How to Pick the Right Debt Consolidation Plan?

Last week I shared how Jason managed to turn around his finances.

If you recall, Jason was caught in a vicious cycle of negative cash flow, burdened by his credit card debt for over 3 months.

I then shared a little-known strategy with Jason – loan consolidation.

By consolidating all his outstanding credit cards into a single loan, Jason managed to reduce his monthly commitments and minimise the interest he was paying. It was a game-changer!

Today I would like to share the exact steps Jason took to achieve this. Let’s dive in!

Step 1: Diagnosis

First, we find out how bad his cash flow is by using the ICE Jar method by simply taking his income (salary) and dividing it by 3.

I found out that he was overcommitting RM1348/mth.

Step 2: Identify the Pain Point

Now that I know he is overcommitted, I looked deeper and zoomed in on his commitments by listing his outstanding debts.

I used the Debt Management Template to find his most burdening loans.

2 main areas stood out:
i. 2 credit card debts: RM 16,000
ii. PTPTN loan: RM 14,753

Step 3: Formulate a Strategy

As Jason was paying only the minimum amount, the 2 credit cards’ monthly instalment was RM 1,500 vs his education loan of RM164/mth.

Strategy: Consolidate his credit card loans into a single payment.

Step 4: Take Action

Jason contacted several banks, compared the interest rates, and picked a debt consolidation plan.

He picked a plan with repayment from his current 18 months to 36 months, reducing his monthly instalment from RM1,500 to RM 491!

Before Loan Consolidation

After Loan Consolidation

Results:

1. Reduced his monthly instalment from RM1,500 to RM491.
2. Lowered his interest rate from 18% to 7%, saving him RM1,000+ in interest payments.
3. Manage only one single payment.
4. Have more cash flow to build his savings.

Today’s action steps

So start diagnosing your current situation using ICE JAR + identify your pain points. Are you over-committed, over-spending or over-investing?

That’s it for today

See you next Friday

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Do you want to know how to pick the right debt consolidation plan like Jason?

With Bank Negara increasing interest rates, how are you coping with paying increased loan repayment?

Recently I shared during my DYN Monthly Mentorship how to cope with the recent increase in interest rate with one fundamental understanding of loan interest calculation to save you up to 6 figures in interest.

Join us in this community webinar, “Low-interest rate ≠ Low interest”, and learn:
a) 1 case study to show how you can save RM 1000/mth and RM 1,000 in interest in less than 60 days.
b) 1 fundamental loan interest calculation 80% of Malaysians are unaware of.
c) 2 distinct differences in interest calculation (Fixed Line Interest Calculator vs Reducing Balance Interest Calculator).

Register HERE
Date: 15/6/2023 – Thursday
Time: 830pm – 1030pm

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Whenever you’re ready, here are 3 ways I can help you to improve your cash flow and double your wealth:

1. If you’re still looking for ways to improve your cash flow and double your wealth, I’d recommend starting with

-> Ice Jar – The world’s simplest money management system. This is really the foundation to improve your cash flow and double your wealth. Join 830+ students here

2. Meet up and clarify your doubts with our coaches.

If you are unsure of where and how to move forward or you are feeling stuck, you can sign up for a complimentary Discovery Call with our coaches HERE.

3. Let’s stay connected on social media.

Tune in to my Linkedin, Instagram and Facebook profiles
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