Recently, I read with interest that the statistics released by the Credit Bureau of Singapore. A whopping 7.16% of those in age group 21 to 29 defaulted their credit card debts. That's about 1 in 14 of us. The news article can be found here.
Being in this age group, I'm indeed extremely appalled. Most of the times, to be eligible for a credit card, one needs a minimum annual salary of $30k, so these are not exactly people who do not earn enough. It really makes me wonder how these people get into such debts. Most of my friends in this age group does not appear to be in credit card debts.
Probably these people lack discipline in maintaining their financial health. Perhaps there are more pressing reasons, I wouldn't know. But 1 in 14 to default on credit card debts isn't a joke. Businesses pray on the needs and wants of consumers, and at times attempt to turn wants into needs.
As an investor in companies like Starhub and Breadtalk, I would love to see consumers throng to the companies I own shares in. Credit card debt? That's their problems, and the banks' problems, not mine.
But as a Singaporean in the same age group of 21 to 29, I dread to see my fellow peers "suffering" from such debts. That's one of my reasons for blogging here now; other than charting my own journey towards my goal of financial freedom, I'm hoping that whatever I wrote here will someday benefit someone to take action to improve their financial health.
Indeed, it's always easier to spend than to save. In Singapore, lots of money is spent to "have face", to appear high class. Driving a BMW puts you one above the rest. Having a $10k holiday in Europe give you bragging rights in front of your neighbours. There are just so many things to spend our money on. A new iphone? A new laptop? Or how about a brand new set of gym attire?
I'm not saying that one should live like a total miser/scrooge. What's the use of that? It will only turn you into a millionaire scrooge eventually. What I want to mean is that although one should enjoy in life, one should still aim to live below one's means. You know, it's not hard to enjoy life by living below one's means.
The Chinese saying goes: Bitter first, sweet later (先苦后甜). It makes a lot of sense here. Spending now merely adds on to our financial burden later on in life. The magical power of compounding will not be helping us. In fact, by defaulting on credit card debts, the magical power of compounding will actually work against the defaulter. A $100 dollar debt will balloon to $125+ in a year. 2% a month, or nearly 25% a year, isn't a joke.
A lifestyle that depends a lot on debts in not sustainable in the long run. I shudder to think how some people can get themselves enslaved for life by living above their means. Especially for the younger generation... it appears to me that most are enslaved by consumerism.
Our personal financial health is not the responsibility of anyone else except us. If we don't take good care of it ourselves, who else truly will?
Blame their parents?
ReplyDeleteTheir parents have been giving them the best that they can afford. So now these young adults are on their own and still expect to get the best but have forgotten they can't really afford it.
Hi CW8888,
ReplyDeleteI believe financial education has to be taught by parents instead of schools. But if the parents have poor financial discipline to begin with..... hmmm....
I will make sure my kids next time do not fall into the same trap :)