Today is Sunday, I woke up ready to have a lazy day but when scanning news online, I had headline like this “1,600 turn to Bank Negara’s AKPK unit every month” screaming at me. This is alarming for a small country like
These 1,600 individuals turn to the Credit Counselling and Debt Management Agency (AKPK) for help to manage their debts. What about those who are also in debts but are not aware yet and also there are those already in debts and trying to clear them on their own to save their pride. I am appalled by just thinking about it.
As reported by Rashvinjeet S Bedi, the number seeking help monthly has tripled since the agency was set up 18 months ago. And I am sure it will continue to rise if nothing is done to educate these people about how to handle their personal finances.
When I started this blog, my main objective is to bring awareness about how to value money to the younger generations; Generation X and Generation Y who should now be in the thirties and twenties and have just started to earn their own money and be out there to swim with the sharks.
I wanted so much to warn these young kids about “money danger” that some of my postings had become so dull, so boring, so not exciting and so annoying as a “nagging mum”. Yes, who wants to live frugally or live a simple life just to ensure there is enough money to keep us going when we are old. How uninteresting can that be? There are so many “happenings” out there that you would want to get your hands into.
To emphasise on why you should, here are the 2 real life examples quoted by reporter Rashvinjeet:-
“DR AZAM, 28, had it all: two flashy cars, a beautiful home and a flourishing career. He wore expensive clothes and lived extravagantly on credit.
He renovated his mother’s home and decorated it with expensive Italian furniture. He took a loan for the renovation and bought another house.
Without realising it, Dr Azam owed creditors RM400,000 in housing loans, hire-purchase loans and credit card debts.
Stuck, he approached the AKPK for help. Being single and with his mother being the only dependant, Dr Azam was advised to sell his house. He moved in with his mother and sold one of his cars.
In the end, Dr Azam was able to save 45% of his monthly loan payment.”
This is a typical example of living beyond your means and spending your money before you even earned it. At least Dr Azam can still be rescued and live a comfortable life. Lets look at the next example:-
“BEFORE the economic crisis of 1997, Allen was a sales manager earning a five-figure monthly salary, living a comfortable life. However, the economic downturn forced his employers to shut down operations in
At 43, it was hard for him to find a new job. To complicate matters, his wife has a medical condition.
Allen turned to loans and credit cards to fund his lifestyle. Soon enough, creditors began hunting him and threatening bankruptcy.
Suicidal, Allen turned to odd jobs, making less than RM1,000 a month. He skipped meals to ensure his wife had something to eat.
His wife changed his mind about suicide and suggested that he seek the help of AKPK.
Allen had RM200,000 in his EPF, although he could only withdraw the money at 55.
With a debt of RM130,000, AKPK advised him to consider bankruptcy as an option, so that he would be able to settle all his debts when he turns 55.”
I truly empathised with Allen. Earning a five-figure income in the 90s is a lot of money but obviously he did not foresee the economic crisis. What we can do now is to learn from this very painful lesson.
A good friend of mine thought me to use the “Worst Case Scenario” method of looking at every situation. Do a “worst case scenario” of your financial situation. How much mortgages, loans, debts do you have and if you were to lose your job today, how are you going to survive. Do you have “Plan B”? Really look at it, it is scary but it is necessary.
Change your ways. Do not spend indiscriminately or at your wimp and fancy. Think before you spend.
Time and again, we need to change but change is hard.
Sometimes we change due to living changes
or we will wait for “hurt to change”
but never wait till you have to “despair to change”.
It may be too late or too drastic, like in Allen’s case.