Last year Hubby and I decided to learn a little more about financial principals from the Bible through the Institute of Basic Life Principals. Their Financial Freedom series was indeed a huge eye-opener. It was a series of 20 lectures exploring all the different aspects of finances related to personal, family and even business. One of the lectures particularly touched on debt and it kind of hit a sensitive nerve in me. I remember when I started my first job many years ago and I got my first credit card...Citibank was then giving out credit cards practically to everyone and anyone who applied and you could get free movie tickets every month! It was exciting! A whole new world of what I could buy suddenly opened up. I didn't need to worry whether I had the cash or not, I could just use my credit card!
A long spiral of debt!
To cut the long story short it was a story spanning nearly 12 years of constantly being in credit card debts. It is really easy to rack up the bill I tell you. A little swipe here and there and the next thing you know, you owe the bank quite a thousand Ringgit. Fast forward to 2014 when we had our first child, it was then that I told myself enough is enough! I have said this a couple of times before, and I am saying it again, having children really changes you for the better. I was finally fed up of paying the endless interest that came every month with the credit card bill as I was only paying my bill partially and yet I continued to spend. You see I was paying more than the minimum payment but not quite the full payment that was owing. The straw that broke the camel's back came when I decided to study one of my lesser used credit card statements a little more in detail. To my horror, I realised the following:-
- My outstanding bill at that time was about RM500 plus. This was a credit card issued by AEON Credit
- I had made a payment of about RM400 plus as I didn't really check the bill properly. The remaining unpaid amount was less than 1 Ringgit
- The finance charge, however, was a few Ringgit!
It was then that I swore I was going to do two things which were to clear all my outstanding credit card debts and moving forward pay my credit cards in full every month! I did a couple of things immediately, I took up as many interest-free balance transfers that I could get my hands on and basically stopped spending money on stuff that didn't matter! (I will elaborate more about this in my future posts) I paid all the monthly instalments faithfully and by 3rd quarter of 2015 I was credit card debt free! Just then I also started an experiment to document my expenditure every month and to go on a clothes buying ban! You can read about ithere the results of this experiment which I wrote about earlier last year in my personal blog before coming on Steemit.
I believe that we cannot be truly financially independent whilst we are still in debt. For me, this includes all the debt that is considered "normal" for everyone to have, like a car loan and a housing loan. A friend who owed RM 40,000 for a failed business venture recently shared with me the horrible stress that she goes through every month when the repayment becomes due. The anxiety and fear of not being able to make the next payment, the unhappiness and distraction...I have also heard about marriages and families being torn apart because of debts.
Borrowing is like heading for financial death!
Borrowing creates a relationship of servitude to a creditor, be it the credit card company, finance company or bank. Even if you owe your friend some money and was unable to pay it back in a timely manner, your relationship then becomes strained. Your friend may still be kind and not pressure you to pay back but wouldn't you feel a little ashamed and indebted to them?
I have also come to understand that borrowing does one more thing to us...it literally brainwashes us to think that t it is ok to live beyond our means and then traps us into being slaves working to pay back the debt. Borrowing is really presuming on our future ability to earn back the money that we borrow! What is something happens to us and that ability is taken away? Lastly, debt really robs you of even a good sleep at night. So the bottom line is we want to make living without debt a reality because we believe that it is a start towards true financial independence.
Our Plan
- To accumulate enough cash equal to our loans in 1000 days to be set aside! We will be collating all the outstanding debts that we have and work out how we can do that.
- Stop incurring any new debt immediately
- Invest to make better returns (I will be also be doing more postings about how and what we invest in)
- Live more simple and prudent lives - ie. spend less
- Save 30% of our income (at least whilst the kids are still young. I am guessing they are going to cost a lot more when they are older!)
So far, I have been credit card debt free since 2016, meaning I pay off my credit bills in full every month and I am so looking forward to paying off the final payment for my car loan this month! (One post on that coming up too!)
Please do share your thoughts on the following:
1. What do you think about debt?
2.Do you think having some debt is ok?
I would love to hear from you especially if you have managed to reduce or live debt free!
.gif)
So what is QUESNEY21? @joannewong and I are challenging each other to create great content for the next 21 days. Starting 26th of March and ending on the 15th of April. We needed the discipline and motivation that comes from being accountable to each other. Tell us if this is interesting to you, do you think you could benefit from your own QUESNEY 21?
Check out the other postings for this challenge:
QUESNEY21 (Day11): Persistence & Perseverance
QUESNEY21(Day 10): Review #1: Weaning Tots - Kid Friendly Restaurant
QUESNEY21 (Day9): 100 Degrees Steemit Introduction Session - 3rd April at Talentbank
Do check out @joannewong postings too for this challenge!
.gif)