Living A Debt-Free Life In Singapore – Is It Ultimately Possible?

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No one wants to be buried in debts. This is a serious fear that many Singaporeans have as this prevents them from saving more considering the debt payments and expenses they need to worry about each month. This is why they do their best to be completely debt-free by tightening their belt and trying hard to live within their means.

But at the same time, there are those who still struggle with their debts. These people may already have existing debts, and they face more financial problems even before the first one is over. Thus, they take out one loan after another from a licensed money lender since their poor credit reduces their chances of being approved of their bank loans. But do take note that it is essential to check against the Registry of Moneylenders before you approach any. 

Now, if you really want to be released from debt, this is something that is quite doable and ultimately possible. It is all about having the right mindset that will enable you to keep up with your expenses while achieving the different items in your financial plans. Also, having an understanding of the reasons why people have debts can guide you better into avoiding these circumstances that impact your finances negatively.

Reasons Behind Increasing Debts

According to research, about 3 percent of borrowers who have existing unsecured loans in the country incur debts that are much higher than what they make in a year. They have a difficult time keeping up with their debt payments, and they worry about not being able to repay what they owe at all. The Credit Counselling Singapore has noted the top reasons why people are in a pile of debts including the following:

1. Splurging

More than 49 percent of debtors put the blame on their poor spending habits and splurging as the top reason why they are in debt. They are inclined towards buying even up to the last dollar. This results to more debts and greater financial problems.

2. Retrenchment

Some situations in life cannot be controlled including a sudden loss of a job. With the changes and instability in the market, there are enterprises that may soon close down or streamline their employees to continue staying afloat in their business operations. A whopping 46 percent of these debtors have several loans because of retrenchment or a pay cut.

3. Crisis in the Business

Employed individuals are not the only ones who may suffer from money issues and enormous debts. Even entrepreneurs may run the risk of a serious problem with their cash flow over time. They may continue to stay in the business, yet at the expense of their credit as their continue to accumulate debts and become unable to pay them off. At least 22 percent of people in Singapore who are in debt have issues with their business.

4. Sudden medical expenses

It is not a surprise that healthcare in Singapore is expensive as it is also one of the best in the world. But at the same time, people who are burdened with debts are those who have experienced a sudden and costly medical expense that they need to pay at a certain time line. About 22 percent of these debtors state medical expenditure as the reason behind their debts.

5. Gambling issue

Lastly, gambling is to be blamed for the high rate of debts in Singapore. The respondents who claim that gambling has put them in debts make up 22 percent of the people in the survey. This is an addiction that can cause people to ruin their credit and their life in general.

Now that we know why people in Singapore are in debts, it is time to explore possible solutions you may take to free yourself from debts. After all, there is the promise of keeping your income all to yourself instead of dividing it with your creditors. You can also save more money if you are debt-free. But for the most part, there is the peace of mind you can get knowing that you do not owe anyone anything at all.

Here Are Some Tips You May Want To Apply

1. Know how much you owe

Naturally, you need to keep track of your debt. Go through the paperwork or documents you have that include loan contracts and credit card billing statement stating the amount you owe each creditor. You should also list down the type of loan, details about the lender, interest rate for every debt, and the payment scheme. Additionally, you may want to request for your credit record available from a credit reference agency to have a clearer idea about how much you owe people. The report, once you get it, may not be very pleasant to deal with, but you have to face the truth once and for all.

2. Determine your expenditures

Next up is to make a list of your expenses. This is a part of your personal debt management plan since you need to understand where your money is going every payday. Generate a budget that indicate a list of your monthly cash outflow and compare this with your take home pay. Continue with this expenditure tracking plan for at least 6 months, so you can have a better idea about your spending patterns and if you are saving enough as well. It may be best to work on this with your partner as this can help lighten your load while receiving words of encouragement and support from him or her.

3. Review your spending habit

After being aware of how much you are spending and what you are spending on, it is time to take a closer look at your spending habit. Do you have a tendency to buy on impulse? Are you really buying things that are truly essential, or do you tend to accumulate so much “stuff” you do not even need? This is a good time to admit to yourself that you have made a mistake, yet never feel as though it is something you can never even resolve. The goal is to figure out where you have gone wrong, then take necessary steps to make amends and start over.

4. Start repaying debts

After determining your debts and your expenditures, it is time for you to begin paying off your debts. You may begin with the most expensive of all, which can make things lighter for you once you are left with smaller debts. It may even be possible to consolidate your debts by taking out a loan with the same amount as all your debts. You can pay off the whole amount in full, which also stops the accumulation of high interest rates from your credit card. Sure, you are not completely debt-free by taking out a loan, but you can make smaller payments for it until everything is back to normal.

5. Change for the better

This is the time for you to make a promise to yourself that you will be more disciplined with handling money. Avoiding unnecessary expenses, starting to build your emergency fund, and diligently paying off your loan on time can all develop better habits while making you more responsible in managing your funds. With your debts fully paid and just a smaller loan to be settled every month in a few years, you are not too far away from being debt-free.

Bottom Line

It takes a lot discipline and sense of responsibility to be completely debt-free. But once you have identified the problem, unhealthy spending habits, and ways to address all of these, you can give yourself another chance to become more in control of your finances. As you start fresh, do your best to begin saving money in the bank and considering profitable investment options that will improve your finances and make your life much easier day after day.