You finished work, drove home, and the very first thing that ‘greets’ you is an envelope that contains your credit card statement. It states:


Outstanding Balance: RM 12,345.67


And, you are overwhelmed as you ponder: ‘How on earth am I going to clear off my credit card debt? It’s way too much and I don’t have much cash in my bank account to do so. I’m so screwed.’

If that’s you, I think, ‘feeling screwed’ is a good start. At least, you know that you’ve got a problem and you’re not living in denial, thinking that ‘all things’ would eventually fall into place. As quoted, wisdom begins when one begins to say: ‘I don’t know. Please help me.’

Today, regardless of what the amount of ‘outstanding balance’ it may be, let’s be rest assured that there is definitely a way out for you and you’ll eventually enjoy a freedom that comes after being fully released from your bad debts.

In this article, I’ll share 7 bad debt hacks which you can immediately apply to find freedom from bad debts. Here we go:


#1: What’s a Bad Debt?

First, we must understand that all debts are not necessarily bad and there are two types of debt: Good Debt and Bad Debt.

Good debt is debt that makes you richer. For instance, property investors are experts in using debt as their leverage to expand their property portfolio and thus, have become richer and wealthier as their properties’ value continue to appreciate over time.

Bad debt is debt that makes you poorer. For instance, many borrowed money to buy things where their value drops over time, thus, resulting in the person becoming poorer. These debt include credit card debt & personal loan where their interest costs are substantially higher than good debt like a mortgage.


#2: Discover the Root Cause

For some, life did happened. Perhaps, it stems from medical bills, or a failure in business or experiencing a pay cut, a job loss or any form of setbacks that are really not a laughter matter. If that’s you, just know this: It’s temporary & you may proceed to Point #3 onwards to work on the solution.

In most cases, having excessive bad debt is more than just a financial issue. It can be a psychological issue. I believe there is a deeper root cause that might be the root cause to your financial problems. For example, let’s say now, you don’t have much money. Why do you:


-Buy stuff that you don’t really need?

-Attend expensive social gatherings?

-Go on a holiday trip overseas?


This takes some soul-searching on your part. It’s helpful to take a stroll in the park to reflect about it. Perhaps, do you find yourself trying to:


– Keep up with the Joneses?

– Protect your image of success?

– Impress people whom you care but doesn’t truly care about you?


The list above is just a few examples to get your brain going. Please treat it as an exercise. The goal is to know yourself better so that you can take a U-Turn in your financial situation for the better.


#3: Work with a Partner

If you are young and single, you may consult your parents for some financial advices. In many cases, you might even receive some financial grace which is much needed as a temporary relief to your problems. But, with that said, you might lose a valuable chance to improve your financial intelligence as you’ve been bailed out. But, if you opine: ‘Ish… Malu-je. I still want to solve the issue like a man’, then, your next best option is to find a friend whom you trust & more financially savvy than you to impart some financial wisdom to you.

If you are in a relationship, it’s ideal for you to work on these financial issues as a team. It’s helpful, but not easy, to be transparent about it and to find the solutions together. One thing is for sure: Both of you will come out stronger and more refined as a couple after you have cleared your bad debts.


#4: Create a Spreadsheet

It’s helpful to create a spreadsheet where you list down:


– Your Credit Cards & Personal Loans

– Your Outstanding Balance of each Credit Cards & Personal Loan.  

– Your Interest Rate for each Credit Cards & Personal Loan.

– Your Monthly Payments over the next 12 – 24 months.


If you are not sure how to do that, you may get a trustworthy friend to work it out for you. All in all, a Spreadsheet is one which gives a clear overview of your debt position so that you can strategize and prioritize which bad debt you want to clear off first, second, …. until the last one. 

Last month, a good friend of mine, Peter Lim, has shared in a 1-Hour Live Webinar session where he describes, in great detail, how he helped his friend to journey his way out of RM 140,000 worth of credit card debt. This includes a simple but helpful Spreadsheet that had given his friend a clear picture on his debt position. Click the link below for the recording:


Peter Lim – How to Get Out of Bad Debt Fast before Declaring Bankruptcy



#5: Go on the Offensive …

If you have little financial resources to work with, you may set a small goal to raise another RM 500 a month which is dedicated to clear off your bad debt.

It may be hard initially. But, if you have learnt how to raise RM 500 a month to clear bad debts, very soon, you’ll also know how to raise even more which could be used for your investments to get rich.

‘Okay… so, where do I start?’, you may asked. Here, I’ll share a guideline that enables you to take baby steps towards your freedom from debt. Firstly, you can split the RM 500 a month into two categories: Earn RM 250 a month & Cut RM 250 a month in expenses. Secondly, here’s a list that you can do to:


Make RM 250 a month

– Do Overtime.

– Do More Sales if you’re a salesman.

– Take up one or two freelancing job.

– Sign up as a Uber or Grab Driver.

– Have a part-time job.

– Give tuition classes to school kids.

– Sell your unwanted stuff on eBay or

– Refer customers to your business friends for commission.

– Join MLM, sell insurance, but please … don’t join money games.


Save RM 250 a month

– Track your expenses. You’ll find items to cut on very quickly.

– Say ‘No’ to expensive social gatherings.

– Say ‘No’ to smoking, alcohol, nightclubs and KTVs.

– Say ‘No’ to gambling.

– Cut entertainment expenses.

– Cancel expensive gym memberships. Run in the Park.

– Cancel Low-Yielding Unit Trust Investments.

– Cancel Endowment Plans with Low Sum Assured.

– Exercise Delay Gratification.

– Quit drinking Starbucks or just reduce four RM 15 drinks a month.


#6: A Word on Balance Transfers

It’s helpful to be aware of the latest promotion on Balance Transfers. Having said that, it’s important for you to check the following before agreeing to do a balance transfer on your credit card debt:


– Is it on an Effective Rate or Flat Rate?

– Is it calculated based on an Annual Rate?

– What are the Clauses for Early Repayment?

– How much is your Monthly Repayment after doing Balance Transfer?


If you are not sure whether a Balance Transfer is to your advantage, you may consult a trustworthy friend first before proceeding on it.


#7: Celebrate Small Successes

Please don’t forget to live life.

For instance, if you made it a goal to raise RM 500 a month and you did just that in the first month, celebrate that…. with a ‘Milo Kosong Beng’. Haha.

Thus, it’s important to set small goals such as:


– Did I save RM 250 a month?

– Did I make an extra of RM 250 a month?

– Did I clear debt on one of my credit cards in 3 months?


These small goals are important as they keep you focused on the needful on a daily basis whilst working towards true freedom from bad debt.


To Your Freedom …..


Ian Tai
Ian Tai

Financial Content Machine. Dividend Investor. Produced 500+ Financial Articles featured in in Malaysia and the Fifth Person, Value Invest Asia, and Small Cap Asia in Singapore. Regular Host and Presenter of a Weekly Financial Webinar with Co-Founded, an online membership site that empowers retail investors to build a stock portfolio that pays rising dividends year after year in Malaysia and Singapore.

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