Why Most Singaporeans Are in Debt

The current starting median pay for polytechnic graduates is $2,000, while for University graduates it is about $2,700. The median salary per month for Singaporeans in 2011 is $2,710. I really wonder how Singaporeans can stay out of debt if they continue to spend.

An example of a typical Singaporean couple

Take for example a Singaporean couple who falls in love and decide to settle down. The man is in his thirties and woman in her twenties. They have a combined income of about $8,000. The man buys a proposal ring that costs $7,000 (Larry’s brand as girlfriend likes it). The couple also buy a pair of engagement rings that costs $6,000 (Cartier due to peer pressure). The wedding photo package costs $6,000, wedding dinner costs $7,000, honeymoon to Korea $3,000. They then decide to apply for a DBSS flat after countless tries with HDB’s BTO without success and have to cough up $350,000 (by taking up an HDB loan and wiping out their CPF and savings). They then spend $20,000 on minor renovation and furniture.

The man decides to upgrade his car as he could not resist the latest continental car design and coughs up $100,000 (by taking a car loan). The man likes to collect watches, saw the latest Rolex and could not resist it. He has no cash but buys it for $12,000 with an interest free 24 month installment since it is so cheap per month.

Then the man tells himself that if he loses his job, he is finished. He is stuck in a rat race and saves on food, entertainment and transport cost. He does not drive his continental car to areas with ERP and instead takes the MRT there. The wife is in the finance industry, and with many banks doing cost cutting, she is very concerned now as she realizes she has nothing much to do during office hours.

The above is a real life story.

The only way the couple could afford all that is if they belong to the high earners group, if they have financial assistance from their parents or if they are born rich. Unfortunately, they are not.

We have not even talked about Singaporeans with lower earnings.

How Singaporeans get themselves in debt

Most Singaporeans will be in debt if they do the following:

1) Earn less than what they spend
2) Have no savings
3) Lose their jobs
4) Stay in a company for too long without promotion and their company pay them pathetic bonuses
5) Spend on liabilities
6) Do not delay gratification
7) Marries somebody that likes Cartier or Larry’s
8 ) Do not invest

To avoid racking up debt and getting stuck in the rat race, don’t do any of the above!

By Kelvin Ng, who has been investing since 2007 and blogs at Personal Finance Master.
Link : MoneyMatters.sg –  Why Most Singaporeans Are in Debt
 

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Comments from the net :

  •  It’s true. People are overspending yet complain everything is expensive in Sg and our Govt are not helping them. Really ridiculous.
  •  I have heard cases where people are incurring debt like nobody business, they can blame banks for issuing them with credit card and things like that, but they just forget that they don’t control their own spending. They blame everyone around except themselves.
  • I agree, see it happening everyday in my social intercourse. Even heard from someone who works for Tigress (Calvin Klien,Prada,Armani etc) the way young ppl buy their product is shocking! A handbag costing tens of thousand is common to SG females and a wallet costing almost a thousand bucks is small purchase!
  • This is nothing to be surprise, these days young ppl because parents have no time for them, so monitery conpensation become the norm. My daughter was telling me that her school friends goes to LV, Prada, all the branded to buy every month. I have seen with my eyes that her friend LV bag have her name on it. How will these young adult went come out to work with less ten S$ 5,000/- to survive. Parents gone to be blame not the children.
  • Parents will tell the children it’s Govt fault and children also learn to blame govt.
  • This is so prevalent to many around. Many are armed with branded bags, wallets, watches etc. all of which are on credit most of the times. They are typically chasing a lifestyle they can’t afford. Then, when they are unable to meet the monthly payments, they blame everyone except themselves for the plight they are in.
  • I have expensive stuff but not as expensive like how i spent when i was not working. Once you started working and know how important is money, you tend you spend lesser. Thats for me.
  • We now live in a world where
    You buy things u dont need,
    With money u dont have,
    To impress people u dont know !!!
    – Will Smith
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