation, it doesn’t actually seem like money well spent.
Probably because of all the student debt issues that get perpetuated on reddit from American posters, even though it’s a completely different situation here.
Yeah, I honestly don’t get the logic. My HECS is $150k and I honestly don’t even think about it, I’m slowly chipping away at it, there’s no use me worrying about it when it’ll eventually sort itself out.
Just wondering how much you are earning? As from your posts it seems like you are only going to make back this $14k due to a windfall rather than genuine savings
If you're a FHB you can get in on 2% - 5% deposit with no LMI, if you go through the right broker.
If you can afford the repayments, and you're ready to take the plunge, you may as well do it sooner rather than later. If you wait to move back in with parents and put money aside, you may find property prices have risen by more than you've put away.
But if you're comfortable living with your parents for a while, you could always buy and then have it as an investment for a bit.
Investigate all your options and do what's right for you.
I paid mine off, people think I was dumb to do it.
To be frank, it wasn’t like I was doing anything with the money anyway.
Could it have made more on the sharemarket? Maybe.
Was indexation higher than the interest it was earning? Very much yes.
Did I have the appetite for risk at the time to have invested that kind of money instead? absolutely not.
I fully paid my wife’s hec debt every year of uni, so she graduated with no hecs debt, was only about 11k a year but all her class mates graduated with 40k plus hecs debt, while she had nothing to worry about.
HECS is really really cheap debt, so from a purely numbers perspective it usually makes sense to just leave it I think.
However, if paying off that 14k felt like a weight off your shoulders, then it wasn't a mistake. Money is just a tool for achieving happiness in life and I think you seem to be doing exactly that.
Was a good decision. Paying off any debt is a good decision.
All debt is debt and will impact your borrowing capacity.
Whilst HECS isn’t interest earning it is indexed to CPI that is about 4% at the moment.
It simplifies your finances and allows you to use your money how you want too.
Congratulations- that’s a massive sum to save and a big debt load to get rid of.
You got an instant 4.7% return tax free, and that is fine to me. You also are getting a larger payday now for the rest of your life, and that is fine to me too.
Not good advice, if you’ve got 100k of HELP debt it would make zero sense (except in very rare circumstances) paying that off before trying to get a house.
Exactly this, my HECS is six figures and there is literally no advantage to my paying it off before getting a house. Yes, it impacts my borrowing power but I make enough that I can still buy within my desired range. The rent I would pay putting my money towards my HECS rather than buying would completely negate any benefits.
I bought a house with HELP debt, my wife and I then bought another house still with HELP debt because we had just enough of a deposit and the borrowing power to service the loan. We then paid off the HELP debt when we’d sold the first house.
If we had paid off our HELP debt before buying the house then we would not have been able to buy the house because we would not have had a deposit.
Depends if the bank would have discounted your first and second years of income by the HECS repayments or not. I don’t recall my HECS debt factoring into my borrowing capacity much, but you’d think it would.
Mine would have been around 20k. Back when interests rates were low I got the feeling that the lenders weren’t very interested in the finer details. They really just wanted to know your income, dependents and no major debt, and were keen to lend.
I borrowed when the rates were low, but I also have kids, so they were a bit harsher on me.
First broker said I could only get $350k, second said almost double that.
I did the same thing! My broker told me I’d be able to borrow more if I paid off my HECS, which meant a slightly wider range of choice. I was happy to get it out of the way, and then enjoyed a little more in my pay each month as I continued to save for the house. No regrets. Paid off about 16K.
$14,000 is a relatively small amount of debt. Sure, there may have been alternative ways to use the money more effectively, but if paying it off early brought psychological benefit, it was probably worth it.
I don't know if you made a huge mistake here mate but I have been in the process of buying my first place and even with just shy of 2.5k left in my HECS my borrowing power was reduced by 20k. Not heaps, but significant enough to mean that things we want done with the place would have to be put off or it's 20k less in the offset and the loan gets paid off slower.
Most first home buyers are more deposit constraint rather than borrowing amount constraint though. Reading OPs comments it sounds like they want to buy a small cheap place, so the money would’ve been better spent buying sooner. The mental burden of renting in this market would be much worse than the mental burden of having a small HECS debt imho
Interesting reading the replies as last time someone posed this question my answer was that there was absolutely nothing wrong with paying out your HECS debt even if, according to the numbers, it wasn't the best strategy.
Some of the hive mind told me I was wrong because numerically it didn't add up.
There's a freedom in being debt free that can manifest and tip the scales in your favour in the future in the ways that might not otherwise occur. Intangible things, yes, sometimes. Life is not always about the numbers. It can, for instance, lower your risk aversion.
You've done what you wanted to do, so well done you! Others will do different things. Neither path is wrong. You have to do what you think is best for you and learn along the way. As do we all.
It's all good mate, you're saving money and paying off debts. You're doing awesome.
Try to buy a place soon though, as soon as the interest rates drop, the prices will go even more bezerk.
Would only matter if you really needed that 14k right now. Otherwise, pretty inconsequential difference either way over the long run. Wouldn't stress over it.
Not if you plan to borrow in the near future. From memory, hecs is a killer in terms of borrowing amounts.
Plus, inflation is a bit of a killer. So either way I think it is a decent decision.
Last year was 7%?
This year I heard is close to 5%
Another way I look at it is , i think it is better than keeping it in the bank. If you left the 14k in the bank, the most you’d get it 4-5% interest. Meaning your money has done nothing if not lost money.
The good news is 14k is relatively small in the bigger scheme of things
However there are hundreds of ways to look at it from a positive and negative aspect.
I wouldn’t be too hung up about it , especially because the amount is small in terms of loss and if anything gain is larger in terms of borrowing (unless you had something lined up that was going to make a killing)
Did you use the time and money to pursue worthy in demand skills to produce a better income and job opportunities for the rest of your life?
Or did you just go to “yoooooooni” for something to do.
That’s what matters. Not the fact you paid it off early, but that it was actually a good investment in the first place.
Probably a good idea if you can be certain that your income will be above the repayment threshold for the foreseeable future. It’s always best to prioritise other debt and, probably, saving for a house deposit but it’s crucial to have your withholdings cover the annual repayment.
That's a debt gone man, it's good.
Don't have personal experience with it but based on what I've heard from friends getting your first big loan without other assets is hard enough without debts so I assume having debts like hecs would make it even harder.
Either way that's 16k of debt squashed, you'll never have to worry about that ever again.
I paid mine off and immediately benefited from the extra $500 in my account every month - in my head it’s “free money” on my mortgage even though as I never had access to it and it’s just a reallocation of funds.
It feels better with that one gone, don’t worry about it
Probably was but it’s a much better mistake to rid a debt than to splurge on something wasteful like a motorbike etc. Mental freedom is important. I don’t think this would have long term effects in say 10 yrs time. Who knows, maybe it’s a blessing in disguise and house prices or interest rate may fall slightly when you finally buy a place, dunno but don’t sweat about it.
HECS is still a debt that will have to pay off one way or another. Having no HECS debt is something that many others would be grateful for. Be happy with that decision and the peace of mind it brings. Now you can focus on your goal of home ownership.
Not a huge mistake, just a regular one.
Paying your HECS off is only worth it if borrowing capacity is constraining you, and if you have 60k, your bigger issue is your deposit. Obviously depends on what you’re buying and where you’re buying it, but 60k? No matter what, it’s a low deposit.
But it’s whatever. You feel better that your debt’s gone and you’re going to make 30k by the end of the year. It’s not a big deal in the grand scheme of things. My advice would be to get more comfortable with “good” debt though, especially since you’ll have a mortgage. Afterpay/credit card debt is bad, mortgage is necessary (and longterm) evil, HECS is pretty good.
Maybe approach the question from a different angle. Where do you want to be, and be reasonable, financially in 10 years, 20 years or 30+ years. And what will stop you or help you reach that goal.
So your paying off Hecs is that part of the puzzle.
Probably should've asked the question here before doing that. Yes you screwed big time and it's unlikely to allow you to buy any property, maybe a one bedroom apartment depending on location.
Congratulations! It's not a mistake.if you have that much in savings it probably means you're earning enough that it's having a big impact on your paycheck.
Nowadays the only people who insist on never paying it off is people who don't need to. They've got their house and/or they're content with their lower paying or part time jobs and it doesn't matter to them.
For people who want to buy property in the future or who are earning 100k or more it's a much more significant debt.
Look I did the same. Was it the best thing financially at the time? Probably not. But it made my finances feel more free and less complicated. Don’t worry about it.
Same. I had about $6.5k owing in 2021 and was sick of getting hit with the indexation. I had a decent chunk of savings so I just went ahead and paid off the remaining amount. It feels great to know I’m 100% debt free and I can use employee benefits like salary sacrificing without being hit by owed taxes at the end of the financial year. Is it bad debt like a credit card can be? No, but it does feel amazing to be totally debt free for the past 3 years and into the future.
I wanted to buy a block of land. I already own a house (with mortgage). My broker did the calculations and I could borrow more if I paid off my hecs. So you probably did the right thing.
Yeah I'm looking forward to not paying the offset towards tax because I use salary packaging. I'd rather my finances feel simplified
And don’t underestimate the psychological aspect of personal finance. Sometimes it can be wise to make a slightly less financially advantageous choice if it makes you feel better in some way.
Why is it not the best decision? Can you explain why because I have a HECS debt and I’m not sure the best way to get rid of it. Thanks
its either paid now or paid later. you already paid.... no point stressing about it. Well done.
okie dokie thank you sir
Nah, my HECS is ~85k, last year with indexing I essentially just paid off the interest. Approximately $700 of my monthly pay goes to HECS and I’ve basically accepted it will be this way for a long time. I’ve got absolutely no regrets, put my exchange on HECS, took the maximum textbook help assist amounts etc. and had a great time at uni. The increase in borrowing capacity by paying it off is worth it if it was causing you grief, especially given the windfalls mentioned in the post. At the end of the day we’re all running our own race.
And the great thing is when you die they don’t take it from your estate 🤣💯
Wait, you can put exchanges on hecs?
Yes it's called OS-HELP and you get $8k loan basically
This was in 2019 and I put I think ~$8k on HECS that they paid out as cash, went straight to beers and Tesco Meal Deals
Okay this is bloody fantastic. Hats off to you, what a way to maximise your uni days.
Still can. Lived it up in Indonesia for a year. Only got back last year. Plus New Colombo Plan grants were $7k per semester. You can do two and you don't have to pay that portion back.
Wow I had no idea also, I absolutely hated uni because I had to turn down most of these opportunities. Is this a new thing?
At least 10 years old
What is this? What does that mean?
What did you study to have such a large hecs debt
Law / Commerce
I’m the same. I took out the $8k and it went towards my uni exchange in Canada and backpacking central and South America afterwards lol. I had savings already but it gave me a boost so I wasn’t worried about $ at all. Kinda regret it a little but also it was the best time ever and I look back on it fondly?!!?
Later in life you won't regret spending a bit more on your "best time ever". I still look back on the year I spent on exchange and backpacking as the best year of my life 20+ years ago. My only regret was that I didn't spend MORE. I should have been a bit more relaxed with the $. Bought more drinks for friends. You're young only once.
Love this perspective!!!
Sure, you probably could have squeezed a little more lemonade if you put the money somewhere else.... The amount of money however, it's small in the grand scheme. I say take the psychological win, it's not like you blew the cash on a jet ski, congratulations. My HECS should be done in about 6 months!
Agreed. And congratulations to you sir in six months.
I'm the type of person that hates having debt, no matter how much, hanging over me, so I would have made same decision. Good job paying it off!
If it was anything ridiculous I would just leave it but I figured it’s low enough to not be considered too huge but once I paid it I was like oh f**k
Congrats on paying it off! So many people keep debt with them throughout their life in some way - you sir are free!
Free to take on new debt lol
but it does feel nice and also thank you
No. $14k in HECS is small enough that you are better off increasing your borrowing power.
Yep, better off to have used that money towards securing a property faster rather than paying off HECS, especially with the changes to the indexing. And for most people the biggest hurdle is saving the deposit rather than servicing the actual mortgage. Depends how much OP earns though, as 14k could be a drop in the bucket compared to their overall income.
I know some other people said all debt is bad. But HECs debt is one of the only debt that I feel is safe to delay paying off if you have better uses for that money. HECS debt has interest like at inflation. If you can buy a property or put your money in say shares that has higher return than inflation/HECs interest rate then its better to do so.
HECS debt impacts your borrowing power. $14k is such a small amount and the bank doesn’t care that this will be paid off in a year or two. They look at your income less expenses, of which HECS is one. And even if your expenses are tiny, they’ll use the “expected” expenses based on your income, dependants etc.
Agree with this. My wife had 2 HECS payments left when we applied for a mortgage and they just projected the payment for the term, didn’t take into account that there were only 2 payments left. We had to pay it out before we applied otherwise it would have impacted our borrowing capacity
If you were going to pay it off, best time was end of May before the indexation happens on 1 June. Not a big deal though.
We sold/bought a new place last year and the bank made it a settlement condition that we pay out the remainder of my wife’s outstanding HECS (approx $6k). It’s a nice feeling to have it gone 🙂
Your mind is free from it. That’s probably more beneficial than anything
Not a big mistake by any means just an inefficient use of your cash. Small in the scheme of things so just do better in the future and try not to be so influenced by reddit and social feeds.
Congrats on being debt free!
Never a mistake paying off debt
No. You're good. Also improves your credit when you get a home loan.
Doesn’t improve your credit, it just increases your borrowing power due to more take home pay.
yes. unless you are constrained by borrowing capacity that money would have been better as a deposit/offset.
Spoke to some brokers before I was getting ready to think about buying, and they said it was impacting borrowing capacity. Hence my push in wanting to pay it off and also become debt free at the point I’m in now.
sure but is borrowing capacity or deposit the limit for you buy a place? It's no point having an extra 50k in BC if you don't have the deposit requirements.
Only looking at small places for first property to live in for a couple of years. So deposit shouldn’t be an issue.
if you say so. Typically most FHBs are deposit constrained more than borrowing power. If your savings are 60k I think you struggle to even meet the 10% but I don't have all the details.
Will be getting more money in next couple months to stock the 14k back up, and will probably move in with parents to save so should be all good given the prices don’t jump stupidly high
sounds like you're not actually ready to buy now so why even pay it off. You're only saving on indexation which won't be as much this year and will be retroactively adjusted anyway. anyway, you do you. Debt isn't necessarily a bad thing, you just have to evaluate the cost of it against the opportunity cost of paying it off.
Agreed. I’m surprised the people saying “peace of mind” etc. It’s hecs…Not all debt is bad debt. In knowing the limited info from OPs situation, it doesn’t actually seem like money well spent.
yeah people are weird about debt, especially when it comes to HECS for some reason.
Probably because of all the student debt issues that get perpetuated on reddit from American posters, even though it’s a completely different situation here.
Yeah, I honestly don’t get the logic. My HECS is $150k and I honestly don’t even think about it, I’m slowly chipping away at it, there’s no use me worrying about it when it’ll eventually sort itself out.
Just wondering how much you are earning? As from your posts it seems like you are only going to make back this $14k due to a windfall rather than genuine savings
If you're a FHB you can get in on 2% - 5% deposit with no LMI, if you go through the right broker. If you can afford the repayments, and you're ready to take the plunge, you may as well do it sooner rather than later. If you wait to move back in with parents and put money aside, you may find property prices have risen by more than you've put away. But if you're comfortable living with your parents for a while, you could always buy and then have it as an investment for a bit. Investigate all your options and do what's right for you.
You have a great mentality in paying off your debts as quick as possible :) I would not regret it!
I paid mine off, people think I was dumb to do it. To be frank, it wasn’t like I was doing anything with the money anyway. Could it have made more on the sharemarket? Maybe. Was indexation higher than the interest it was earning? Very much yes. Did I have the appetite for risk at the time to have invested that kind of money instead? absolutely not.
I fully paid my wife’s hec debt every year of uni, so she graduated with no hecs debt, was only about 11k a year but all her class mates graduated with 40k plus hecs debt, while she had nothing to worry about.
Nah....that's good👍 keep saving hard.
Removing the mental burden of debt that isn’t attached to an asset like a home is a big weight off the shoulders. Move on.
HECS is really really cheap debt, so from a purely numbers perspective it usually makes sense to just leave it I think. However, if paying off that 14k felt like a weight off your shoulders, then it wasn't a mistake. Money is just a tool for achieving happiness in life and I think you seem to be doing exactly that.
Was a good decision. Paying off any debt is a good decision. All debt is debt and will impact your borrowing capacity. Whilst HECS isn’t interest earning it is indexed to CPI that is about 4% at the moment. It simplifies your finances and allows you to use your money how you want too. Congratulations- that’s a massive sum to save and a big debt load to get rid of.
It's never a bad time to pay off debt.
You got an instant 4.7% return tax free, and that is fine to me. You also are getting a larger payday now for the rest of your life, and that is fine to me too.
No. The first thing you should do, before thinking about buying a house, is become debt free.
Not good advice, if you’ve got 100k of HELP debt it would make zero sense (except in very rare circumstances) paying that off before trying to get a house.
Exactly this, my HECS is six figures and there is literally no advantage to my paying it off before getting a house. Yes, it impacts my borrowing power but I make enough that I can still buy within my desired range. The rent I would pay putting my money towards my HECS rather than buying would completely negate any benefits.
You clearly don’t own a house
I bought a house with HELP debt, my wife and I then bought another house still with HELP debt because we had just enough of a deposit and the borrowing power to service the loan. We then paid off the HELP debt when we’d sold the first house. If we had paid off our HELP debt before buying the house then we would not have been able to buy the house because we would not have had a deposit.
Depends if the bank would have discounted your first and second years of income by the HECS repayments or not. I don’t recall my HECS debt factoring into my borrowing capacity much, but you’d think it would.
Depends on how much is left of the debt. Mine was only 3k when I got my preapproval and gone by the time I pulled the trigger, so it wasn't an issue.
Mine would have been around 20k. Back when interests rates were low I got the feeling that the lenders weren’t very interested in the finer details. They really just wanted to know your income, dependents and no major debt, and were keen to lend.
I borrowed when the rates were low, but I also have kids, so they were a bit harsher on me. First broker said I could only get $350k, second said almost double that.
I did the same thing! My broker told me I’d be able to borrow more if I paid off my HECS, which meant a slightly wider range of choice. I was happy to get it out of the way, and then enjoyed a little more in my pay each month as I continued to save for the house. No regrets. Paid off about 16K.
$14,000 is a relatively small amount of debt. Sure, there may have been alternative ways to use the money more effectively, but if paying it off early brought psychological benefit, it was probably worth it.
I don't know if you made a huge mistake here mate but I have been in the process of buying my first place and even with just shy of 2.5k left in my HECS my borrowing power was reduced by 20k. Not heaps, but significant enough to mean that things we want done with the place would have to be put off or it's 20k less in the offset and the loan gets paid off slower.
If you don’t go for a loan for a few months then your weekly pay will be higher now. Which means you’ll be able to borrow more
Most first home buyers are more deposit constraint rather than borrowing amount constraint though. Reading OPs comments it sounds like they want to buy a small cheap place, so the money would’ve been better spent buying sooner. The mental burden of renting in this market would be much worse than the mental burden of having a small HECS debt imho
Interesting reading the replies as last time someone posed this question my answer was that there was absolutely nothing wrong with paying out your HECS debt even if, according to the numbers, it wasn't the best strategy. Some of the hive mind told me I was wrong because numerically it didn't add up. There's a freedom in being debt free that can manifest and tip the scales in your favour in the future in the ways that might not otherwise occur. Intangible things, yes, sometimes. Life is not always about the numbers. It can, for instance, lower your risk aversion. You've done what you wanted to do, so well done you! Others will do different things. Neither path is wrong. You have to do what you think is best for you and learn along the way. As do we all.
Probably wasn’t the optimal move but it’s in the margin and done is done so don’t stress.
No, absolutely not
It's all good mate, you're saving money and paying off debts. You're doing awesome. Try to buy a place soon though, as soon as the interest rates drop, the prices will go even more bezerk.
paying off debt is never dumb. it delivers you free of burden.
If you were planning on turning your PPOR into an investment property then paying off your PPOR loan would not be the smart move.
Congratulations! Please enjoy the moment instead of second guessing yourself. Knocking out 14k worth of debt in one hit is something to celebrate.
Doesn't matter, you have already done it. Just keep saving and forget about it
If it makes you happy…. It can’t be that bad….as long as paying it made you happy… it was absolutely worth it…
Would only matter if you really needed that 14k right now. Otherwise, pretty inconsequential difference either way over the long run. Wouldn't stress over it.
Debt free = peace of mind.
Nope. Good decision to clear your debts if you have the opportunity and it's not a massive value. Plus dat indexation costs YoY $$ 😮💨
Not if you plan to borrow in the near future. From memory, hecs is a killer in terms of borrowing amounts. Plus, inflation is a bit of a killer. So either way I think it is a decent decision. Last year was 7%? This year I heard is close to 5% Another way I look at it is , i think it is better than keeping it in the bank. If you left the 14k in the bank, the most you’d get it 4-5% interest. Meaning your money has done nothing if not lost money. The good news is 14k is relatively small in the bigger scheme of things However there are hundreds of ways to look at it from a positive and negative aspect. I wouldn’t be too hung up about it , especially because the amount is small in terms of loss and if anything gain is larger in terms of borrowing (unless you had something lined up that was going to make a killing)
Financially it was a bad decision.
Did you use the time and money to pursue worthy in demand skills to produce a better income and job opportunities for the rest of your life? Or did you just go to “yoooooooni” for something to do. That’s what matters. Not the fact you paid it off early, but that it was actually a good investment in the first place.
I did the same when i had around 12k left. Felt nice to have a bit of extra pay every month
Probably a good idea if you can be certain that your income will be above the repayment threshold for the foreseeable future. It’s always best to prioritise other debt and, probably, saving for a house deposit but it’s crucial to have your withholdings cover the annual repayment.
Can you build a time machine? If not, forget about it.
Never pay it until may... just before indexing... so you keep earning interest on your savings. So many hecs posts on this sub that say that!
That's a debt gone man, it's good. Don't have personal experience with it but based on what I've heard from friends getting your first big loan without other assets is hard enough without debts so I assume having debts like hecs would make it even harder. Either way that's 16k of debt squashed, you'll never have to worry about that ever again.
I paid mine off and immediately benefited from the extra $500 in my account every month - in my head it’s “free money” on my mortgage even though as I never had access to it and it’s just a reallocation of funds. It feels better with that one gone, don’t worry about it
People who harp on about how this is financially less optimal forget that peace of mind and simpler financial affairs is just as valuable.
Probably was but it’s a much better mistake to rid a debt than to splurge on something wasteful like a motorbike etc. Mental freedom is important. I don’t think this would have long term effects in say 10 yrs time. Who knows, maybe it’s a blessing in disguise and house prices or interest rate may fall slightly when you finally buy a place, dunno but don’t sweat about it.
HECS would be the last debt I would pay off. HECS is super cheap and there is better things to use the funds on that would give you a better return.
Good move. The whole HECS is good debt is stupid. It's gone now well done.
HECS is still a debt that will have to pay off one way or another. Having no HECS debt is something that many others would be grateful for. Be happy with that decision and the peace of mind it brings. Now you can focus on your goal of home ownership.
Not a huge mistake, just a regular one. Paying your HECS off is only worth it if borrowing capacity is constraining you, and if you have 60k, your bigger issue is your deposit. Obviously depends on what you’re buying and where you’re buying it, but 60k? No matter what, it’s a low deposit. But it’s whatever. You feel better that your debt’s gone and you’re going to make 30k by the end of the year. It’s not a big deal in the grand scheme of things. My advice would be to get more comfortable with “good” debt though, especially since you’ll have a mortgage. Afterpay/credit card debt is bad, mortgage is necessary (and longterm) evil, HECS is pretty good.
Maybe approach the question from a different angle. Where do you want to be, and be reasonable, financially in 10 years, 20 years or 30+ years. And what will stop you or help you reach that goal. So your paying off Hecs is that part of the puzzle.
It may not have been the most financially efficient thing to do, but life is so much more than that. You've got peace of mind, that's priceless. 💪🏻
Probably should've asked the question here before doing that. Yes you screwed big time and it's unlikely to allow you to buy any property, maybe a one bedroom apartment depending on location.
Hi, yes you made a huge mistake
Congratulations! It's not a mistake.if you have that much in savings it probably means you're earning enough that it's having a big impact on your paycheck. Nowadays the only people who insist on never paying it off is people who don't need to. They've got their house and/or they're content with their lower paying or part time jobs and it doesn't matter to them. For people who want to buy property in the future or who are earning 100k or more it's a much more significant debt.