Avoid Post-Raya Debt, Spend Wisely


Article from BERNAMA21 July 2014


KUALA LUMPUR (Bernama) -- Her furniture was in good condition - its colours still bright and its structure still solid. The curtains in the two-storey house still look like new, too.


In fact, everything looked fine. Nothing was old, ruined, or faded.


"Abang, let's just change our sofa set. The design is outdated. I am embarrassed to let our guests see it", Sofia complained.


Her irrational request was undoubtedly met with her husband's disapproval. An annoyed Sofia tried to come up with other excuses to buy new furniture.


This is the short sketch on wastefulness when spending for Hari Raya, which was aired on television recently.


Although it was meant to be humorous, Sofia's story is all too familiar in today's society. Many believe that it is alright to spend freely in celebrating upcoming festivals. Few realise how detrimental such wastefulness can be.



It cannot be denied shopping centres too tend to take advantage of upcoming holidays and festivals by offering incentives to consumers so that they spend big.


Those on a different budget have the option of visiting the numerous bazaars set up during Ramadan selling items like tablecloth, traditional clothes and "kuih raya" (cookies).


These traders are simply competing with each other in the bid to push up sales.


Some place hefty discounts, others put on "raya" songs to get visitors in the buying mood, while others resort to other gimmicks.


Taglines like "buy now, pay later!" and online promotions can prompt many to make hasty decisions and spend beyond their means.


"Malaysians tend to celebrate Aidilfitri or other festivals on a grand scale. They would buy new clothes, change their furniture and other items.


"Some go overboard with the spending and find themselves in a financial quagmire after Aidilfitri", said Mohd Yusof Abdul Rahman, the communications director of the Federation of Malaysian Consumer Associations (Fomca).



The typical mentality among these big spenders is that "raya only comes once a year", so why not spend a bit more.


Those with poor budget management sometimes fail to maximise the benefit of the early disbursement of salary and the additional raya bonus.


They will spend to their last ringgit, and continue their shopping frenzy with credit cards, without sparing a thought to the possibility of running a serious debt.


"People tend to overspend when they don't pay by cash.


"It would not be a problem if they can manage their debts well. But what if they fail? Thus would it be better to use cash or debit card", asked Mohd Yusof.


Failing to settle credit card debts does not only mean that they may have to tighten their belts by the end of the month. It could also mean that they will not be able to pay for their house and car installments, utility bills and other recurring monthly expenditure.



More worrying is the trend to borrow from "ah longs" (loan sharks) because they have exceeded their credit card limits. This is an unhealthy development that can lead to serious consequences, as often highlighted in the media.


"I have been told that an overwhelming number of people go to unlicensed money lenders prior to the festive season.


"This shows that people are running themselves into a debt in preparing for the celebration", he said.


This begs the question whether taking such risks in the name of celebrating a festival are all that necessary.


Is it worth it to borrow money to spend on a new car or a new phone for Hari Raya, at the risk of losing one's life to moneylending thugs?


Mohd Yusof said a survey by Fomca revealed that 37 per cent of young people spend outside their means.


Meanwhile, 47 per cent of respondents use 30 per cent of their earnings to repay loans.



Those who like to pile on debts may soon find themselves on the brink of



The Malaysia Department of Insolvency showed that 23,397 people who were declared bankrupt from 2007 to September 2013 were between 25 to 34 years old.


Even more worrisome is that there are those who have yet to reach 25 years old, but are already bankrupt.


"Societal awareness on financial management is still low. This is because it is

hardly impressed upon in school.


"It is only in the recent years that there have been programmes on financial

management education. This came about after the Insolvency Department reported that 61 people are declared bankrupt everyday", he said.


Meanwhile, the Credit Counselling and Debt Management Agency (AKPK) Head for Johor Bahru, Mohd Nasir Mustafa said the worse thing was that some of them did not even know what a budget meant.


This is despite how easy it is to budget for the festive season, considering it only occurred once a year, with ample time to save for the celebration.



To address this problem, AKPK is ready to help the public become smart



The agency launched many programmes to help individuals take charge of their financial situation and gain peace of mind due to wise credit management.


Among them is the Power programme, aimed at helping the young manage their personal finances as well as provide counselling services for them.


"It is not wrong to spend, as long as it is within one's means. Try not to succumb to the temptation.


"We need to allocate at least 10 per cent of our salary for savings and emergencies", he said.