Sunday, January 29, 2017

Story-sharing : Debt

What is 'Debt'

Debt is an amount of money borrowed by one party from another. Debt is used by many corporations and individuals as a method of making large purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest


The most common forms of debt are loans, including mortgages and auto loans, and credit card debt. Under the terms of a loan, the borrower is required to repay the balance of the loan by a certain date, typically several years in the future. The terms of the loan also stipulate the amount of interest that the borrower is required to pay annually, expressed as a percentage of the loan amount. Interest is used as a way to ensure that the lender is compensated for taking on the risk of the loan while also encouraging the borrower to repay the loan quickly in order to limit his total interest expense.
Credit card debt operates in the same way as a loan, except that the borrowed amount changes over time according to the borrower's need, up to a predetermined limit, and has a rolling, or open-ended, repayment date.

Read more: Debt Definition | Investopedia

Recently I shared with few 'followers' about how I got into huge debt due to my financially-idoit mentality before I was married ... went into huge debt due to marriage and having my boy ... and how I got OUT of debt ... recently, I sold off my two apartments to accumulate more cash, awaiting the market crash.

So ... as my goal is to be FINANCIALLY FREE (I am not yet at the moment), it is obvious that the very first step is to get out of debt (bad) and ... yes, take good debt!!

#1 : No housing loan for me at the moment.

#2 : Paying off my auto-loan (RM600 for my Proton) by April

#3 : No credit-card debt but taking loans from the credit-cards

#4 : No personal loans but intending to take to the max soon

So ... debt was a big issue to me as I was struggling every month end to "fulfil my commitments". As I m out of debt ... I m no longer a financial-idiot, I m learning how to leverage on debt (good).

The sequence should be ...

#1 : Get the financial-mindset re-tuned

#2 : Be frugal ... very careful with our spending

#3 : Increase our earnings

#4 : Pay off our debt with highest interest, gradually

#5 : Invest in ourselves


#7 : Take risk ... invest in assets

#8 : Leverage on OPM

#9 : Maintain the cycle ... go back to #1 and repeat.

#10 : Eventually ... financially free.

Yeah ... these are what I have been doing for past 11 years. My boy is 11year-old now. I need to plan for my retirement (and his education fund).

Do not rely on unit-trust ... or those educational-fund that those banks/insurance companies providing us. The charges and non-flexibility would not favour us, in long run.

Learn to get out od DEBT and ... yes, INVEST. You will never regret ... and if you are young, imagine that you would be seeing another 2-3 crashes in your life time. If you are in markets for 20-30years and not capitalising on the crashes, you will not make it in markets.

Well ... I will share more about my DEBT-story ... for those missed my recent sharing. I came from deep-deep financial crisis ... and listening to my voices, you will feel the pain I have went thru. I could be in tears ... thinking of the mess I went thru merely 10years ago ... unable to pay the minimum to the credit-card amount (5% min) and not able to buy my little boy a simple toy. Have you read about my "TOY" story?

The choice is in our hands.

Don't know how ... don't know why? Learn then ... and presevere. FOCUS in getting out of debt and our brain will work wonders.

A clip to share ... in case you are losing the motivation!! We all need to INNER-motivation ... listen to youtube to these clips consistently, not wasting your time yanking around.

Happy New Year ... day #2.


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