27 Jan 2020
Hi Seedly Peeps,
Long story short, I have been struggle with a failed investment for the past 5 months, which resulted approx S$30k debts
I have 99% exhausted my cash, my credit card & my loans... I was thinking to pick up Debt Consolidation Plan (DCP) but it must be 12x of my monthly salary hence I am not eligible for DCP...
My CC and Loan interest are snow balling like mad and I'm really struggling af, any advice to get me out of this turmoil please?
I am no expert here but let me try my best.
Credit card interest rate is insane and killer. I think you can apply for a personal loan, at a much lower interest rate. Then immediately use the personal loan cash to pay off all credit cards.
If you have other loans at high interest rates, use the personal loan to clear them all off first.
Then focus all your effort to clear the personal loan. Don't take anymore risk in investing. There is no easy way out anymore and its just facing the reality here. Make some sacrifice, cut down expenses where you can.
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Hey friend, consider register for CCS info talk here: https://www.ccs.org.sg/about-ccs/page/appointments
CCS has this plan calls DMP (Debt Management Plan) which could be your savior.. I had a friend in similar situation to yours (hers was due to business sold off but continued to live on high credits + lifestyle choices which led to the ultimate inability to pay off debts that rolled over). She wasn't eligible for DCP either. We went to the talk together; she ended up asking CCS to help her and she is on her way to financial freedom soon.
What CCS did for her was that they helped scrutinized her lifestyle choices + expenses and gave good advices on how to keep herself in check. Of course it takes time for her to change her habits.. but she is getting better everytime I see her and I'm positively influenced by some of the habits too! That said, CCS helped negotiated lower interest rates for her debts as well and set a loan tenure for her (based on ability to pay off after minusing expenses.. if you do not have a job or do not have enough excess to pay the banks CCS may reject to help you; but once they decided to help 90% it will go through).
I am happy you're seeking help and here's a link. https://forums.hardwarezone.com.sg/credit-cards... This is the very thread that got me talking to my friend.. who then went with me to the info talk and got help~ Thing is though, you won't be able to get a credit facility at least until you've repaid your debts (why would you want to anyway?)
I believe you must have most of the ways that the others have suggest; budgeting.. cutting expenses etc. but interest rates is a much better maranthon runner vs budgeting. So I suggest you register for the talk asap and seek help from CCS immediately; at the end of the day you can always think over if you'd like them to submit a proposal for you after the one-on-one counselling session.
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Starting off. Do let your love ones know about your situation, if not letting them know is worsening your debt due to you having to keep face.
Even if you don’t want to borrow from them. At least let them know so they won’t expect certain things from you. If you are married, it is even more important you share the same goal.
Second to get extra income, as some of the others mention, can be grab driver, etc. If you got property can rent it out (one room or stay with parents and rent whole unit out). Sell off assets like car if you are not going to be grab driver. (Convenience should be the last of your concern). Sell off other investments, except insurance.
Lastly, manage your lifestyle, I added this as there are really many people who have no self awareness to their spending. Eg. If you sell your car you really shouldn’t be taking a cab anymore. Stop all restaurant visits including fast food. Budget everything and keep to it strictly. Like each meal should not exceed $5 if you eat out, etc. Clearly identify needs and wants.
Basically life will be hard but the more difficult it is, the faster you can clear your debt. If you take the attitude that it’s just a few dollars, and relax every other day, you will take longer to clear your debt.
How much difference is it away from 12x of your salary?
Unpopular opinion: If it's not too near away, take up a little more to reach the 12x so you quality for DCP (which is usually at 6-8% p.a. with 1-2% processing fee - much better than any other loan out there).
An easier to stomach option would be trying to get a balance transfer to reduce the highest interest loans first. You then give yourself some breathing time to work things out.
If you have a private property, you can reverse mortgage it to get cash (secured loan) and pay off these high interest debts. Current interest rate on secured loan should not be higher than 2.3%.
If you live in a large HDB (4/5 room), it may be worthwhile to downsize to a less-prime location to unlock cash. Of course, please do your calculations right. You don't want do all that to only have your money lock up in CPF.
By calculations, if you maxed out your credit cards and loans, it should reasonably be around 12x since credit card limits are usually 4x monthly income (per bank). Or if your gross income is actually pretty high, speak to a bank about restructuring your loans. They will usually allow you to do that (approx 10% p.a. with 3% processing fee). From there, you can slowly pay off in bulk when you have more cash.
Sources to get more cash: Drive Grab during your free time (~$15/hr). If you focus only on peak timing, you can make around $30/hr. Do part-time jobs such as events ($10-15/hr). Deliver Grabfood - lower entry criteria. You can even do it on foot/bicycle - approx $8/hr.
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