My Debt Management: All The Good Debt & Bad Debt I’ve Taken So Far

In this day and age, it’s pretty hard to avoid being in any kind of debt. This is a post about my own debt history and how I apply debt management strategies in my life. But first, I want to clear something up:

Taking on debt =/= bad spending habit

To be clear, yes SOME people have problems with excessive spending. HOWEVER, there are also many other circumstances that force someone to take on debt. For example:

• They needed money to pay for their or loved ones’ medical bills
• Their parents ask them to take on a loan to ‘pay them back for raising them’ (narcissistic parents do this)
• As elder sibling, they are expected to help with their younger siblings’ expenses (studies, car etc)
• Someone with learning disability or low media literacy is very much susceptible from unethical and manipulative advertising
• Frequent marketing banks and financial providers do to promote excessive spending

Only 2 out of 5 ppl who get into debt is due to poor financial planning. The rest is due to reasons out of their control

Also let's talk about the frequent marketing banks do to promote excessive spending pic.twitter.com/aXTapEq1ly

— Suraya | suraya.eth (@surayaror) July 20, 2021

All I’m saying is… don’t be too quick to judge people who are in debt and reduce them to just ‘bad at financial planning’. You’re capable in understanding more than that shallow reasoning. And if YOU are the one in debt, give yourself some slack, especially if you find yourself in any of these 4 tough financial situations.

Now, with that, let’s get into the meat of the article – sharing my debt history and debt management strategies so far in life.

#1 – ASB Financing

Type: Good debt

In 2011, when I was 22, I took on RM50k in ASB financing. It remains one of my best financial decisions.

In 2021, I got an offer to refinance the loan at a lower rate and took it.

(ASB loan was a good decision for me but it may not be for you. Read more at 5 Reasons You Should NOT Take ASB Loan)

#2 – PTPTN loan

Type: Good debt

I borrowed some money from PTPTN to complete my Masters. RM8k plus, if I’m not mistaken.

Upon graduation, I dutifully paid my PTPTN loans on a monthly basis. On March 2015, I decided to pay off the remaining balance of my PTPTN loan. There was a 20% off PTPTN discount incentive and so I saved RM1014.82

(Note: this particular incentive already expired)

This is the screenshot of my final payment amount. Paying off a little over RM4k in one go was painful, but ultimately the right decision.

#3 – Credit card instalments

Type: Neutral because all justified purchases

I have taken credit card debt, but ONLY the 0% instalments. The ones where you can convert a big purchase into 6, 12 or more monthly payments with zero additional cost.

The instalments were for:

• A laptop – done with payment
• A phone – done with payment
• Home renovation 1 – currently paying
• Home renovation 2 – currently paying

My own debt management strategy with 0% credit card instalment is to not have more than 1, max 2 at a time. Because I’m paying for 2 at the moment, I will avoid any other instalments for the time being and only pay lump sum. That’s what my savings is for.

My cashflow this month is super negative 😖 but proud of myself for making lump sum payment instead of taking (another) instalment

— Suraya | suraya.eth (@surayaror) February 25, 2022

Again, the only instalment I’ll take is the 0% instalment. I do not and will never (touchwood; if I can help it) get into credit card debt where I have to pay 15-18% interest rate on my balance.

#4 – Credit card cash advance

Type: Bad debt

This one is embarrassing for me to admit, but I believe in transparency and this is a personal finance blog (emphasis on personal and blog), so… here it goes. Once, I used the cash advance service offered by my credit card to… buy bitcoin.

I know, reserve your judgement. I’m not going to pretend I’ve never made any financial mistakes you know.

Unlike #3, this service came with a fee – 3.88% interest rate for 6 months (or effectively 7.76% per annum). That’s high – in hindsight, I was stupid. I paid it off, but I really shouldn’t have taken it in the first place.

To be super clear, DO NOT DO THE SAME THING. Thank goodness it turned out well (this happened in 2016 or so), but I can’t give myself any credit for skill at all when all there is to it was I simply got lucky.

That’s my debt history and debt management strategies. How about yours?

Luckily for me, my debt situation at the moment is under control. I don’t have mortgage or car loan under my name, nor do I plan to take one in the near future. All the debt I have is good and justifiable debt.

But even if they are good and justifiable, debt is still debt. My preference is to not have any at all, actually.

I also have this theory that the easier it is to borrow money, the less likely it is for salaries to increase. I mean, why would they increase salaries when they can just allow you to borrow from Future You’s income, am I right?

Have you noticed that nowadays, instead of increasing salary, the trend is making it easier for people to borrow from future income? And then they call it 'affordable'

This is just one of the points I made. Listen to the rest at: https://t.co/FDMtIxew3x https://t.co/pchBtThP9d

— Suraya | suraya.eth (@surayaror) July 15, 2021

I’ll leave you with that food for thought. Now to you, dear readers. What debt do you have? Have you taken bad debt – and if yes, what’s the story?

How to Pay off Credit Card Debt in Malaysia

If you are in debt, you have 2 options: (1) Try and dig yourself out of it via DIY research (the video below is a good starting point), or (2) Contact AKPK and see if you are eligible for their Debt Management Programme (it’s free!)