Sunday, February 25, 2018

Off topic: Getting out of Debt in Singapore

September 5, 2010 by  
Filed under Off Topic

I work for the Navy, I saw my fair share of good people, good colleagues, working hard, protecting Singapore waters, but have very poor personal money management. Many of them, got into a lot of debts. Usually credit cards debt. Don’t me wrong, not the usual Forex Money Management, which we discuss so often to protect your capital when trading currency. This personal money management is about how you spend your money, how you preserve your savings and how to clear or stay out of debt.

Why are we talking about getting out of debt? Is it important? Personally I feel that is the most important thing in your finance health. The reason is because even if you earn S$1million daily, if you spend $1million and $1000 dollars without fail daily. You are still poor. Wealth is measured by time, not amount. You may have the knowledge and skill that rival Warren Buffett, however you spend like a waterfall, faster and more than what you earn, you still a nobody.

If you are in debt, you do realized that you clear your debt as soon as possible. Here are some steps for doing so:

Note down your Monthly Expenses

Take out your credit card statements, receipts, log in your online bank statements. Have a good look at them. If some expenses can be reduce, make a commitment to reduce or cut them away. In this step, you need be merciless. You need to free up as many cash as possible.

Consider Extra income Activities

For those who can, try take an extra part time job or do overtime for your existing job. If it seems impossible for some, try a sideline business. In Singapore, try a network marketing company or an online business. Some network marketing company cost less S$500, some of them even less. The cheapest I ever heard is S$13, which is about 2 Big Mac meals. If you are afraid of another MLM scam, like Sunshine Empire case. Just bear in mind that as long as if that company is selling a physical product, meaning you can touch it, use it as soon as you pay for it. It is pretty much very legal.

Online businesses can be very cheap too. Blogshops are on the rage right now. Selling from clothing, rings, necklaces, Iphone covers etc etc. however, you are require a little capital to hold these stocks, which require some capital.

Another way to generate income from online is simple write something that interests people. Some writers wrote fictitious stories for free and post ads online. You can try that, as long as it is interesting and legal.

Last but not least, you can try a hobby that you can profit from it. I am a Magic the Gathering trading card game player, and I have seen people using this card game and profit really well monthly. However, you must have a lot of passion for it. If you like cooking, you can try to make some and sell them through your friends. Please make sure they taste good. Otherwise you will earn a bad reputation…

For many of my Navy friends, please, don’t use mahjong or poker as a hobby excuse to profit. Unless you write a book and sell. That is a different issue.

Review again

In this step, when you need to know how much cash you can free up after cutting down those necessary expenses and income-increasing activities.

Then after that, write it down. For your income-increasing activities, you may not able to predict the amount. You may take the worse case situation, and plan according.

Make a debt list

Starting from the smallest amount to the biggest amount. Put a side note beside each of these debt, saying how much is the minimum monthly payment. Total these minimum monthly payment and review how much you need to pay monthly. The objective in this step is to know the size of the debt and how much you need to service them.

Consider which to reduce or clear

Look at which debts can be clear totally or reduce greatly. For example, you brought a new, nice and expensive laptop using your credit card. Is it logical to sell that laptop away, at a second hand price, then pay off a large amount of the credit card debt? Since that laptop can’t help you generate any income, and you do have ways to access to the internet other than that laptop. Why not right?

You can try on other things that have a reasonable resale value.


After you free up surplus cash, by reducing, cutting your expenses, selling your unnecessary goods, and maybe extra income from your activities. Look again the amount of minimum monthly payments and your monthly expense.

Chances are it will look like this :

Total Income – Total Expenses – Min Monthly Payment = Cash Left Over

From here on, there are two ways to handle the debt with the cash left over.

  • Reduce the debt size by pay back additional amount, for example $50 more monthly. Save up the rest.
  • Save up a crisis fund first. For example your crisis fund target is $2000. After you reached that target, use the surplus cash and pay off the debt.

Both ways works. Personally, the second method is more aggressive in clearing your debt. Clearing debt helps you save money in the future because of the interest rates. The first method helps you gain more capital, allowing you to able to invest. Even so, I strongly recommend you learn how to invest first. Learning financial knowledge is a form of investment too.

When you clearing your debt, choose wisely too. I recommend that you pick the one with the highest interest rates. This will help you save a lot more money in the mid term future. This also means you will be clearing more of your debt faster.

However if you are a visual creature, you can try clearing the smallest amount of debt first, giving yourself a sense of achievement.

Regardless which method you use, just makes use you plan it, follow it, and kill the bloody debt.

What if…

What if when you free up surplus cash, by reducing, cutting your expenses, selling your unnecessary goods, and maybe extra income from your activities and it looks like this:

Total Income – Total Expenses – Min Monthly Payment = Negative Cash! Oh My God!

Well, it is time to talk to your creditors. Explain to them your situation. If they can help, they will help. Trust me. Everyone objective is earn money. Not to make you bankrupt.

If that doesn’t help you at all, look at the debt consolidation loans very cautiously. There maybe some scammers trying impose some extremely high interest rates that totally unrelated to you but sucking cash from you. Once you found out that, call the legal help and get rid of them.

If even all these does not help you. You need to find more aggressive income booster activities. Once you achieve more income, review and repeat the ACTION! step

Close all of them but…

Once you clear all of the debts, close all the credit card accounts expect one. You don’t need that many. Just one will do. Find one that give you the best privilege or reward system and stay with that one.

If you have credit card phobia, then close all of them and say “Good Riddance!”

You can apply for a debit card. It does have the same function as a credit card expect it does not give interest rates for you.


I am sure you still remember the “Rabbit and the tortoise” story. Sometimes it isn’t fast how fast you clear the debt, but how you preserve to clear them. As long as you don’t give up, you will be alright and never become bankrupt. With debt out of your way, you can actually build up capital.

With capital in hand, you can actually learn how to build wealth. After which, with proper knowledge and tools, you can learn how to build wealth.

To my navy buddies, hope you can achieve what you want in life.

To others I don’t know but are in this debt situation, you can do it too.

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One Response to “Off topic: Getting out of Debt in Singapore”
  1. Rayna Waskow says:

    This is Really Beneficial I’m actually unclear precisely what else to express, I by no means really comment on these.

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