Financial Crisis
I just found out that my family is in a financial crisis.
We have RM30k in credit card debt, and a monthly deficit of around RM2k. All this while, my husband has been dipping into our savings just to cover our daily expenses.
Since I've never owned a credit card, I didn't really understand how the system works. My husband told me there was no interest and we only needed to pay the minimum amount. But when I checked properly—of course there’s interest! The interest and takaful charges alone come up to around RM400 a month. He’s only been paying about RM600 a month, so no wonder the debt hasn’t gone down at all after two years.
As usual, I panicked, listed down all our commitments, and started looking for solutions.
At first, we decided to apply for a personal loan to clear RM20k of the debt, and take the remaining RM10k from ASB. However, the personal loan got rejected. In the end, my husband withdrew RM20k from ASB to wipe out that portion of the debt, and he’s trying to get a cooperative loan (pinjaman koperasi) for the last RM10k. Right now, he needs to find a colleague to act as his guarantor. If he still can't find one by next month or if it gets rejected, I suggested he try applying for a personal loan again. Since RM20k of the debt has already been paid off, it might get approved this time.
So right now, we still have RM10k in debt left to settle.
And that’s just the debt part—we haven't even touched the deficit yet. Our deficit is around RM2k, meaning we are spending RM2k more than what we earn every month. After listing down our commitments, I realized it's really hard to cut back on anything because everything is a basic necessity.
Next year, Fatin will be going to a government school, so that will save us RM420. Plus, my husband will get a RM300 salary increment. That means we’ll have an extra RM720 next year. But that's next year. For the remaining 7 months of this year, we are still facing a RM2k deficit every month.
We just cancelled Astro (-RM140) and might downgrade our internet plan next month (-RM80). We could try saving on electricity, but I doubt it since I love using the aircon.
Another option I see is refinancing the car. Personally, I’d prefer swapping it for a cheaper car, but my husband loves this one. I suggested refinancing it so the monthly payment drops by half (-RM400). Aside from that, I’ll start cooking at home a lot more. Our food expenses might cut down by half (-RM1,000)—well, hopefully, since I don’t even know our exact monthly food budget right now.
If we pull all of this off, our deficit will drop to RM780 for the next 7 months.
By next year, the deficit would only be RM60 (without car refinancing), or we’d actually have a surplus of RM340 (with car refinancing). On top of that, my husband can withdraw from his EPF Account 2 (KWSP Akaun 2) next year, so we can use that money and won't even need to refinance the car.
What I’d prefer doing is taking out one personal loan to clear the RM10k debt, and using the rest to cover our monthly deficit (either the full RM2k, or the RM780 after our savings). Next year, when we get the EPF money, we can use it to cover the remaining RM60 deficit. In 3 years, the car loan will be fully paid off, freeing up an extra RM800 a month.
By then, everything should be okay. We just need to survive and hold on for a little over 3 years.