There is a growing number of people in Singapore who find themselves in a difficult financial situation. This is due to high cost of basic needs in the country. Some even feel as though they’re just working to meet their daily expenses, leaving them with little or nothing to save for their future. This is far from what many people believe that Asians are very prudent consumers. Facts show that many find themselves fighting unfortunate debt crisis hanging over their head. If your debts are high, you can approach a licensed money lender to assist you in your financial needs.
According to a recent report released by HSBC, Singapore’s household debt has risen significantly to 73% from 48% in terms of GDP share. For a few years now, consumer debt is said to experience a steep upswing in many Asian nations. The study notes that, the need to take up more personal loan, payday loan are not only due to housing demands but also other needs such as expensive cars, motorcycles and many others.
Why people get into debts
1. Lacking of savings
Saving culture is an important skill that everyone needs to inculcate in life. Lack of saving for your future will definitely lead to more debts. Regular saving will help you to become financially independent and invest your money in other important things. Staying out of debt will lead to a less stressful financial life.
Many people in Singapore are more inclined towards big spending, which is a bad habit that leads to heavy borrowing. Studies have shown that over 40% of all debts, overspending is the main reason behind the borrowing.
3. Unexpected medical expenses
You never know when a serious medical condition will strike your family or an accident will happen. About 22% of our debts are said to be as result of unanticipated medical expenditure. You can cushion your family from these unexpected expense by investing in medical insurance.
4. Little or No investment to increase your wealth
Grow your wealth by directing part of your income into smart investments. This way you’re assured of return on investment with minimum risk. A good investment will help you to save on tax apart from increasing your wealth over a period of time.
5. Gambling Problem
This is a bad habit that will drag you into serious debts. Gambling takes about 22% of the borrowed money. The figure keep going up due to the nature of gambling habits which is becomes an addiction. However, the numbers released recently showed that many people are now shying away from gambling.
6. Business Crisis
Entrepreneurs sometimes run into financial crisis to harsh business environment and other factors. Most business owners use borrowed funds to finance their businesses and this can lead to a serious monetary dilemma if the business is making losses.
Best Ways to avoid debt in Singapore
It’s possible to live a debt-free line in Singapore despite the high cost of living. However, this requires a lot of dedication and skills to turn around your financial problems. Here are some of the best tips to help you manage your money in a prudent manner.
1. Determine your expenditure
To solve your financial problems, you need to have a good personal debt repayment strategy. Come up with a realistic way on how to repay your debt on a monthly basis. This means, working out your inflows and outflows for the purposes of managing your money efficiently. Come up with a comprehensive budget with all your monthly expenses against your income. Give yourself an average of 6 months doing the same and you’ll begin to see your financial woes reducing drastically.
2. Assess your current debts
The most important step is to figure out your exact amount of debt. Create a list of amount you owe, lender details, type of credit and rate interest for each debt. Debts are subject to high interest rates which can be problem when it comes to repayment. Carefully rearrange all your loans and credit card debts to lessen your repayment burden. This will help you to clear your debts within a short period of time. Avoid borrowing more money to repay your debts, its a bad decision.
3. Use your savings
It’s advisable to use your saving funds such as work bonus to clear your debts. This will ensure that you avoid delaying your debt, which can be costly to repay due to steep monthly charges.
4. Review your expenses
Getting to know your exact expenditure will make it easier for you to identify areas where you need to cut expenditures to increase your savings. It’s possible to improve your finances by taking drastic measures in your existing lifestyle. This will involve taking a comprehensive review of both regular and recreational expenses.
5. Speak about your problem
Huge debts can be a source of nervous breakdown for many people, especially when you struggling to repay. This is the right time to speak with your partner in regards to your debts. When you share the problem with family members, you’ll reduce stress and constant panic. Also seek for help from a debt counselor, where you can share all your debts problems.
6. Assess your spending habits
When you succeed in trimming your regular expenses, go ahead and check you daily spending. Cut overspending so that you can free up more money to repay your debts. Budgeting is not meant to take away your joy for life, but its an innovative way to compromise on different things we face in our day-to-day life.
7. Give your debts the first priority
Once you assess your debts and cut all unnecessary expenditures, then its time to focus on repaying your debts. A smart and effective decision is to start with repayment of the most expensive debts. This way you’re sure to avoid high interest rates.
8. Change your spending habits
To ensure you remain debt-free calls for a complete attitude change towards your spending habits. Sometimes we tend to learn through the scary debt experience the way we approach money. Simple basics teach us to live within our means. Manage your financial resource in prudent manner and you’ll stay away from debt.
9. Inculcate a saving culture in your life
Saving culture is a critical life skill that we must incorporate in our daily life. Once your debts are fully paid, start saving for your future. Savings are a good source of building a cash fund for your investment options. Have an emergence fund to take care of any unexpected situation in your family.
With the above tips, its possible to live a life free of debts in a country like Singapore. All you need is to have a positive mindset and avoid painful situations that come with debts. Create a budget to guide your expenditures and start saving for your tomorrow.