7 Strategies for Eliminating Debt: A Guide for Singaporeans

Piling up debt is pretty much like getting into quicksand—you often don’t sense you are in danger until you are deep enough in it and are struggling to get out. Of course, having debt by itself is not wrong. There are numerous valid reasons to avail yourself of credit if it is available to you in Singapore. Businesses that require capital often resort to borrowing and even ordinary consumers may take out loans to meet daily spending needs.

What’s dangerous, especially for individuals with limited financial resources, is to mindlessly purchase things without being aware of the financial consequence of going beyond one’s means. Credit cards are often the cause of such predicament. Your wanton spending at the shopping mall will come back to haunt you by way of ballooning payments due every month. Indeed, consumer debt may be the most common form of debt afflicting a lot of Singaporeans.

The good news is that problematic debt is something that you can overcome. While you are currently immersed in the pressure of mounting bills, you may feel helpless or overwhelmed. However, there are concrete steps that you can take to fish yourself out of this financial quagmire. Here are some clear and effective strategies to help you eliminate debt:

Stop Using Your Credit Card

Needless to say, the goal is not to create any additional debt. Cut up or throw away your credit cards and close your credit lines for good. Physically preventing yourself from using them is the only sure way not to create more financial burden. As long as easy credit is within your reach, you may always find a reason to use it.

Curb Your Spending

Debt problems are caused when you spend more than you earn—it’s as simple as that. Therefore, you can stop sinking deeper into the debt hole by stemming your spending. Prioritize only the most vital essentials, and prevent yourself from purchasing anything unnecessary or frivolous. You can even save further on daily needs by perhaps going for cheaper alternatives or cutting back on quantities.

Use Cash

With your savings from more prudent spending and the absence of credit cards from your life, focus on the discipline of living off hard cash. Getting into deep credit card debt is usually the consequence of thinking that plastic is “free money.” Transacting in cash can help keep a reality check on your spending. Make it your mantra not to spend money that you don’t already have. You will be amazed at how much your spending habits will change for the better if you make do with the cash in your wallet.

Increase Your Payments

As you free up more cash, strive to make bigger payments on your credit card. If you pay only the minimum amount due every month, chances are it will take you a very long time to eliminate your debt. Chip away at the total amount due as much and as often as you can. If you have debt across multiple credit cards, you may want to focus on paying off those with smaller amounts or you may zero in on the one with the largest debt.

Consolidate Your Debt

 Negotiating with your creditors is a good way to manage your debt more effectively. You can ask for a lower interest rate or consolidate various credit card debts under a single creditor. Using a debt consolidation calculator Singapore citizens and residents trust is another great way to give yourself an idea how to streamline your financial liabilities. It can help you project and plan your finances in the immediate and long term. Debt consolidation may also empower you and create a more positive mindset that you are able to get things under control.

Augment Your Income

Debt is a financial deficit between your earning and spending. Thus, increasing your income is another way to boost your savings and offset the financial hole created by debt. Roll up your sleeves, look into your talents and expertise, and take up some freelance work. If you are employed full-time, you may look at ways on how to get a raise or to take on additional work for additional compensation.

Take a Deep Breath and Relax

Faced with the nagging prospect of growing liabilities is very stressful indeed. However, fear will most likely freeze you in place and get you nowhere. Instead, clear your mind and take the challenge as it is. Having these steps is just one way to help you tackle the problem of debt deliberately and strategically. Debt will not magically disappear if you ignore it.

Most importantly, be honest with yourself, especially if you need help. Aside from seeking financial assistance from family or friends, professional help in terms of financial knowledge and management can make a big difference. There are a lot of resources available from organizations that can guide you on your journey to financial freedom and wellness.