February 2009 Update

My update for February 2009

Saving for old age : RM300,000
Current Saving: RM157,000
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TOTAL: RM457,000
Current Short Term Debt: - RM10,000

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Net Worth : RM447,000 (+2% from January 2009)
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Unique way to reduce the debts faster

This is another way on how you can reduce your debts faster. This is a little bit different than the consolidation of debts in my earlier post. This method is also known as snowball debt reduction.
THis is how it works. If every month you have an allocation of RM1,500 per month just to pay debts from different channel, you will need to maintain this allocation everr month until all your debts are paid.

For example:
Car loan - RM500 per month (still have 3 months to pay)
Personal Loan - RM800 per month (still have 6 months to pay)
Education Loan -RM200 per month (still have 2 years to pay).

This is how the payment looks like
Jan - car (500), Personal Loan (800), Education Loan (200)
Feb - car (500), Personal Loan (800), Education Loan (200)
Mar - car (500), Personal Loan (800), Education Loan (200) -- by this month you should have finisehd paying your car loan. Use the 500 to top up the personal loan payment
Apr - Personal Loan (500+800), Education Loan (200)
May - Personal Loan (500+800), Education Loan (200)
Jun - Personal Loan (500+800), Education Loan (200)
Jul - Personal Loan (100+800), Education Loan (400+200)
Aug - Education Loan (400+200)

As you can see the original duration is 2 years but with this snowball, you can finish paying all your debt in 8 months. It is a very effective way on how to manage your debt. Give it a try and you will be amazed on how effective it is.

Ways to reduce the debts

During those days when I was heavily in debts, most of my debts are from credit cards. I was having 3 credit cards with high credit limits. I was a very good paymaster but that was the problem, the credit card companies will entice you with higher credit limits. Sometimes, the credit card camponies did not even tell you that they have increased your credit limit.

I visited many finance blogs on how to manage my money and how to be debt-free. I have learnt a few things and now finally I am debt-free. And the feeling is overwhelming.

If you have accumulated many debts from different channels, the first thing that you should do is to take a look at the whole picture: how much debts you have in total (not including you house mortgage or car loan). This is the most essential piece of information as you will formulate on how to get out of debts based on this amount.

Once you have this figure, the next thing you want to know is how much is the interest you pay per month on each of this debt. You then calculate the average interest that you are paying on this.

At the same time, scout around on any personal loan that is offered in the market. Most personal loan - ranging from 7% - 12% a year which is much lower than 18% a year for credit card.

Take a personal loan and settle all your debts. This way not only make you more focus but make sure that your debts are all paid. Personal loan make you commit a fixed amout a month and making sure all your debts are paid within a few years. Whereas the credit card give you the flexibility to pay the minimum amount which you know you will never pay them off in any fix duration.


Hope this helps

My Financial History

I started to come to my senses when I gave birth to my first daughter. Due to the complication it costs me a bomb and I dont have sufficient saving at that point of time. Prior to my pregnancy, I was a heavy spender due to no commitment. With a decent earning and no commitment except for my car, I was enjoying my life like no tommorrow. Buy whatever I wanted or whatever I felt like having. Without realising that I have overspent my money plus credit card..

With the birth of my daughter suddenly I realised that..hey I cant live like this this.. I need to have savings and sufficient emergency fund just in case.. I cant live with credit and I need to have cash around..

This is where the restructuring of my debts started. I learnt about money management through the various finance blog and I decided to adapt a few approach.. and it works.. If I am keeping to this approaches, I will be a millionaires in 5 years time.. hopefully.. The approach will be revealed in the next post... Until then see you..

My Portfolio

I am trying to diversify as much as possible so that when the economy goes downhill, I am not too much affected. But hey with the current economic conditions nothing seems to be reliable.

Fortunately so far I am not much affected by the current economic slowdown because my stock portfolio is the least in my basket. Before the economic downturn, my gut feeling made me sold off all my shares and I managed to avoid the big crash. The remaining stock that I have now has devalued more than 50%. Same goes to my unit trust. I used to transfer my old age saving to ASW until somebody managed to influenced me to put into the public mutual fund. I did and I am now down with only half of my investment. I guest all my stock and unit funds will be kept there until market get back to normal in perhaps 4 to 5 years time.. nothing much I can do right now.

My main target now is to increase my savings and decrease my debt. As per the earlier post, I have a little bit of debt which I need to celar in acouple of month time. And I hope by then I am debt free.

Until next time....

This is all for now

My Baseline

This is my journey blog towards RM1 million in 5 years time.

My Baseline as of January 2009

Saving for Old Age: RM300,000
Current Saving: RM150,000
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Total Saving : RM450,000
Current Debts: RM12,000
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Net Worth: RM438,000
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