Does Your Bank Ac­count Need Need To Go To Re­hab?

CLEO (Malaysia) - - SMART REPORT -

Istill re­mem­ber my first symp­tom of Debt – acute hap­pi­ness in­duced by a shiny black credit card. But af­ter four years of swip­ing that damn thing, Debt came over me like a rash and it was not pretty. If you too are liv­ing off canned tuna right now, but mirac­u­lously still have a fresh head of foils, chances are you’ve reached a low point and need a fi­nan­cial health check-up, stat. I once worked out how to in­crease my credit limit 20 min­utes be­fore a Zim­mer­mann sam­ple sale, but it wasn’t as easy fig­ur­ing out how to get the crip­pling out­stand­ing bal­ance out of my life. So I bit the bul­let and called my bank’s gen­eral en­quiry line ….

The Di­ag­no­sis

I told them about my large credit card debt, the lap­top I’m pay­ing off on a “pay­ment plan” (which is ac­tu­ally just an­other credit card), and the hol­i­day I want to go on in four months … oh, and the fact that I’m on an en­try level wage so will not be pay­ing any­one a dime for fi­nan­cial ad­vice. Luck­ily they had all the an­swers. Ap­par­ently I needed a fi­nan­cial health check-up, which is a free ser­vice pro­vided by the bank (visit your bank’s web­site or call their en­quiry line to see if they of­fer some­thing sim­i­lar). All I had to do was visit a branch and talk to one of the per­sonal bankers.

Doc­tor Debt Will See You Now

My check-up started out like an earnest first date. What were my goals? My con­cerns? What was my life­style like? But un­like a first date, the per­sonal banker al­ready knew ev­ery­thing about me. He could see I hadn’t up­dated my ac­counts since 2007, which meant I could’ve been earn­ing more in­ter­est on my sav­ings for years. Awe­some. He also knew I was fork­ing out for a lot of late pay­ment fees and all this could be solved by set­ting up di­rect deb­its and switch­ing to e-state­ments. No-brainer. Then he told me once we broke down my debt, we could look at the best ways to make my money grow and ful­fil some goals. Hal­lelu­jah! We dot-pointed, brain­stormed, and dis­cussed ev­ery

debt con­sol­i­da­tion op­tion pos­si­ble, and he out­lined ex­actly what all my new ac­counts could do in com­par­i­son to my old ones. My fi­nan­cial health prog­no­sis looked like this:

The Cure Fixed De­posit

This ac­count earns 3.05 per cent in­ter­est within the first four months. It al­lows me to keep track of ex­actly how much money I’m putting to­wards a hol­i­day and be­cause the in­ter­est rate is mod­er­ately high, it’s ideal for a short­term sav­ing goal.

A Credit Trans­fer

Af­ter con­sid­er­ing a per­sonal loan, I chose to can­cel both my credit cards and trans­fer their bal­ances to a new credit card with an eight per cent per an­num in­ter­est rate, through an­other bank. The low in­ter­est rate only ap­plies if I pay off the debt within 12 months. If you are only mod­er­ately in debt and com­mit­ted to get­ting rid of it, this is a fast debt con­sol­i­da­tion op­tion.

Di­rect Deb­its

Pay­ments for my new credit card, phone bill, rent, and hol­i­day sav­ings ac­count are now sched­uled to be de­ducted on pay day. Not see­ing the money come in is the eas­i­est way to fight temp­ta­tion and for­get it ex­ists.

In Four Months’ Time I Will Have

RM4758.63 in my hol­i­day sav­ings ac­count.

Paid off more than RM5100 of my debt (I now de­posit RM330 to my credit card ac­count weekly).

Saved over RM900 in late pay­ment fees (just by set­ting up di­rect deb­its).

The Aftermath

Be­ing granted a fi­nan­cial clean bill of health is amaz­ing. In fact, I was on such a fi­nan­cial high af­ter­wards, I trawled my bank’s web­site for an hour. Usu­ally I would have a headache from the mere thought of do­ing this, but the per­sonal banker showed me how to use the on­line sav­ings cal­cu­la­tor, which is as ad­dic­tive as Tetris! Clearly I was turn­ing over a new leaf. Like all im­por­tant check-ups, look­ing at your true fi­nan­cial state is awk­ward and a tiny bit scary, but it’s a small price to pay for peace of mind.

Newspapers in English

Newspapers from Malaysia

© PressReader. All rights reserved.