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  • Writer's pictureAtiqah Nadiah Zailani

Dealing with Debt

The best way to deal with debt is to have none of it.

Credit Card

In a world where loan opportunities and credit cards are offered every time you so much as sneeze, and where borrowing money is made incredibly easy and normal, it’s difficult to not be in debt. After all, who wouldn’t take up the offer of using someone else’s money to buy cool things and only having to pay just ~10-20 bucks a month for it?

Free Money

The sad truth is this: Free money is never free. And when something is too good to be true, it always means there is a price to pay, if not now, then somewhere down the road, for sure.

Here's what happens when you buy something on credit or loan: you kickstart a relationship with something called Interest.

It’s an unhealthy relationship, where for every dollar you take, Interest demands one dollar and 20 cents back. And for every day that you fail to pay back, the amount grows and grows, until suddenly, the $1000 you borrowed once upon a time to buy a sound system has ballooned into $3500.


Interest only ever appears as percentages, which means nothing to us,

but behind all that % is your money running away from you.

You will end up paying 3.5x the price tag, and Interest will love you for it. In fact, Interest will pray and pray that you keep ‘forgetting’ to pay back so it can get more out of you, you poor sucker.

Why do you think shops eagerly offer those instalment payment plans where you pay a small amount each month for 2 years? Because you will end up paying way more than necessary, and you won’t even know it. In fact, you’ll think you got a good deal!*

bad deal

Why pay 59.99 when you can pay 69.99?

*Note: there are times (very few!) when it does make sense to pay on 0% interest instalment rather than in full, but only if you have mastered your finances, can crunch the numbers to determine the pros and cons, have alternative ways to use that same money to earn more, and have the discipline to pay your credit loans on time. If that's the case for you, then why are you even reading this series?

Don't. Just don't.

The best way to deal with debt is to not even get into debt.

If you want something, don’t go the easy way of borrowing money. Instead, figure out how to earn that money.

You want to buy a $1000 sound system? Figure out what it would take to earn $1000. Does that mean you have to work as a part-time tutor, charging $50 an hour, and teach for 20 hours? Does that mean you need to cut down on your daily Starbucks for half a year? Does that mean you should negotiate for a well-deserved pay raise?

You want to buy a $150,000 BMW car? Same deal. Figure out how to make that money. Your tactics will be different (I really don’t think foregoing Starbucks for the rest of your life is even going to scratch the surface), but the principle remains the same. Earn it before you buy it.

This habit will help you in more ways than one. Not only do you avoid going into debt, you also learn all sorts of ways to earn more money that will benefit you in years to come, beyond the one-time purchase of an object.

Good debt versus bad debt

I’m pretty hardcore about avoiding debt. That being said, not all debts are bad.

People take on loans to get an education or to start a business. Those are perfectly good reasons to go into debt, because your earning prowess will increase (theoretically, that is, assuming you don’t drop out of school or drive your business to the ground).

If taking on the loan will result in an improved version of you, someone with better skills, someone who can add more value, someone who can translate that value into more income, then by all means, go into debt. This typically includes education loans, business loans and investment loans. These loans tend to pay itself back in the future through your increased competence and capabilities.

However, if taking on the loan doesn’t result in any increase in your value or your money-making abilities, then don’t do it. That is a bad debt. Bad debts will not increase your value or skills, they will not help you recoup the money in the future and they will walk away laughing at the growing interest that you are stuck with.

I borrowed money...

Boohoo. *cough* PTPNloans *cough*

Avoid the bad debts, and if really necessary, only take on good debt. Even then avoid it as much as possible. Look for alternatives. Can you get a scholarship? Can you fundraise for seed money? Can you work extra on the side for some additional income?

Look for ways to earn the money first, before you even think about borrowing.

What about credit cards?

Credit cards are the most prevalent and most dangerous of all debt, because it’s so, so easy to get, to use and to forget. You don’t have to sacrifice your belongings as collateral or sign fancy documents in the presence of lawyers. You only have to swipe. Any 10-year-old can do that.

Often, you receive a credit card from an eager salesperson without a single clue on what the fine print says. The only thing you know is that you can now spend up to $5000 that you don’t even have, and only pay $25 a month for the privilege. Woohoo!

You vaguely know that you’re supposed to pay all that back at some point, but lolllll, there’s no deadline so you can pay whenever! (which basically means never lololllllolllll)

Even worse, the things you buy using your credit card don’t typically qualify as good debt: petrol, groceries, the latest Bluetooth speakers, or a ticket to Taylor Swift’s concert, for example. So you’re digging a hole for yourself over the dumbest little things, unwittingly being charged a rate of 15% or more every single day for a bunch of apples and a box of cereal.

money illusion

The fake feeling of having money when you actually don't


There is, however, a simple way to have your cake and take home the plate as well.

Credit cards are only a hazard if you don’t pay back what you borrowed, letting Interest go crazy wild.

HOWEVER, if you are a disciplined person who pays their bills on time, then the credit card world is your oyster.

The trick is to treat your credit card as though it is a debit card.

A debit card will stop working if you try to withdraw or spend more than what exists in your bank account. Your credit card won’t stop working, but pretend that it does.This means only using it to spend money you definitely know you have, and then promptly paying off everything, not just the minimum fee, when the credit card bill comes.

So if you have $500 in your bank account, then limit yourself to $500 on the credit card, and then pay it all off at the end of the month. Go earn more money and repeat as necessary.

This way, you get the benefits of the credit card (not having to carry cash, gaining points, enjoying perks like free travel insurance) without falling into the debt hole.

You will be the worst customer the bank will ever have, because they’re not earning any profit from you, you’re not paying interest and you never carry over a balance to allow for interest to accumulate.

Trust me, that’s exactly the kind of customer you want to be if you know what’s good for you.

However, if you’re not disciplined, never pay your bills on time, don’t even know the remaining balance in your bank account, then stay far, far away from the credit cards. If you have them, cut them up and burn them while doing a fire dance.

Stick to debit cards. You’ll be doing yourself a big favour.

“Ooopsssiess, I’m already in debt”

If you are already in debt, either due to student loans, car loans, personal loans – all kinds of loans, it’s okay. It’s not great, but it’s okay. Your main goal should be to pay them off as soon as you possibly can.

The longer you drag the loan out, the more interest you’ll have to pay. Time will literally cost you money, and as we all know, nothing can stop Time.

time is money

When time is literally money

First, strive to pay off as much of remaining debt as possible each month**. Ensure that your payments are going towards the principal amount you borrowed, not towards interest. The faster you lower the principal amount, the less interest you’ll end up paying in the long run, and any money that does not go into the bank’s pocket will go into yours.

Second, look for debt optimization strategies. You can refinance your loan to take advantage of lower interest rates, or you can structure your debt such that you pay the one with the highest interest rate first, before moving to those with lower interest rates. This is not the place to go into details (and honestly, I can’t say much as I have not been in debt and never went through this), but a simple Google search will yield you the resources you need.

**Note: People with mortgages or home loans may want to explore different tactics. Home loans tend to have the lowest interest rates and stretch for decades, plus properties typically (but not always!) rise in value, so instead of paying off the home loan, one can opt to wait to sell the property at a higher rate and pay out the loan in that way. Make sure you do the necessary calculations and research on this before you go down this road.

It will likely take you a few long years to finally be rid of your debt, but when you finally do get there, it will be the best thing ever. The only thing left to do is to avoid getting into debt again, because some lessons you only need to learn once.

when you pay off you debt


  1. NOT get into debt, no matter how tempting it is. Learn to earn the money instead - that skill will benefit you 100000x more than the skill of borrowing money ever will.

  2. If you’re already in debt, figure out if it is a good debt or a bad debt: will this thing you got via debt increase your ability to earn more / make you a better person?

  3. If it is a good debt, stick with it and ensure you’ve read all the fine print in your loan contract.

  4. If it is a bad debt, look into strategies to finish paying it off ASAP. Google is your friend, or look into credit counselling services. Refrain from taking on more debt. Not to be repetitive, but learn how to earn more money instead of how to borrow more money.

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