Spend Wisely To Avoid Risk Of Becoming Debt-Ridden

By Nur Aimidiyana Zuher KUALA LUMPUR, July 11 (Bernama) -- A failure to plan expenses prudently, especially that involving the use of credit card, can leave an individual to be burdened with soaring debts, eventually leading to bankruptcy, according to a financial consultant. Hijrah Wealth Management financial senior consultant Zulsaidi Redzwan said every expense incurred should be determined, according to individual solvency and not cause a debt-ridden burden to them. Referring to a recent media report, 23 per cent of 90,807 borrowers who were assisted through the Counselling and Debt Management Agency (AKPK) Credit Management Programme (DMP) for the period from 2007 to May 31 this year, were among those who had poor financial planning. Why was the individual unable to control spending? Were the items purchased a necessity? Zulsaidi said, without making a list of the expenses, an individual could be easily influenced by the excessive use of credit cards and make financial loans solely to satisfy the desire and personal preference. "Individuals, especially salaried workers, tend to overspend because of a desire to purchase all and sundry, without thinking of tomorrow. They feel safe and comfortable because every month, they know they will receive their monthly salary. "Most worrying is, when they own more than one credit card because they were easily tempted to purchase luxury and branded goods," he told Bernama in a recent interview. Zulsaidi noted that another cause leading some to be in debt was the high medical cost and loss of jobs. What steps should one take in prudent expense management? He recommended that everyone use the 'envelope system' to help manage their financial expenses in more consistent manner. "The 'envelope system' helps in sifting the salary money, accordingly, such as for shopping, travel, entertainment or when in an emergency situation. "Sufficient or otherwise, spend what is contained in the envelope. If there is excess from the salary, it can be kept aside as savings," he said. On the rate of household debt in the country, Zulsaidi said it was still under control but the government needed to monitor the issue before it worsened. Malaysian Muslim Consumers Association (PPIM) chief activist Nadzim Johan said everyone should play an important role, including the family institution, to educate society in spending money wisely. "Despite the existence of reference centres such as AKPK, participation from the private sector needs to be expanded to help solve the problem. "I hope the government and non-governmental organisations (NGOs) can provide a platform to society, such as guidance and advice, on the importance of managing expenses," he said. Nadzim said the guidance was not only focused on the individual in debt problem but instead, could be accompanied by those who wanted to get advice on prudent financial management. Meanwhile, credit card officer Suryamarlini Md Hazair said individuals aged 18 and above, and having steady income of above RM1,500 (US$474.65) were eligible to apply for a credit card. She noted, as most of the applicants did not understand credit card terms and financial institution procedures, there were complaints galore when more were charges incurred due to late payment. "If we just settle the minimum payment in credit card bills, it causes the debt to increase while the card has been used more than the permitted amount stated in the loan," said Suryamarlini, who works in a private financial institution. She said it was not a problem if anyone wished to apply for a credit card but users must have a high sense of discipline and plan their expenses before using the card to avoid being burdened with high debts. -- BERNAMA