Living in debt can be stressful. Every cent you earn feels like it goes down a hole that can’t be filled. You know you should be saving up with enough investment to secure a retirement budget, but it seems like everything is getting more expensive with every day that passes, and you’re coming up short.
Are you going broke? How do you conquer this dilemma before retirement, if it is even possible? Don’t worry; we’ll walk through the whole thing in this article, so you can carry on to living a debt-free life in Singapore.
Is it possible to become debt-free in Singapore?
It feels too optimistic a take to say that it is simply “yes”, considering that debt can rack up easily when you have a lot of things to pay for, from your student loans, your mortgage, your car, everyday expenses, credit cards, and other forms of debt. But take heart–it’s certainly possible.
In fact, back in 2014, the Singapore government announced that Credit Counseling Singapore, an independent, non-profit organisation that wants to help you get out of debt, will expand their services to include a centralized repayment solution to help people pay off their debt.
That said, it’s not going to be as applying for the program and your debt fading into the wind. Your own finances are still your own personal problem, making paying your debt your own personal responsibility.
It takes a lot of discipline and hard work, but working towards living a debt-free life is an ultimately rewarding plan for the future.
Characteristics of Debt-Free Living
The benefit of debt-free living is already clear–with no debt; you have financial freedom and a bigger budget to spend on things. You would be able to save enough balance in your bank account to use for important things in the future, like a car, a business, or a family.
But most of all, it would simply be having that weight off your person. Debt can be heavy, and it will constantly create problems, so without it, things can eventually domino from monetary freedom to you living with less worry.
But that’s not all; being debt-free can also improve the way you live in different ways. So to pay whatever loan you may be paying, here are a few characteristics that you should learn to emulate so you can quickly live without having to think about your finances constantly.
Without debt, a person has financial security. They are comfortable with what they currently have, be it an older car. Having the confidence and contentment in the way you currently live your life will remove the nagging feeling of needing to spend money on things to emulate success.
Having that confidence that you don’t have anything to prove will help you look at the price instead of the brand and help you pay off the money you owe.
The road to becoming debt-free isn’t easy, partly with temptations right around the corner. Learn to budget your money instead of spending it on impulse upon every shopping sale at the mall or every bargain deal that you may not actually need.
Also, learn to say no to your family and friends and regular drinking nights, movie nights, or whenever they coax you into making an expensive purchase or taking a luxury trip.
Learn to keep your credit card, and cash tucked in your wallet instead of making an irresponsible purchase, and that cash is already an investment in your future.
Being practical with your money is key to being able to live with financial responsibility. More than simply being able to say “no” to your impractical impulses, you have to learn to direct your cash into more practical ways.
For example, instead of going for the expensive product, you could instead look for less heavy alternatives on your wallet. Take advantage of a timely, practical sale so you can save on each purchase.
To lead a money-smart life, you have to be more hands-on with managing money. Create a plan that involves dividing up your money into paying for expenses, loans, and others.
This is also where you should direct money into more important things, like your insurance, retirement fund, and more.
Lastly, more than anything else, you have to learn to be consistent. It’s not enough to seldomly ignore your impulses or make a money-managing plan. You have to have follow-through and aim to have consistent discipline to achieve a debt-free lifestyle.
How to Live Debt-Free in 8 Steps
Becoming debt-free is no easy feat, but it is doable by following a few key steps:
- Create a Plan
- Negotiate With Your Creditors
- Pay Off Larger Debts With Higher Interest Rates
- Earn More Money
- Cost-Cutting and Financial Responsibility
- Credit Counseling
The first step towards a debt-free life is accepting your situation. Acknowledge that the total debt balance is too big and that it’s time to fix it, and fix it as soon as you can.
Financial responsibility comes with accountability, so accepting early that this is the price you’re going to have to pay will help you lead a more disciplined life.
Create a Plan
Set clear, attainable goals, especially concerning the amount of money you have access to. It helps to divide your debt into more manageable chunks and settle each of them one at a time.
Negotiate With Your Creditors
Lenders run a business, and they finance people expecting to be paid. In Singapore especially, laws are firmly for the benefit of keeping borrowers safe from financial ruin, and credits are required by law to hear out how you’ll be paying your remaining balance.
Moreso, they really want to be paid and would very much prefer not to bury you in debt. In fact, the first instance that you realize you’ll have difficulty with debt, you should immediately reach out to your creditors. They will likely even offer to create a payment plan that suits needs to help rid you of your debt.
Pay Off Larger Debts With Higher Interest Rates
When you have access to money and finally start paying off your debt, the sound (and obvious) financial solution is to settle the debt with the highest interest rate first.
In the face of multiple sources of debt, your priorities might get blurred, but dealing with loans that have the potential to bury you in more debt will inevitably be saving you money in the end.
Earn More Money
The reason why you have debt in the first place is definitely related to a shortage of funds. Therefore, it’s generally a good idea to find more income sources. The more money you can get, the quicker you can make repayments, and the sooner you can be debt-free.
Consider starting a business that you can manage along with your existing job. There are many different opportunities online, especially if you have skills that you can market.
Learn to Budget
Formulating a good budgeting scheme can help you address your debt earlier by giving you a structure to allocate your existing funds. Separate the money you mean to use on matters related to everyday expenditures and free up specific amounts for your debt repayments.
Maintaining a consistent structure will be crucial in your journey to becoming debt-free.
Cost-Cutting and Financial Responsibility
Decreasing your expenses will help free up some funds that you can use to repay your debt. Take a look at where your income goes in your budgetary scheme, and consider what you can trim or remove entirely.
It’s also important to be responsible with your credit card. If you know you can’t afford something, it’s best to settle on avoiding the purchase. If you use your card, address your credit card statement immediately so it doesn’t add to your existing debt.
Finally, it’s best to seek help when you know you are having difficulty addressing your debt. Applying for credit counselling is not only a smart move; it’s also going to make things easy for you.
Reach out to Credit Counseling Singapore. They are experts who have helped many individuals address their fiscal woes, walking them through their problems and guiding them towards ideal solutions.
They provide webinars weekly that you can listen in on to get general answers about your financial troubles, or you can speak directly with a counsellor who can help you address your woes one-on-one.
Either way, it’s free. You wouldn’t need to spend a single dollar, and they can help you cut down on your debt.
The Bottom Line
Debt has its pros and cons. A mortgage can help you get your own home, and student loans can help you get an education. Any financing can get you something you may want or need, and you can repay them in manageable amounts.
As much as possible, become debt-free, so you can use less time worrying about your finances and more on important things, like family, friends, or your passions.
Moreover, be smart when you’re applying for financing. Consider your own ability to repay, and opt for flexible solutions. It’s best to seek out lenders who want to give you the best option that works for your specific financial situation, like 1 Fullerton Credit.