1. Be thrifty by reducing your cost of living
Being able to save money is the first step to better secure your financial well-being in managing your hard-earned money. Your savings provide the ability to deal with any emergency situation, solve them independently, and lend help to your loved ones.
If you are able to do this gradually, you will end up having money to repay your loan steadily. You should start by looking at ways to shop cheaper, get the right credit cards with rebates, reduce your entertainment budget, and make smarter choices in choosing what you need, not all that you want.
Lifestyle spending comparison for “Normal Spending” vs “Reduced Spending”
| Normal Spending (per month) | Reduced spending (per month) | ||
|---|---|---|---|
| Food | RM330 (RM5.50 per meal, 2 meals per day at a Kopitiam) | RM200 (Home-cooked meals) | |
| Rental and utilities | RM550 (Master room) |
RM300 (Small room) *Sharing a room will be 50% less cost |
|
| Transportation |
RM300 (Driving) |
RM100 (Using public transportation) *Rapidkl offers RM50/month unlimited travel pass. |
|
| Entertainment | RM200 | RM100 | |
| Cigarettes | RM255 (RM17 per pack, 15 packs per month) |
RM68 (4 packs per month) |
|
| Smartphone bill | RM80 (Example: Dxxx postpaid plan) | RM35 (Example: Dxxx postpaid plan) | |
| Miscellaneous expenses | RM100 | RM50 | |
| Total | RM1,815 | RM853 |
The comparison chart above shows that you’ll be able to save RM962 per month if you reduce the cost of your lifestyle spending in all areas. Surprisingly, the savings could make up almost 50% of your normal spending!
These savings will be useful during your repayment period for your personal loan, and you will most definitely be able to pay off or get a bigger loan amount of up to RM40,000 with RM934 repayment each month for 5 years (you'll still have RM28 left over!).
You’re never too late to reduce your cost of living, and you have the choice of doing this only during your repayment period!
2. Create budgets and record your expenses
If you fail to plan, you plan to fail. While planning, you should start using a finance/budget app with your mobile phone or your laptop. By recording your expenses and knowing how much you’ve spent your money on all categories of your lifestyle, you can plan better for next month by creating budgets for each category. This will ultimately lead you to reduce your cost of living and plan ahead for next month by studying your past expenses monthly.
For example, by having these records on your finance/budget app, you can foresee all the yearly charges for your car insurance, medical card renewal, fire insurance, property assessment tax, and many more. You also can rely on setting up recurring charges on your finance/budget app so you know how to plan and prepare to pay for these extra expenses.
3. Avoid this common mistake, only opt for full settlement with a rebate
Car and Personal Loans offer Flat Interest, therefore you pay interest on the entire loan balance throughout the loan. So it makes sense that you don't pay extra each month or shorten your repayment period as this is the common mistake we all usually make, because you won't be saving anything on interest charges.
But if you have enough money in your savings to settle your loan balance all at once, then you should use our Car & Personal Loan Settlement Calculator to calculate how much rebate you can get from this settlement. Although it's a complex calculation, our calculator simplifies it with a Mortgage/FD Interest Rate savings for your full settlement by percentage.
So you'll be able to consider this with the actual figures and decide carefully, after all the rebate you'll get should make you feel good and proud of finishing off your personal loan!
Take charge of your loan today
If you’re willing to make adjustments wisely, you’ll definitely be able to pay back your personal loan. As a matter of fact, you’ll become a better planner with such experience for your future financial management.
*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.
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