Article from The Malaysian Digest dated 20 February 2014
“I work all night, I work all day, to pay the bills I have to pay, ain’t it sad? And still there never sees to be a single penny left for me, that’s too bad!” – ABBA, “Money. Money, Money”
I couldn’t help myself to sing that line of the song by a popular 1970’s Swedish pop group ABBA whenever the word ‘money’ came across my mind.
Frankly speaking, money if often used to buy something you want rather than something you need, especially when one lives in an urban area. Surrounded by the peer pressure to live like kings, without proper financial planning spending to please other people can lead you into bankruptcy very quickly.
Contrary to popular belief, bankruptcy isn’t a human condition, but a legal status enforced by a court order on a person who is unable to pay off the debts that he owes to his creditors.
Being bankrupt means you will lose some of your legal rights, particularly those related to finance. Your bank accounts will be frozen and the Director-General of Insolvency (DGI) will control all of your assets and properties.
That’s not all, don’t even think you can step your foot right out from Malaysia because there will be difficulties for you to travel overseas and other restrictions.
What’s worrying is that the ages of those declared bankrupt now also include those who are younger. There is now an increment of bankruptcy in our country with over 47% of young adults’ age between 18 – 35-years-old are having serious debts due to living beyond their means.
According to the recent statistics from the Malaysian Department of Insolvency (MDI), an average of 1,812 people are declared bankrupt per month last year, with an 11% rise in the average number of monthly bankruptcies from 2012 to 2013.
Although you will be declared bankrupt by a court rule for debts above RM30,000, many young people would refer it simply as being broke.
Sherry (not her real name), 28, lost a place to stay after failing to pay rent and her car repossessed by the bank. Sherry admits that she tends to overspend on branded goods, beauty treatments and other excesses because she is used to having a lavish lifestyle since small.
“I was born with a silver spoon. As a child, I am used to get whatever I wanted. I am used to showing off expensive things I bought to my friends and have spent thousands of Ringgit to fund my posh lifestyle, she confessed.
The pressure to live the life of luxury soon led to her divorce.
“I admit that I did not have a proper financial planning to get out of my financial troubles,” admits Sherry.
The harsh reality of having no income after the divorce really had her having thoughts of ending her life at one time but for the sake of her daughter, Sherry regrouped and sought to start fresh by getting a job as a receptionist.
She is now struggling to settle her debts.
“I thank God for not choosing suicide to end my misery only because of my daughter, I just wish I was more cautious before and now I want to learn from my mistakes,” said Sherry.
Why are we having debts?
The lack of discipline on financial management is why many young Malaysians today carrying major debts and also with it a high possibility to go bankrupt, according to Public Mutual Agency Manager-Unit Trust Consultant, Erin Adlina Adnan, 25.
“Apart from majority of credit card debts and higher purchase loans like car and housing loans, most young adults did not settle their study loan as well upon graduating from university and this set a bad record or being blacklisted in Malaysia,” said Erin.
Their lifestyle also due to overspending on items like branded goods, gadgets, and cars. They are mainly pressured among their peers earn less from those who can afford, which is around RM2000 to RM3000 per month.
“You have to know where are you standing with the income that you have. This matter is quite subjective and it all depends on how an individual manage their finance,” she said.
Some would see being bankrupt as a choice, especially for those who are doing business as their source of income.
As a financial advisor, Erin always advises her clients to have another saving fund to support the usual funds such as the EPF, ASB or the Hajj fund and always have a thought to invest your savings so you can enjoy the harvest for your future.
Getting the help you need
In effort to curtail bankruptcy, Bank Negara Malaysia has set up an agency called Agensi Kaunseling dan Pengurusan Kredit (AKPK) to help individuals manage their financials accordingly.
Since its set up in 2006, AKPK had reached out to 248,491 people as of December 2013 in their counseling program with over 40% of them people enrolled in their Debt Management Program (DMP) stated the General Manager, Operations Division, Nor Fazleen Zakaria.
“When customers come and seek our counselor, we will go through their income and expenditure to analyze their financial status so they can manage personally, however there are instances where we see there is a need of us to come in and encourage them to enroll in our programme,” she said.
Through a programme called “POWER! – Managing Your Debts Effectively”, it was developed for the youngsters to learn basic financial knowledge such as Cash Flow Management, Borrowing Basics and Debt Management. It is very useful especially for them who are about to start working and taking loan after graduating.
“Most people are not comfortable to discuss financial matter openly, but we encourage them to be more open because we want to prevent Malaysians from leaping into bankruptcy,” said Nor Fazleen.
“A lot of people do not understand what is bankruptcy is all about. When you take a loan, you know have to pay and there’s no way you can run without paying, that is when it will accumulate and you’ll be declared a bankrupt” she added.
Money does not grow from a tree, while we all busy making a living, always know that everyone must always spend wisely, not excessively, or it will all be gone before we know it.