Image from Unsplash | Mohamed Nohassi @coopery

I’ve been waiting to hit “publish” on this blog for 15 months!

If you see this post, it means we’ve succeeded. What you’re about to read is a prediction of an outcome that we set for ourselves exactly one year ago hence the past tense.

Let it be known that it is 30 October 2020, Friday, 2:05 pm at the time of writing this post.

I am finally debt free.

I grew up in an environment where my parents were careless with money. The range of issues that span not just my parents but my entire extended family made me make promises to never follow in their footsteps. Gambling, lavish holidays, larger than life lifestyles, buying material goods to demonstrate success, and throwing huge parties just to show off.

Sure, as a child growing up in that environment, I benefited from it. I lived in a 2-storey detached home with huge bedrooms. I used to brag I could play badminton in mine. My family drove a BMW (at one point they had two cars) — by the way, buying a brand new car in Singapore is very expensive. As of February 2020, the cheapest car you can buy in Singapore is a Perodua Bezza 1.3 Premium X (A) for SDG$61,999. And that’s not even inclusive of the COE (Certificate of Entitlement) needed to own a vehicle. Those buggers cost about SGD$35,000 as of January 2020.

(Side note: I have never heard of a Perodua Bezza but cars aren’t my forté.)

But material goods do not define your wealth. We were cash poor. Behind the scenes, we were living beyond our means. I didn’t know much about this until I started to see the tangible consequences of it all. Consequences that later led to a lifelong unhealthy relationship with money.

Let me explain.

Both my parents had to declare bankruptcy at some point during my teenage years. Even with divorced parents and not having to deal with one of them on the daily basis, I was constantly pestered to give him money. I was 13. If bankruptcy wasn’t a lesson enough, both of them decided to throw us further into debt by borrowing from bad people.

I don’t want to dwell on the trauma that followed these bad decisions. But I will give you some insight. My growing up years consisted of some of the following experiences:

Fear
Scenario 1: It’s 9:30pm at night, and there’s a knock on the door. You’re watching TV in the living room. Your mom is in the bedroom. She comes out looking anxious and whispers to turn the TV off then proceeds to shut off all the lights. She tells you to go to your room and not make a noise.

Scenario 2: You’re walking down the street with your mom. Suddenly you feel a strong grasp on your upper arm as she whisks you in the opposite direction and tells you firmly, “just walk. Don’t look back.”

Both these scenarios were instances when the ‘bad people’ showed up to collect money.

Guilt
As a teenager growing up, I depended upon my parents for my livelihood. I was given a weekly allowance for school. The allowance was essentially lunch money. We spent more than 8.5 hours in school daily.

During the hard financial times (which was most of the time), I would have to remind my parents to give me allowance. Half of the time it was met with “didn’t I already give it to you?” Following that was the reluctant reach into her purse to pull out a $10 bill which she would annoyingly toss at me. On a bad day, I would have to deal with her concluding jab of “stop asking me for money”.

Because of that, I didn’t like asking for money. I was too young to work and she was adamant that education was important so I didn’t have much of a choice. However, apparently feeding yourself wasn’t. Sometimes I’d go a month without asking for allowance. And that meant that I would go hungry most days at school.

To me, it was guilt that I was a burden to my parents even though I didn’t really have much of a choice but to depend on them.

Lack
I alluded to this earlier that my father often asked me for money, even though I was a dependent who was not making much money. In my late teen years, I started to do odd jobs to kill time during my summer holidays. As I got older, I did some freelancing while attending college. At that time, my parents were already estranged and my father had only kept in contact with us (my brother and I) when he needed monetary help.

Pity was what I usually felt for him. He never opted to get a proper job that would help sustain him. He preferred the abnormal life of being a bookie.

(A bookie is short or slang for “bookmaker” — someone who facilitates gambling, most commonly on sporting events. A bookie sets odds, accepts, and places bets, and pays out winnings on behalf of other people.)

Actually he was the worker for the bookie. He didn’t run the show. You get my drift.

There were days he’d call me up to ask me for $10 so he could have a meal. The human in me would always give in. After all, he was my father — a supposed role model who demonstrated what life would be if you didn’t have a good job to take you through life. He showed me what lack looked like.

Needless to say, my relationship with money was tumultuous.

“Can’t live with it, can’t live without it.”

That was my love-hate relationship with money. Who doesn’t like having more money? Money solves a lot of problems. But money can create problems too!

Today, between my spouse and I, we bring in a gross income of around $200,000 annually. In the context of the middle class worker, in a city with a high standard of living, THAT’S STILL A LOT OF MONEY.

Yet we had been in debt for 8 years. That debt had been fluctuating between $40,000-$60,000. There’s no sense going into detail as to why the debt was never paid down, or how it was racked up in the first place — clearly there were some lessons I never took from my parents. Namely spending beyond your means. And the entitled mindset of deserving to live a lifestyle that a $200,000 household should be able to despite of debt.

We had several debt consolidation and repayment plans, more borrowing through lines of credit (to pay a lower interest), and countless conversations with our financial advisor. Who had inadvertently recommended we focus first on debt repayment before considering investments and savings. I admit, I felt safer having savings and investments. I wanted to know that I had cash hidden somewhere that I didn’t see on a regular basis.

The counter-effect to this was that though we managed to save up a significant amount of money that we had put towards a TFSA, we were only paying the minimums on our loans and racking up credits cards on the side.

It took us 8 years to finally put our egos aside and say “it’s now or never. We’ve got one shot to get this right.” We withdrew all the money from our TFSAs, and paid off the credit cards with the highest interest rates. We then closed the accounts and cut the cards up. We formulated a plan to redirect previously scheduled bi-monthly savings and existing regular payments to the outstanding debt, starting with the ones that had the highest interest rates. Our calculations showed that if we disciplined ourselves and doubled-down on our debt payments, we would be debt free in one year.

Today is 28 February 2022, Saturday, 2:05pm. We did it. We are debt free.

With every story I write, there’s always a lesson. Sometimes it’s my point of view, other times there are clear steps to my point. I don’t profess to know all the answers to life. I also recognize that all our situations differ. I can only give you a point of view and sometimes advice based on what I’ve experienced and learned.

Debt is a slow killing machine. It will affect your mental health, your physical health, your relationships and everything else that you hold dear. Money is a means to an end. Don’t chase it.

If there’s a few obvious pointers from this story, they are:

1. Don’t spend beyond your means. You do not need that new dress that Armani just released. Pay off whatever you put on your credit card. In fact, don’t have a credit card. Use pre-paid credit cards where you can only spend what you have. Koho (in Canada) is a great example! (No, they don’t pay me to say that.)
2. Minimize the number of credits cards that you have. It’s so easy to sign up for a new ‘deal’ that the credit card companies promote. MBNA will always have promotions like “0% interest for balance transfers for up to 12 months”. It’s a slippery slope. Having the card in your wallet means you can be tempted to use it. And after 12 months, you’re still using it and now you’re paying 19.99% interest on a credit card that’s potentially at its max.
3. If you need to take out a loan, stay away from line of credits. Not the popular opinion but having a revolving line of credit will always give you a reason to keep borrowing from it.
4. If you have debt, focus on paying that down. Don’t do what I did. Having a safety net is important but if you can risk it, put everything to paying down the debt. You have time to build up savings again (and probably faster) when you have no debt.
5. If you don’t have debt, invest. I’ve spoken to many people who’ve worked in the banking industry, financial advisors and investment bankers. Savings is only great when it’s growing. There was analogy I saw (I don’t remember where) about the depreciation of a dollar over the course of 50 years. The value of US$1 in 1960 versus in 2020 is drastically different. Invest your savings. Make your money work harder for you.
6. Choose sanity over wealth. If you’ve read my work before, there’s many instances where I’ve said that money is a means to an end. Money is temporary. If you choose to chase money, you will never chase enough of it. Choose your sanity and happiness over wealth.

I can finally breathe.

Editor’s note: All opinions expressed are of my own and do not have affiliations with any corporate entity.