Yay! My pay is in, the bonus is in the bank, and I’ve … used it to settle my credit card debt. Thankfully there’s still a significant sum left, but, yay! Debt free once more. And the best thing is: October is also the last month I pay for my car loan! Yay!!
I truly hate being in debt, did I tell you that? It stems from the fact that I was $10k in debt once upon a time. Although I paid it down in a year, the struggling, the worry, the constant budgeting is still a bad memory.
The debt this time was lower, but debt is still debt, y’know?
How did you get into debt again, you ask? By slacking off on the plastic. Sometimes you use it, and you think you’re going to pay it back the same day but you forget. So it just piles up. (I actually had more than enough to just pay off the debt, but I was very reluctant to touch my savings. Yeah, I know, warped logic. Having my savings there is a psychological comfort for me.)
I vow never to be in debt again, and to create a positive cash influx from now on (aka savings). My aim the next few months is to save up enough money to have several FDs so that my cash will be more liquid. My long term aim is that in five years, I’ll have enough money to buy a second property - to pay at least 30% of the property’s price so that I don’t have to take such a big loan. And I plan to rent that property out to service that loan. (Yes, I’m such an enterprising person! 
Here are some tips I’ve picked up along the years about managing your money:
- Automate your savings. I give my bank standing instructions to transfer a few hundred $ every month to my bond account, which in the same bank. I cannot tell you how easy it is to save money via this method. Not only is a bond account an investment account, so the money won’t just lie there but accumulate interest, it’s relatively risk free too. Also, my co-op takes RM100 a month from me as well. (So in essence, I’m saving quite a bit each month.)
- Have an emergency fund of about $1,000 - $2,000 in a savings account that is easily accessible for emergencies such as car repairs and what not. It really helps you not to dip into the handy credit card. I think the Emergency Fund is the key to helping me lose the debt - because of the lack of an emergency fund, many people use their credit cards for emergencies, and that tends to pile up.
- Keep your plastic at home. I’m tempted after this debt fiasco not to bring my credit card around. But I have to admit that the card has come to my rescue numerous times. Especially when my car breaks down without warning! But from now on, when I visit bookshops - it’s cold hard cash all the way.
- Diversify your savings. Don’t put all your money into one mode - for example, don’t put your entire savings in fixed deposits (the interest is not great, for one!). FDs, however, are great for keeping your “financial base”.
- Save six months of your salary and put them in FDs. This is your security buffer. In case, God forbid, you lose your job, you have somewhere to turn to. Do not, by any means, touch it!
I live by these financial rules as best as I can. I gleaned them from several books, among them Dave Ramsey’s Total Money Makeover, The Automatic Millionaire (this is where I got the so-simple rule of automating your savings) and The Richest Man in Babylon. (My next goal is to educate myself on real estate … I plan to use real estate as an investment.)
These rules have helped me build my savings, and the bank officers all say that my financial health is rosy. (Which means easier to get house loan and all that, but seriously, not too keen on loans!
Yes, people, it’s great to be debt free. 
