Most of us Malaysians are in debt. Like it or not, we are in this rabbit hole together.
If you think you are not having a debt problem, take another look at it. Run through your credit card statement and even saving accounts. Do you have enough to pay off your debts?
Taking myself for example. I used to have over RM 10,000 in debt on my credit cards, plus a housing loan of RM 400,000. Now, I know some of you call it as an investment but I call it a debt. Imagine what happens tomorrow if I lose my job today?
I’ll go bankrupt and I will have no money to survive. And yes, I’m worried as hell!
Just like many of you, I searched on “How to solve debt problems in Malaysia” and read probably 50 articles talking about ways to reduce debt.
Disclaimer: Reducing debt is easier said than done.
Fast forward three years, I cleared everything I owed. Now, I am just paying off my usual monthly payments for my house and some credit cards bills, without overspending. Plus, I have three nice and healthy savings on going as well!
So, what did I do? How did I solve my debt problems in Malaysia?
Let’s dive in further, shall we?
Know your limits
There is no magic formula when it comes to solving debt problems. The route is never easy, but it is not impossible either. I started off by knowing my limits. In easier terms, I understand what I can afford (and what I should avoid).
I started off with the small amounts that could lead me to many financial challenges. Here is a list of things I stopped doing:
- Stop spending money on online games
- Stop subscription for magazines and opt for online reading instead
- Buy only things I need and not what I want
- Reduce the eating out occassions
By knowing my limits and doing the above, I save over RM 1,000 a month. The money saved is NOT used for saving, but to pay off my credit card bills.
Knowing your limit is a great way to solve your debt problem and the best way is to create an Excel Sheet on what you are going to spend for the month and what you are going to save. And no, there will not be any exceptions no matter what!
Go the extreme where you save up more money this month because you want to buy new shoes in the next month!
Allocate your spending before payday
Do you know that the best way to solve your debt problem in Malaysia is to allocate your spending even before payday?
I usually do this a week before payday. Let’s assume you are going to get paid on 30th June. Therefore, you need to plan your financials at least by 23th May. Again, this is where the Excel Sheet comes into play.
By allocating your spending in advance, you will not use your money for other unwanted matters and leaving yourself broke for the month!
Auto billing to the rescue
I love auto billing. Seriously.
The concept is simple. Do auto billing for anything that gives you discount or rebates. Saving 5% each time will go a long way especially when you need the money.
As most companies in Malaysia would love prompt payments, they often provide discounts when you sign up for auto billing. Just make sure you pay your credit card bills at the end of the month in full to avoid overcharges.
Be smart with credit card grace period
Do you know that you will not be charged with interest rates when you pay your credit card spending within 20 days of usage? In Malaysia, most credit card users will enjoy a grace period (often times is 20 days) where it will be interest free. So, make sure you perform payment within 20 days to avoid any interest charged back on you.
Automatic, scheduled and recurring payments
Want to make your life easier and reduce your debt at the same time? Setup recurring payment on your bank account!
What happens is that when pay goes in, the standing order will automatically send out payment to all your approved ‘debts’. This means that there will be NO late payment whatsoever.
Not only this will give you better credit record, it will help you a lot in reducing your debts too.
Last but not least, do you know that investment can help you reduce your debt really, really fast?
For me, investment comes in two forms:
- Doing additional work/freelance
- Investment in other things (stocks, cryptocurrency, etc.)
I do freelance work from time to time and my focus clients are Americans, Europeans, and Australians. Why? The exchange rate!
All of us are good in something and apart from your 8 hours work, you can easily find another sidekick that pays you money for doing it. Example, freelancing could easily earn you around USD $50 a day. Now, converting to ringgit would easily be anywhere between RM 200 to RM 250.
The second part of the investment that I do is cryptocurrency and investment in dollars. In this case, I use FexFund.net (click here to check it out) where I basically invest money (as low as USD $25) to a broker where they will ‘roll’ the money. In return, I will get a small interest rate or profit.
If you are wondering, I'm using the 'Investor' plan for FexFund where I will get back 150% net profit after 30 days investment on stocks and cryptocurrency. You can also check on my FexFund review here.
Important tip: Any form of investment is always risky. You should only invest a little and not to be greedy. After all, your main goal is to solve your debts and not making it more!