I remember it well. The heavy weight on my soul as I neared the end of the month and I ran out of money for food or gas. The painful sensation of running my credit card down that slot in the machine, knowing that it’ll only make the debt situation worse the next month. The fear I have when I read news about people being laid off, wondering how I was going to survive with no savings and a 6-figure debt. It seemed as if every ringgit I earned was going to everyone else but me.

It was 2008, and I was neck-deep in debt. I had RM10,000 in credit card debts, RM12,000 or so in a car loan and a six-figure housing loan. I felt as if the weight of it all was crushing me. 

My parents are stalwart Chinese folks who believe in the power of property ownership. So, at the tender age of 23, barely fresh out of college, I became a property owner with their help. But I was also a reluctant owner of a six-figure debt. Back then, property prices were not as insane as it is now but it was still a huge amount on my inexperienced shoulders. I remember lying on the floor, numb, as my mother outlined the benefits of owning a property. I only felt stark terror at the thought of owing so much. But I trusted their wisdom and signed the dotted line anyway.

At times I think it was a great thing that they did this for me. If I had bought the property when I could afford it on my own, say when I was 30, it would’ve probably doubled in price and I would’ve owed much, much more. But at other times, especially when I was turbo-paying-off my housing loan in 2016, I regretted it immensely. Especially since I knew so damn little about what I was getting myself into when I signed that loan papers.  

I can’t really remember the day when I’ve just had it. Was it the day when I asked a colleague to co-sign a loan for me and she turned me down with a look of horror and shock? Was it the day when I asked my mom for a loan to pay off a credit card debt and she sternly told me to “do this on your own or you’ll never learn”? Or was it the day I dug into instant noodles for days because I busted my credit card limit and couldn’t even buy proper food?

Debt, I realised, does something to your self-respect. Sooner or later, you’ll lose it altogether just to stay afloat.

So I decided to pay off my debts. I paid off my credit card debt and car loan in roughly under two years. In 2016, I paid off my housing loan using a combination of my savings and EPF. (It’s mandatory Malaysian retirement savings. It allows Malaysians to use part of it to buy a house or pay off a housing loan.)

Today, I have reversed my fortunes. Instead of negative net worth, I now have positive net worth. I’m mostly debt free except for a RM12k car loan remaining which I plan to pay off in 2018. (I can actually pay off the loan outright, but I prefer to have more liquid cash with me at this moment.) It’s actually mindblowing to know that I’m now on Step No.7 (build wealth and give generously) in Dave Ramsey’s 7 Baby Steps! Ten years ago I had zilch savings!

Today, I have a much happier and stress-free life. I don’t worry about the recession as much as because if I get laid off, I’ll survive for a good few months because of a financial cushion and because I know how to live frugally.

To be honest, I didn’t consider all of this an achievement because I’m a perfectionist; I don’t consider myself truly debt free until I pay off that pesky car loan. However, when I told this to a room full of fellow workshop participants once, they were all amazed. I should so write about this! How did I do it? Could they do the same?

Yes, you could, definitely! If a single girl with a modest income like me could do it, anyone could! (FYI, when I started paying off RM22k of credit card debt and car loan, I was only earning RM3,500.)

Here are the things you can do to get out of debt:

Educate yourself

There are thousands of personal finance blogs out there. Malaysians, do yourself a favour and read Ringgit Oh Ringgit and Mr Stingy. There’s also Mr Money Moustauche and Budget Girl, who paid off her hefty US30k debt while on a tiny salary. Then listen to Dave Ramsey, the American debt-free guru whose debt snowball system got me out of my fix. Read his book Total Money Makeover. That one’s a keeper.

Use the debt snowball

This system works! The idea is to pay off your smallest debt first and work your way up to your biggest debt. Although it makes more sense to pay off the debt with the highest interest first, Ramsey designed his system this way because he understands human nature: Sometimes you need a psychological boost to continue the journey. Once you pay off a debt, snowball that amount to the next debt.

Be laser-focused on the goal

When I was paying off my debt, I’d gleefully check my credit card balances to see the reduced balance, picturing the day when it’ll turn zero. I wrote in my diary, my month-by-month plan to paying it down. Now, my credit card balance is always zero. I never allow it to creep beyond that number, and if I do, I’ll pay it down as soon as I can.

Keep to a budget

Confession. I’m absolutely lousy with sticking to a budget. (Sometimes I think it’s an absolute miracle that I paid off my debt with my cincai system.) Now I use Goodbudget app (it has a free option) to track my expenses. Give every ringgit a job or a place to go. Save like a demon when you can.

Get extra income

I worked overtime and did extra jobs, earning sometimes an extra RM1000-RM2000 a month.  

Stop buying things you don’t need

Like, duh, right? Yet I was spending a horrifying RM500-RM800 a month on books, clothes and nick nacks when I was struggling with debt. No wonder I was living paycheck to paycheck! I buckled down and reminded myself of my priorities. Sometimes, I even hid my credit cards!

Become a minimalist

Another confession: After paying off my debt, I almost immediately ended up with RM4,000 of credit card debt again. What changed me completely was stumbling on the concept of minimalism. Now, back then, the word was more about interior decorating than lifestyle. So I didn’t have any gurus telling me how to simplify my life. The catalyst for change was me deciding to move to Australia. That meant packing up all the things in my apartment.

I was horrified by the amount of stuff that I had accumulated over the years. Worse, I didn’t use half of the things I bought! I had hundreds of books I hadn’t read. I even had dozens of food containers – overkill for someone who barely cooks. I got into debt for this?

 My wastefulness and money mismanagement disgusted me. I swore never to buy things unnecessarily anymore. I also felt guilty. I became interested in sustainable living and zero waste living because I didn’t want to be part of the problem that was sickening and destroying the world anymore.

Minimalism changed me in many ways, but crucially, it has helped me stay out of debt. After adopting the mindset of “living happier on less”, I am far more careful with what I buy. Heck, I don’t even have the desire to buy half the things I used to crave anymore! (Books, however, are still a problem. Sigh.) I still have a credit card, but I use it for buying things online or paying bills. And I make sure to pay it off every month.

Learn frugality – it’s a skill

Living frugally is fun. Seriously! I love finding ways to stretch the dollar, and one of my favourite things to do is to meal plan. While I am by no means the Queen of Meal planning, but I cook a large amount of my meals now. I love finding creative ways to use leftovers, often sending my bestie photos of culinary creations created from bits and bobs of leftovers from a restaurant meal or things I needed to finish in the fridge. 

How about you? What do you do to pay off your debt? Are you debt free?