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MORE SINGAPOREANS IN DEBT TRAP Big spenders chalk up debts of more than a year's salary from splurging non-stop By Yasmine Yahya, The Sunday Times, 2 Nov 2014 It is so easy these days to shop online 24 hours a day, book a trip to Europe on an instalment plan or even make an appointment for cosmetic surgery in Seoul. So easy, in fact, that more Singaporeans are falling into the trap of overspending and chalking up massive debts. Just over half of those who sought help at Credit Counselling Singapore (CCS) last year landed in debt after splurging on brand- name goods, holidays and clubbing, among other things. "Debtors usually have more than one reason. They may overspend and then become more vulnerable to get-rich-quick schemes, time shares or gambling, and one thing leads to another and the debt gets bigger and bigger," said CCS president Kuo How Nam. "But the first cause is usually overspending because many people are living lifestyles not justified by their incomes." There may be more than 40,000 people who owe more than a year's income from credit cards and other unsecured loans such as personal lines of credit or overdrafts. The Monetary Authority of Singapore estimates that 3 per cent of unsecured credit borrowers' debts exceed their annual incomes. Based on Credit Bureau (Singapore) data showing that 1.44 million people had at least one credit card account at the end of last year, The Sunday Times estimates there to be 43,000 people who had debts of more than a year's salary. Last year, the average debtor who turned to CCS for help owed $84,447 to seven creditors, but Mr Kuo said that figure is skewed by gamblers, who owe the biggest sums. Most others have debts in the tens of thousands of dollars, and they make up a big group. "A lot of it has to do with peer pressure or their own values. Some people say they feel they deserve to indulge themselves - they've worked hard, so they deserve to take more cab rides or a holiday even if they can't afford it," he said. "I asked a debtor once, 'Why did you carry on spending like this?' And the answer was that he was hopeful that some day his income would rise to a level where he could pay off his debt." Financial advisers say that is a common problem. SingCapital chief executive Alfred Chia said e-commerce has made it easy for people to use credit cards to shop round the clock, buying things they do not need. Even small purchases can add up. Travel-related temptations are also pervasive, he noted. "Some travel agencies have tied up with banks to offer trips to places like Europe on interest-free instalment plans so you can pay for your holiday over 12 or even 24 months," he noted. And if you do not make your monthly payments, you end up with interest charges and late fees. Financial planner Damian Pang notices that people are taking more holidays, including "staycations" at hotels in Singapore. "In the past, holidays were seen as a luxury but with so many budget flights now, people take two or three holidays a year. And in the past, we never had staycations. That's a norm now," he said. He is also seeing more clients going abroad, especially to South Korea, for cosmetic surgery. "That's the power of K-Pop. These trips can easily cost $10,000," he said. Financial advisers note that overspenders may not splash out on flying business class or staying at top hotels, but they do overspend on shopping or eating out. "They travel to exotic places, buy branded goods and dine at Michelin-starred restaurants," said Eternal Financial Advisory chief executive Viviena Chin. "The temptation is very high when you are overseas to go crazy shopping. Things are nicer or cheaper and you think you might not come back again soon, so just swipe the card and forget about tomorrow."

Source: http://business.asiaone.com/print/news/personal-finance/35-and-flat-broke/page/0/3 She's 35, single and has worked for over a decade. She earns $5,000 a month and has no mortgage to worry about. And yet Lisa*, a publishing executive, barely has any savings to her name. Oh, and she's $20,000 deep in credit card debt. "It's been this way for years... I don't know when or how I'm going to pay that sum off ," she admits. She allocates about $3,000 each month to her rent, phone and utility bills. A large chunk of the remainder goes into paying off the debt on her three credit cards. But to make matters worse, she's been regularly rolling over the amount owed for the past 10 years, which means the sum has been snowballing. How did it get to this? Blame it on her shopaholic tendencies. She has a taste for designer bags and shoes, and enjoys eating at posh spots such as Mezza9, Otto Ristorante and Catalunya, easily racking up bills in the hundreds every time. And when she travels? You can bet she's staying at five-star resorts in Thailand and Bali. Sally*, 38, an accounts executive, owes her credit card company $7,000 even though she earns a comfortable $6,000 a month. She splashes out on designer bags, expensive holidays to exotic destinations like the Maldives and Fiji, and fancy toys and clothes for her fi ve-year-old son. Every month, she tries to dedicate at least $2,500 to servicing her credit card debts - but she always falls short. As long as she can remember, she's been struggling to pay off purchases she made months ago. Worse, her sales manager husband - whom she calls the "conservative, frugal one" - has no clue. She borrows a few hundred from him whenever she's desperate, but only as a "last resort". "The amounts are small, so he never suspects, but if he found out the whole truth, he'd be shocked," she confesses. NEXT: Taxis, spas and other splurges leave her in $15k debt ROLLING IN DEBT Lisa and Sally aren't the only ones in credit card hell. Across Singapore, 30-something career women with no kids or mortgages are chalking up dizzying amounts of debt. According to Credit Bureau Singapore, women aged 30 to 34 who have unsecured credit (this includes credit cards) owe an average of $5,445 each. And as of July last year, 62,830 unsecured credit customers had not made a minimum payment in two months - a striking 12.7 per cent jump from the previous year. How did we get to this stage? Sure, we can blame it on low interest rates and aggressive lending by banks in recent years. But experts say the main reason hits closer to home - we're just spending way more than we should. Instant gratification is a hallmark of our generation, says Roy Walker, principal consultant at IPP Financial Advisers (Singapore). Unlike our parents and grandparents, who scrimped and saved, we want it all and we want it now. He adds: "No matter how much fi nancial education or resources they have, folks who need that instant gratifi cation will always have a problem managing their money." BIG EARNERS, BIG SPENDERS Even high-flyers in senior positions are guilty. They splurge and don't know how to budget, which means that they too are falling prey to the crushing effects of debt. Take Stephanie*, 33, who is single and still lives with her parents. Though she's an art director at an ad and marketing agency and earns a decent $4,000 a month, she's mired in credit card debt totalling $15,000, which she's amassed since 2007. "I go to the spa every week for massages, mani-pedis and hair treatments; I take cabs everywhere; I eat at expensive restaurants twice a week; and I'm always treating friends to drinks when we go out - I like being generous and I feel bad because my friends don't earn as much as I do," she explains. She spends close to $2,000 a month on herself, leaving her with half her salary to pay off her three credit cards - nothing goes into her savings. "I know I should cut down on my spending, but it's hard for me to give up my indulgences," she laments. Stephanie recalls several incidences when she depleted her bank account the day before payday and didn't have enough to take a bus or train home. So she'd walk home from her office near Chinatown to her flat in Bukit Merah - a one-and-a-half-hour journey. "I was too proud to ask my parents, siblings or colleagues for money. Walking home one night, I promised myself I'd manage my money better... but I just haven't been able to nip this crazy debt in the bud," she says. She adds: "I admit that I feel powerless when it comes to money. The second it's in my hands, it disappears. I'm always telling myself that I deserve new things or treats." "I hate the situation I'm in, but I don't know where to start taking control over what I earn." Clara*, 34, and her husband Dennis*, 36, both lawyers, have a combined salary of $17,000 a month. So when they tied the knot three years ago, Clara assumed they could easily aff ord a big wedding in Bali and a nice condo. They went ahead with these, but she now estimates that they'll spend several years paying for their splurges. "We spent $100,000 on our wedding, a six-figure sum on our condo in a prime district, and even more money renovating and outfi tting it with expensive furniture," she says. "We had a budget, but I'm embarrassed to say that we busted it. We thought we could afford it all - but we barely did. Now, we're up to our necks in debt, amounting to about a couple of hundred thousand dollars." Th e couple are also servicing a loan they took out for their wedding and honeymoon. "That will probably take us three years to clear," she says. The situation is serious enough for Clara and Dennis to delay starting a family. Having a child now would only mean digging themselves deeper into debt. GETTING YOUR ACT TOGETHER Living simply and within your means is the key to staying out of debt, says certified fi nancial planner Daniel Tan. "Some people borrow money just so they can go on holiday, others drive cars that cost way more than they can afford… They can't distinguish between needs and wants, so they make poor money decisions that keep them in a vicious circle of debt." Clara and Dennis have learnt this the hard way and are now slowly building up a small nest egg for their retirement. "We've cut back on holidays, extravagant purchases and socialising," she says. These days, they take the train to work even though they own a car and limit themselves to one nice meal a month instead of splashing out on fancy dinners several times a week. Clara has also had to cut down on the allowance she gives her parents every month. The couple hope to be out of debt in a few years, and only then will they be thinking about having kids. "It's sad because I was hoping to be a mum by my 35th birthday," says Clara. "It doesn't look like that's going to happen now." *Names have been changed.