Debt management is key to better financial health. Seriously.
The below is an actual article by Farhana Norlisan in her Facebook page. I find her to be knowledgeable and have lots of experience to share. I think this is in essence what many people are facing today. Debts. Lots of debts. Many times, when debt starts to build up, it looks impossible to climb out of it.
Take a step back, reassess everything. List down all the debts to understand where the biggest problems are. Better still, find a friend who could help. For example, learn from how Farhana helped a close friend as below. Original article was in BM. This is translated and edited and published with permission from her. Thank you for sharing Farhana! (Visit her FB here)
— start of article —
I have no money
I have a friend, syu (not real name). She has been complaining that she had no money to me for some time. Today, she complained again and this time, she cried.
Syu: Fana, I don’t have money. Just the other day, my in-law fell sick in the village and my husband had to take a personal loan of RM40k. Our credit card debt has accumulated to RM5K since 3 months ago and we have not been able to settle it yet. Now we have to also pay for the car. May I borrow money from you?
Farhana: Be patient syu. Take it easy. I’m sorry that I do not have tens of thousands to lend you. However, I understand your feeling. Let me help. Let’s see where you can find your money.
Syu: Where are you going to ask me to find more money? Do you want to ask me to do two or three jobs? I can’t, I have a child. Furthermore, I have to take care of her tuition too.
Farhana: No. It’s not what I meant. Please give me just three documents. Let’s see how and what we could do soonest. I need documents from your husband and you. Please provide me your pay slip, EPF and CCRIS.
Long story cut short, she trusted me with his documents and these are the details:
The Debt Situation is as follows:
📌 Personal Loan (5 years): RM983 / month
📌 Credit Card (outstanding): RM5k
📌 Home: RM 1558 / month
📌 Car 1: RM1125 / month
📌 Car 2: RM788 / month
📌 Salary: RM8k (combined household)
📌 Salary Balance: RM 3546 (exclude credit card debt)
📌 Monthly savings: RM200 (not fixed)
Farhana: Looking at all these numbers, this is my recommendation for you. The total amount of your debts is RM75 k (personal loan + car loan + credit card ).
Syu: Ok. (with heads down)
Farhana: I looked at your house there and I could see it having a positive equity of RM120k. Since your age is only 35, I suggest that you could refinance this house. You can then take our RM80k from the refinancing to to solve these debts, first.
For better understanding, please let me show how this helps her debt issue.
📌 Home Debt Balance: RM270k
📌 Equity: RM120k
Refinance cost: RM5k (estimated)
Farhana suggested Syu to pay her debts as follows:
📌Personal loan: RM40K (full settlement)
📌 Credit Card: RM5k (full settlement)
📌 Car 1: Bank Debt Balance RM30k (full settlement)
📌 Car 2: BANK DEBT LEFT 6 MONTHS (pay as usual)
📌 Home loan: RM 1700
Salary Balance: RM 5512
📌 Monthly savings: RM2k (potential)
Syu: Thank you Farhana. Now I realise there is light at the end of the tunnel. Now I have visibility on my financial issue. Now, I could stop all the arguments with my husband because of money.
Final Note: This is just one of those actual life stories on debt issues in the society of today. More often than now, it’s usually due to our own fault. However, if we are able to realise the mistakes / problems, then we could take steps to fix it versus letting it grow ever bigger and in the end becomes almost impossible to solve.
— end of Farhana’s sharing — (Follow her on FB here. She’s knowledgeable and down-to-earth.)
<Featured Image is courtesy of Stock Photos from Andrii Yalanskyi>
Next suggested article: If 30% of what we have is spent ONLY for debt repayment, then it means trouble ahead