How I cleared my debts in 3years

Assalammu'alaikum family and friends.

Following up with my last entry late last night, now with over $15K of outstanding debts, and without a permanent stable job. How did I do it?

The first year

It was horrible. Scouting for jobs, I didnt have much choices but to just accept what comes. I became a despatch rider sending out invoices and letters, I took up the food delivery rider job, I even became a full time babysitter!

All three paid me pea to the nuts! It drove me crazy. I couldn't make ends meet. All my pay was out to pay these debts I have accumulated.

Setting priorities

I set my priorities by the amount of debt. I listed the least amount as first in the list. It was something people don't often do. Letters of sympathy was written and sent out. Of course, it was rather late as I was retrenched some 6months ago at that point when I decided to take myself out of this mess.

The list

Here's my list in accordance and how much I wanted to pay each month.

Diners : $200/month
Car : $303/month
Bike : $292/month

The rest just the minimum fee - about $50-100/month, total of 3 creditors.

How I manage?

Because my part time jobs are often by the hour or by the job, I set a target for each job.
My despatch job gives me $3 for every one way trip and $6 for every two way trip, and pays me forthnightly. I target this salary to pay my bike. I need 50 2-way jobs or 100 1-way jobs to reach this target.

My food delivery job pays me by the hour plus I get a docket for every delivery made. I sometimes run in for a friend who is tired, and could earn a little more, and often volunteered for those secluded areas especially Jurong Island because the customer would often slide in some tips. For this job I get paid once a week, and brought home tips of about $30/week. I used this salary to pay for the car.

Babysitting - it pays so little! It was rewarding though. I get paid $600/month for a 10hr job, 5 days a week. However, when I do this, I could only do so much for my other two part time jobs. So it wasn't really any solution at all. I did this for 6months, and paid for both my car and bike with this pay, and achieve the rest by my part time job somehow.

I don't have a choice!

A proper full time job - Start of Year 1

Alas after 1.5years, I finally secured a job to my professional skills. The flip side? It was 70% pay cut from my previous company. Still, it was better than a mere $600/month babysitting, no?

With a $2000 salary, I bring home $1600. I can now comfortably continue to pay the three main targets that accumulates to $795, leaving me $805 to survive. I set aside $300 for bike fuel and misc. I packed food from home for lunch. With $500 balance, I paid out the other 3 targets at $150/each. It was better than paying just minimum, and the balance $50 I topped up Diners.

Now I pay the following:
Diners : $250
Car: $303/month
Bike: $292/month
HSBC: $150/month
Citibank : $150/month
Courts : $150/month.






Despite seeing such figures, it didnt do much justice to the total amount. Watch...

Warning Letters

All the banks started throwing me red warning letters threatening me to court if I fail to do a full settlement. I am going crazy. I refused to panic, I called up all the agents stated in the letter, and arranged to compile all my debts, my payslip and everything I could to come up with a good installment plan.

I want to stick to my plan. I couldnt do more.

Paying in coins

All banks were more considerate knowingly I can declare myself bankrupt if I wanted to, but instead, I wanted to really pay off my debts. They complied to allow me to pay what I could. All except for Courts.

I am at wits end. I had nothing but my coins. So coins it is. I came through the accounts department door, and handed over a bag full of coins.

"Sorry but this is  all I have, I was retrenched, I had submitted my letters, I have just started my new job with all these other banks chasing me (flashes all red warning letters and handed over my coins)"

The officer kept mumbling and asking me how much was it in my bag, and I said I dunno, but it's all I have.

2hours and some $300 later, they decided to waive the balance and close my account.

*I am not asking you to try, but I had no other choices*

One off, 6 more to go

With additional $150, I snowball it to my priority - Diners

Before doing so, I called them up to get a current outstanding amount. They quoted me $400ish. And I decided to take a little away from the other bank to clear off Diners.

Called them back only to say they need another $100ish more of interest. Oh how now brown cow? I decide to not pay Citibank that month and just get this Diners out the door, and told them I am closing my account.

Two off, 5 more to go

The following month, I decided to priorities Citibank.

Now the amount snowballed. NO celebration for me, I had no time nor luxury to shop or even looked at anything to shop, these debts needs clearing more than anything else.

Citibank : $400
Car: $303/month
Bike: $292/month
HSBC: $150/month

At this point I had another $2K ish left on Citibank and $5k ish on my HSBC.

Technically I just need to go through 5months to almost clearing Citibank? NOOooo, remember, there are interest and late payment charges which will also snowball and you may take twice the time (if not more) you think you would clear off the debt.

Keep it going 

It was tough. I continued this for almost a year before clearing Citibank to proceed and pay up HSBC.

This time I changed my plan. I decided to participate in tontine. To help me get a lump sum so I can pay extra once a year or so. I also changed my job so I had more time to crochet (I started a small home business)

What is tontine? 

It was basically like a savings plan, but played within a group of as little as 3 to as many as 12. We will ballot names to know the order and we will begin. Eg, 3 person decided to play tontine, namely A, B and C.

Names balloted and it goes with the order C, B and A

If each person decide on $200. At the start, as ballotted C will get the monies, so B and A will fork out $200 each and give it to C, the following month, C and A will fork out $200 each and give it to B, and the following month, C and B fork out $200 each and give it to A.

I had trouble having money in the bank, so I decided this is the only way I can save up, of course, I went to a group that is trustworthy.

Start of Year 2

New year, new job, same momentum.

I am clearing the last bits of Citibank, saving via Tontine and continued on with HSBC.

I cleared the last bill for Citibank sometime mid that of Year 2. By this time I was engaged, the monies I had saved via Tontine saved me a lot on the expenditure.





PLUS, I took another job - tutoring my niece and nephew at a nominal fee of $100/month.

So here's what my financial responsibility look like at this point:

HSBC : $350/month
Tontine: $200/month
Car: $303/month

I overtrade my bike for a lower monthly installment
A downgrade deemed necessary for me with a wedding in tow.

Bike: $183/month

I found a better paying job, and with my business merging through, I could spare another $300/month or so on leisure, BUT, instead of celebrating and shopping, I decide to put this $350 aside for my wedding.

My tontine was for 12months. By that, in December, I will be getting a lump sum of

Tontine: $2,400
Savings: $4,200

Total lump sum in December $6,600

Discipline

Of course discipline to way way way important when it comes to clearing debt, seeing lump sums makes me wanna spend, so I draw it and gave it to my mom or someone else who are more trustworthy than me in terms of spending.

I was keeping stead and constant with paying HSBC, and I tell you that $5K figure seemed to deplete ever so slowly. Still, don't give up, keep paying. Of the $6,600, I saved the $5K for my wedding and the balance $1.6K to divide over what is necessary $1K for car insurance and $600 top up to pay HSBC more.

Budget

Stick to it, no matter how cheapstake it can be. Just stick with it. My wedding budget was at $10K. There is another year to save another $5K and I should be okay. Just stick with it.

(I know I wrote my wedding cost $17K in the end, thanks to kind sponsors. The 7K was raised by doting parents, of which I had fully repaid)

I budget myself so bad, I havent shopped for more than a year at this point. Sticking to needs and not once wants.


Start of Year 3

I used my dowry to pay off HSBC completely so I can start the year debt free. Some balance was used to pay off personal loans from my doting parents. I continued participating in Tontine because it was a pleasure and a pleasant surprise because I often forget when it is my turn to receive them.

Saving

Now that I don't have any debts to pay except for my car loan, I was free to splurge. NO!
Why splurge when you can save. Learn from your mistake, start saving. Deposit into worthy investments. Enjoy watching your money grow. Don't let it deplete.

I invested heavily on my business when I was free from debts, I started living like a human. I get to enjoy travelling without worrying about the banks chasing me. I enjoy little life pleasures like having the luxury to buy a bottle of mineral water when I am thirsty.

Today

Not being a brag, but today, I am debt free for over a year with blooming business of which I have given jobs and opportunities to those who worked alongside me or under my wings.

I am able to breathe much calmer.

My method worked. And I hope you too can get out of the debtful mess (if you are in one) soon.

The little things

Sometimes, it is the little things that make a big difference. Make you little change now. Save more, so you'd be ready when it rains. :)

PS: I had typed this over many distraction, so I apologize if it didn't make sense midway.

Wassalam,
Jun