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Where to get help if you’re in financial trouble

Despite their best intentions, a fair number of people in Singapore run into serious financial trouble. The good news is that there is help available.

Despite their best intentions, a fair number of people in Singapore run into serious financial trouble. The good news is that there is help available.

GETTING INTO DEBT

While most people do want to manage their money well and live within their means, a small number overspend or run into difficulties that cause financial challenges. Whether it is through over-spending or losing a job or illness or something else, they find they do not have enough to pay their bills.

For some people, these difficulties creep up before they realise it. They are using credit cards to fund shopping or vacations for example, and do not even realise that they are overburdened until monthly payments start to take more of their salary than they can afford.

As licensed moneylender i-Credit describes the situation, “our national inclination towards big spending has led to a bad habit of bigger borrowing. Over 49 per cent of all debtors have blamed overspending as the key reason behind borrowing.”

These problems affect more people than one might expect. MAS data showed S$5.2 billion in credit card revolving debt at the end of September from people who do not pay their balance in full. It also showed that 6 per cent of credit and charge card balances were written off in the quarter ending in September.

THE CHALLENGES OF DEBT

If you realise you are heavily in debt, it can be hard to figure out the next step. People often do not want to tell friends or family about their dilemma and may not even want to admit it to themselves. Facing up to the challenges as soon as possible is important, though, because letting the problem grow can cause even more difficulties.

On a personal basis, stress levels increase along with debt, which may affect work performance and personal relationships. Moreover, some companies prefer not to hire people with too much debt because they see it as a sign that they are not responsible enough or that they will be too focused on their financial difficulties to perform well.

Late payments also turn up on your credit report, which banks use to decide whether to give you a loan, so buying a home or borrowing in the event of a healthcare emergency may be difficult.

WHAT TO DO

If you find yourself in financial trouble, the place to start is analysing your situation and developing a plan.

Financial advisory firm The New Savvy advises that the first step to take is to analyse your situation and determine how much debt you actually have. You should then find which credit cards or loans have the highest interest rates, pay those off first, and also break the habit of paying only the minimum amount of instalment every month. Most importantly, “to live below your means, you have to spend less than you earn”.

If you are in credit card trouble, renowned financial advisor Suze Orman recommends that “you must cut up all of your credit cards now, with the possible exception of one card for emergencies”. She too suggests paying more than the minimum payment, paying off the credit cards with the highest interest rates first, and switching to cards with the best interest rates.

As iCredit also noted, “leading a debt free life, even with the higher cost of living in Singapore, is possible”. Its 10-step plan for healthy money management includes sharing the problem with your family or seeking help from a debt counsellor, creating a budget that shows the exact inflow and outflow of cash, using your savings to clear debt, and getting back to basics so you can live within your means.

WHERE TO GET HELP

If taking these steps on your own is difficult, it may be useful to reach out for help.

One of the best places to obtain assistance is Credit Counselling Singapore (CCS), a non-profit that helps people deal with their debts. CCS provides assistance by educating consumers on how to manage money as well as how to overcome financial difficulties, and they can help develop debt repayment plans. Last year, according to CCS president Kuo How Nam, CCS counselled more than 4,000 people.

The Debt Advisory Centre (DAC) provides similar assistance, offering advice and education to individuals with debt problems. The Centre was proposed during the National Convention of Singapore Muslim Professionals in 2012 and was launched in 2013. It focused initially on helping clients referred to it by partner organisations and has since extended its services more broadly.

While some debt counselling companies also offers services, they may charge fees for advice.

You should also talk with the banks or other lenders that you owe money to and to ask for their assistance. They may be able to help with figuring out a payment plan or restructuring your loan.

GETTING OUT OF TROUBLE

For some people, getting into credit trouble is altogether too easy. Fortunately, there are steps you can take on your own and there is assistance available if you want help. What is most important is to start solving the problem quickly rather than letting it get worse and affecting you even more.

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