Debt Reduction – How to reduce 50% interest & settle your debts the fastest way

Ismail (not his real name) approach me after reading my blog. He told me he didn’t know I could help individuals resolve their debt problems. I have known Ismail for a long time, he was a quiet but responsible father & caring husband, that supports whatever his wife wants.

“What a loving & responsible husband & father to have”

I found out he got into this problem, not because he was living a lavish lifestyle, but because he wanted the basic things in life for his family. A landed property, a car to ferry them to work & daughter to school. Weekend shopping, eating out & spending time with his family. I guess with the inflation growing so fast, all these ‘basic’ things have suddenly become something of a ‘premium’. He shared his frustration with me in his slow, deep voice. I could sense he was on the verge of breaking down.

He also shared his wife doesn’t know about his situation & that he was doing his best to ‘resolve’ it without worrying his wife. Talk about responsibility. But this over responsibility is driving him faster & deeper into his HOLE

“Here’s what his situation look like”

Here is what his situation look like. Not as bad as I had imagine it.

1. Credit card & personal loan of RM 150,000
2. Cash outflow of RM 2,105/mth as total expenses was RM 10,955/mth
3. Decent salary of RM 8,850/mth
4. His total debt repayment came up to RM 6,712/month
5. Total interest payment of RM 288,860 that he have to pay, when all the debts are fully repaid
6. His CCRIS koyak & doesn’t own a property

“Creative financing needed on top of Debt Reduction Strategy…”

Have you ever felt that when you have tried everything & it still, wasn’t good enough? This was Ismail’s biggest frustration. His situation was not hard but it was not as straight forward as it seems. Most people will wonder how does some 1, who has a ‘bad’ CCRIS report continue to take loan?

First thing first, we had to break the news to his wife, so that we can get some help. We needed to use 2 strategy here, Debt Consolidation Strategy (similar to Case Study #1, you can read it HERE) & a Debt Reduction Strategy to reduce his interest payment as his credit card & personal loans interest were ranging from 15% to 24%

Although we could use both strategies, there was 1 stark difference between Ian & Ismail’s situation. Ismail’s spouse had a property, she bought more than 10 years ago. And you know is long time ago when the Loan Letter Offer shows BLR + 2% (banks started offering BLR minus a variable rate some where in 2008 – 2010) . So we had to ‘borrow’ her credibility & property to overcome Ismail’s situation. Ismail gave his word to his wife that he would take on this responsibility of paying fully the RM 150,000 debt. (A word of caution though, this strategy has to be use carefully as there are risk involve. Do consult me on the detail execution)

“After 6 months, here’s what happen”

1. Have a savings of RM 2,125/mth including a increment of RM 800 from his employer for his good job done
2. Cut his debt repayment of RM 3,666/month, from paying RM 6,712 to onlly paying RM 3,046 per month
3. Savings on his interest rate of 11-20% averagely from his 9 personal loans & 4 credit cards outstanding
4. Only need to pay an interest of RM 44,719, savings of RM 244,141 out of the total interest of RM 288,860
5. Help to save 3.25% interest on the wife’s property loan from 7.75% to only 4.5% (from BLR + 2% to BR + 0.85%)

“He felt so alive & started investing. He approach life with so much more confident”

After consolidating 1 by 1 his personal loans & credit card, he started investing with his savings & surplus. He invested in Unit Trust & Derivatives (oil future commodities). I did share with him to be careful on futures investment and this is one of the side effects which I am still trying to manage. Most , if not all the ppl who successfully get out of their debt situation, feel more confident & will get into Property Investment, Stock Investment , Unit Trust Investment and many more. Investing is good, but not investing with emotions. That’s what I learn in my journey & experience.

“Thank you from the bottom of my heart!”

If you are in this situation or similar debt circumstances, looking for help, CLICK HERE for a initial 1 to 1 assessment, as we know how tough it is to be stuck & not knowing where to turn to.

*DISCLAIMER – All strategies listed here are not a recommendation nor advise. The article is written purely for the purpose of education and journaling only. The content of this article is an expression of my opinion and should not be taken as professional advise. If you are seeking for professional advise, please consult me personally . You should do your own research and/or seek expert’s advice when overcoming your debt circumstances.