While we’re personally still getting over 2020, the new year is already almost upon us. While all of us may have different resolutions –– to lose weight, to eat healthier, or to quit smoking –– having any amount of debt can be a burden and may constantly weigh on your minds. According to Bank Negara Malaysia, Malaysia’s household debt is one of the highest in the region which amounted to nearly RM1.4 trillion last year.  

Whether you have student loans, borrowed money to try and start a small business during the pandemic, or have a car loan, it’s important to take practical steps to reduce your debt. 

Here are some tips from CIMB that you can follow:  

Have a debt management plan 

Dale Carnegie said, “An hour of planning can save you 10 hours of doing” and it can save you some moolah too! It may sound like a lot of Math and planning, but it is good to be realistic and take orderly steps.

Make sure you avoid accumulating debt and it will be handy to have a notebook to record this down. Although it may seem like a small step, lower your credit card limit, and talk to your creditors to work out a better payment plan.  

Reduce your expenses wherever you can. You probably don’t need that expensive cup of coffee (We’re guilty of this too *coughs*). Or five pairs of white sneakers.  

Increase your income where you can if your debt is more than your income. Why not take up a stress-free job in your free time like selling cookies or pet sitting?  

Start off with high-interest debts

This is a helpful step to reduce the amount of interest paid each month for debt accumulated. Pay the minimum for your other debts and try to channel more funds towards your high-interest debts. Although you may be overwhelmed by multiple debts and this may feel drawn-out, this method will help you to decrease your debt overall.  

Pay off your smaller debts 

Otherwise, if having too many debts overwhelms you, start off by paying off all your smaller debts. Start paying the minimum on all your debts and work on your small debts. This will reduce the number of debts you have and motivate you to settle off more. Combine this with the first step and then tackle the big debts with the highest interest rate.  

Consolidate your debts

You’ll have to check with your personal bank on this and you may want to check with bank personnel as there are eligibility requirements that need to be fulfilled.  Debt consolidation refers to combining multiple debts into a single larger debt such as a loan, typically with lower interest rates or lower monthly payments.  

There are two general types of debt consolidation loans: secured loans and unsecured loans. If you have assets such as a house or a car, this works as collateral for secured loans.

Unsecured loans, on the other hand, rely on a borrower’s creditworthiness and include personal loans, student loans, and credit cards. It would be best to check with services offered by different banks before you commit to a specific loan.  

Seek Professional Help

If you feel like you are drowning from the sheer amount of ‘hutang’ you have, you might need professional help. Bank Negara Malaysia set up Agensi Kaunseling dan Pengurusan Kredit (AKPK), a credit counselling and debt management agency to help individuals with such matters. 

You can apply for AKPK’s Debt Management Programme or call their hotline at 03-26167766. 

Image credit: Luis Villasmil on Unsplash