Living Large - Bruneians in Debt

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Written by Kartini Knox Monday, 10 May 2010 09:29


"Spend up to $100 on your credit card and get 15 per cent offthese products!" "24-hour loan approval!" "Special discounts for credit card holders!" "0% interest credit card payments on all furniture items!"

It's no wonder our credit cards are max-ed out and Bruneians are in debt. It's a double-edged sword: Banks are quick to tempt us with "too good to resist" offers (like the ones listed above) and we get carried away thinking we got a good deal. In fact, the only winners in this case - are the banks.

Think about your credit card. Pay up a day or even an hour after the deadline and you're slapped with late charges or "admin fees" on top of what you owe.

"It's like throwing pebbles into the ocean," said a friend who had paid $100 on her card, only to be slapped with another $45 in late fees, effectively making her hard-earned payback count as only $55.

"It's funny how, if we pay off our cards early, the banks don't reward us with a discount," she pointed out. "Yet when we're the slightest bit late, they won't hesitate to make us pay through our noses!"

The conversation switched to car loan payments. "Whether you pay for your car over seven years or seven months, there is no incentive such as a reduction in the amount of interests you pay." "Why settle it quickly?" shrugged my friend. "Let the bank wait for its money!"

Another friend of mine related how her bank manager had enthusiastically called her one day to offer her a "personal line of credit". The bank would be happy to lend her a huge sum of money, it said, which she could pay back over the years, through deductions in her salary. Was she tempted?

Naturally! Visions of holidays, sports cars and shopping danced in her head. Being young, single and living at home, she had practically zero living expenses and bills to worry about. It seemed too good to be true!... It was.

Her dad sat her down and talked her through the options. She'd have to sacrifice the largest part of her monthly pay packet, over much of her working life, on paying back the bank's "generous" loan offer.

"Think of your future," he told his daughter. "If you wanted to buy a house of your own one day, do you think the bank would loan you the money for it? Not likely, with such a huge personal line of credit to pay off."

Another girl fell for the bait and took the bank up on its offer. "Living large" for a while, she spent like there was no tomorrow and frittered cash away on makeup, clothes, handbags, holidays and a fancy car.

Now, still only in her 20s, she is a whopping $70,000 in debt. With plans to get married, she's in a desperate conundrum, frantically looking for a way to pay off her debts, so she can afford her fast-approaching wedding. How will she manage? Only time will tell.

"The bank is not your friend," lectured one parent to his son. Some would say by offering naïve young, working people personal loans that they didn't really need, banks have exploited these youngsters' lack of financial finesse.

Can we say then, that it's the banks that are largely responsible for young Bruneians being stuck in huge, financial black holes? How does one dig their way out of that hole, especially now with the rising minimum card payments and soaring cost of living? Some struggle.

The only way to dig ourselves out of debt would seem to be to tighten our belts and curb spending. Forget about minimum monthly payments - they don't work!

If you can afford to sacrifice half your salary or more, on paying back that credit card, then do it! Don't think twice! Otherwise, late charges, interest and admin fees all pile up on top of what you actually owe, making it a growing pain.

Since adopting that tactic (as well as digging into my savings account) - I've managed to clear two credit cards and cancel one, keeping the other, only for emergencies.

It may seem harsh to sacrifice 50 per cent (or more!) of your salary to pay off bills and debts instead of treating ' yourself to the usual monthly indulgences. But there is no greater feeling like being free of financial debts. Once you've cleared yours, you'll feel richer in an instant! -- Courtesy of Borneo Bulletin

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