Get Out Of Debt


There are many reasons why people get into debt. Being financially illiterate, poor money management skills, not able to say no to instant gratification, overspending, and of course genuine reasons like unemployment and having unexpected expenses can place a person into a debt situation. Personally, I got into debt awhile back due to poor money management skills, impulse buying, and on a deeper level, my overspendings were due to insecurities issues, and a lack of purpose in life.

1) Make getting out of debt a commitment

Getting out of debt is more of a psychological issue than anything else. It is useless if you have the best method/ system for getting out of debt but are unable to stick to it. Decide once and for all that you are sick and tired of debt. No one likes debt repayment. It is painful, but since you have dug yourself into such a hole, the only thing you can do is to repay your debt as soon as possible. Think of all the extra money you will have once your debt is fully repaid. You then have the freedom to use the spare cash to do whatever you want, without guilt.

2) Develop a budget

Now that you have put your heart and soul into debt repayment, work out your monthly income and expenses. Cut all unnecessary expenses such as shopping, excessive entertainment, eating out at restaurants, and you even have to cut down on vacations until you clear your debt. Yes, it is depressing, but now is pay back time for using money you have not earned to pay for things which you do not need. By developing a budget, you are able to track and cut spending, and to allocate extra money towards debt repayment.

3) Debt repayment

After coming up with a budget, you should be able to know how much money you are able to repay each month. Make sure it is more than the minimal payment required. If you have more than one card, always allocate a higher payment towards the card with the highest balance. Compared to paying the same amount for all cards each month, I personally prefer making more payment towards the card with the highest balance to save on interest charges. Another way is to do debt consolidation using ready credit or a personal credit line, with an interest rate ranging from 4% to 12% per annum. Do shop around for the best rate between different banks. For myself, I am using the debt consolidation method with Citibank’s ready credit at a rate of 4% p.a.

However, the drawback for using the debt consolidation method is that you would not be able to make a lump sum repayment due to fixed monthly installment. Also, there are penalty charges for early repayment.

4) Life after debt repayment

It can be really depressing to just focus on the debt repayment process. To encourage yourself, start planning on how to allocate the money once debt is fully repaid. You might want to go on a vacation to celebrate, or to start saving up for your goals. Regardless of what you do, it is important not to fall back into debt again. Learn to manage your money, save up, and plan for retirement.


Good luck and do stay committed!


7 thoughts on “Get Out Of Debt

  1. Pingback: Simple steps to improve your financial health | Get Rich Diva

  2. Hi there,

    Was introduced to your blog by a friend of mine. Good to know that there are more personal finance blogs around these days, as well as investing ones.

    I applaud your efforts at reducing debt, sticking to a budget and living life more simply. For myself, I’ve been practising budgetary discipline (including keeping track of all my bank and investment accounts since about 2005), and am also active in reading up on personal finance and investing. In our increasingly consumerist society, you tend to read more and more about young adults who over-spend and over-commit. That’s a sad consequence of our materialistic society where people measure success as a measure of how many possessions you own.

    But the most important things to me are being in a net cash position, paying up all my bills (on time and in full), having almost no debt (except a small HDB loan), family, friends and being happy doing the things I love. I personally do not believe that one needs leverage to grow wealthy, though this is a view which is NOT shared by most of my peers (I am in mid-late 30s). Having a family with a kid does make it tougher to save, but I still try to manage the best that I can. Dividends do help me attain my savings targets as well.

    Keep up the good work, I shall look forward to reading more of your posts!


    • Hi Musicwhiz, first of all, thanks for the encouragement! I have to thank your friend too for introducing you to my blog. I agree with you that we come from a very consumerist society and not everyone pay attention to how they manage their finances and grow their wealth. Having been on both side (being a spendthrift and now being frugal), I feel happier being in control of my money, and being able to differentiate my wants and needs. Most importantly, I learnt that money is to help us gain freedom, and gives us a sense of security, not just for material possessions.
      Kudos to you for managing your finances so well. It is always nice to find like mind people! Do you have your own blog as well? 🙂

  3. Hi Jasmine,

    Yes I used to maintain a blog from 2007-2012 but it is defunct now. It is a blog on value investing and I stopped it due to work and family commitments. The URL is

    I did blog a lot on Personal Finance as well, and split it into 26 separate parts for easier reading. I think Parts 21 and 25 would be very relevant as Part 21 would talk about how to plan finances as a couple (as you are getting married soon) and how to manage money together as a couple, covering savings, insurance, investments and debt. Part 25 talks about how I manage all my spreadsheets to track all aspects of my monies, investments and other balances (CPF, HDB Loan etc). If you are getting a house soon I would recommend a loan amortization table with sensitivity analyses in order to assess the effects of different loan tenures, interest rates and instalment quantums; that way you can better stress test to see if you can afford the loan should tough times arrive.

    You can access the Personal Finance section through this URL –

    It is very true that money means freedom for me to do what I want, and enables me to live my life without worries. Most people I see around me seem to want to accumulate money to impress others or to make themselves feel better; but to me true happiness is in living the life that you want and not caring about what others think of you.

    The correct way to measure wealth (and not many will tell you this) is to see how long you can live on your current cash/investments/assets assuming you never work again. If you have a high-maintenance lifestyle, then your fixed expenses will erode your cash hoard faster than someone who has comparatively less assets but has a minimalistic lifestyle. The human mind is a strange thing – once you get used to a higher standard of living or a certain lifestyle it is tough to go back to where you once were.

    • Hi Musicwhiz,

      Thanks for sharing your blog! I spent the last two days of my spare time reading it. It is a pity you stopped writing, your blog is both thought provoking and inspirational. I did not have time to complete the 26 part series but I’ll be visiting them as and when I have the time for a good read. Your portfolio is also very impressive. At what age did you started investing? Investing is something new to me, and I am still doing a lot of fine tuning.

      We share the same view on what money mean to us, which is basically security and freedom (I love your article on “What money means to you”). I also agree that too many people in our society associate wealth as status. That they must lead a lavish lifestyle to show others how much they are worth. Even those without the means are doing that, hoping that they’ll gain others’ respect by appearing successful. Sad to say, I was like that. For me, this year an been an life changing year. There has been a great turn in my personal and financial life, once I am in control of my money and knew what I want. Right now, I am trying to minimize my expenses and to maximize my earnings.

      One thing we do not entirely agree on is leveraging. Like the others, I believe in leveraging to create wealth. I plan to maximize my HDB loan (my BTO flat will be ready in 2015) and repay within 30yrs time. With any excess cash, I plan to buy a second property after the 5yrs holding period. With my calculation, my future husband and I can probably afford the downpayment of 40% in 8yrs time. Do share with me on your choice on not preferring leveraging to create wealth?

      And once again, thanks for your wonderful blog. I have recommended your blog to friends as well. Do let me know if you decided to start writing again.


      • Hey we are pretty much in the same wavellength, my new flat willl be ready in 2 years time and i have set aside a goal to invest in another private property later. The key question is by then, will prices fall..will we be able to find tenants..

  4. Hi Jasmine,

    Thanks for your kind comments. I started investing at the age of 28, back in late-2004; so you can deduce my age haha! I would think that young adults like yourself who have several years of work experience and some savings would be ready for investments, though I would strongly advocate financial education first before taking the plunge. In other words, equip yourself with knowledge before attempting to put your money to work.

    Since this is a public blog, I would not like to write too much of my views on leverage and investing. My views on leverage are tied to my investment philosophy which stresses an understand of what you are investing in, as well as having a margin of safety. You can drop me an email at and we can talk further on this. I am also curious as to what started you on your path of personal financial prudence/discipline.


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