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5 Steps On How You Can Resolve Your Debt Woes The Smart Way


If you have problems with debt, it can take a toll on you. Debt can be stressful, and it is a major source of worry for many people. Taking out loans from a legalised money lender in Singapore also has its fair share of responsibilities — the biggest of which is repaying the loan.

For debt repayment to be less stressful, here are five steps you can take.

Step 1: Make repayments part of your budget

If you have debts to pay, you need to put monthly repayments into your budget. This is the best way to make sure you always pay your dues on time and in full. Failing to pay your dues will cost you more in the long term. Not to mention delinquency in loan repayments can damage your credit score.

But if you make repayments part of your budget, you will always have the money each month to pay back your loans. This way, you can get out of debt faster, losing far less money to interest and penalties.

Step 2: Live beneath your means

The number one rule of financial stability is living below your means. In other words, the money you spend must always be less than the money you earn. This way, you will always have money left before your next paycheque.

The remaining money could go into loan repayments, savings, or both.

Step 3:  Cut down on your expenses

If you need to adjust your budget to make room for loan repayments, evaluate your expenses. Find out which ones you can shave off from your budget. For instance, you have a habit of buying a S$7 coffee each morning before heading to the office. Multiply that by 5, and you get S$35 per week. Multiply it by 4, and you get S$140 per month.

Now, see what happens if you cut down to just three coffees per week instead of five. That’s S$21 per week, and S$82 per month. From your previous spending, you save S$58 per month. That can easily add more to your loan repayment fund.

Do the same thing with your other expenses and see what you can cut down on.

Step 4: Build an emergency fund

One surefire way to avoid debt later on is to build your emergency fund. This is roughly three to six months of your monthly income, and this fund is reserved for emergencies like hospitalisation, unexpected home repairs, sudden family needs, job loss, and the like. Your emergency fund is your lifeline in case you lose your main source of income or have to spend an inordinate amount of money at any one time.

If you have your emergency fund, you will not have to take out a loan in times of dire need.

Step 5: Prioritise your savings

Your personal savings is different from your emergency fund. The latter is also a form of savings, but you would reserve it for emergencies only. Your personal savings, on the other hand, can go to other things like your hobbies, property, travel, and other similar expenses.

You can also use your savings as capital for a small business. It can start off as something you do alongside your day job. Then, as the business gains traction and profit, you can invest more time and money into it until the revenues exceed your salary. At that point, you can safely resign from your day job and focus on your business full time.


Resolving your debt woes does not have to be hard. Take these five steps and you will be on your way to a debt-free, financially stable life. If you remain wise with how you handle your money, you can avoid taking out loans for any sudden, financially draining circumstances in life.