#175. A Debt-Free Life

To Be Debt-Free Or Got To Get That Loan? Why Drop A Stone On Your Foot And Then Shout "Pain, Pain"?

I was shopping at a local hypermarket and on display was a spanking new Perodua Myvi car. And a leaflet clipped on the wiper caught my attention. It said something like "Fixed for 5 Years at low payment of RM347 monthly". Can't remember the actual figure but it's around that range of RM300 plus.

I asked the sales lady what it meant. She said, you just need to pay RM347 monthly for the first five years! What happens after the fifth year I asked. "Well, after 5 years, you pay the normal price." I asked her how much would that be. And she showed me a chart that said about RM700 plus monthly for the following 4 years.

WOW!! That surely is a great way to get buyers who are low on monthly budget and yet want a spanking new car. She continued "Usually, after 5 years you can trade away the car for a new car." In my mind I am thinking, that's right, and start the 5-year thingy again at a low monthly repayment.

I also questioned whether when you trade in or sell the car after the fifth year, the selling price or market value is able to pay off the remainder of the loan outstanding.

Well, certainly not the way to get a car. That is a total of 9 years of loan! And living a 9-year life in debt to the bank for a piece of transport. Why don't people get a pre-owned (sounds better than 'used', right?) car instead? It's much cheaper that way and you don't get into debt for so long.

What are the benefits of being debt-free?

1. More disposable income for other things including investing for the future. Money makes money concept.

2. No worries of late payment for the loan and risk getting the car being repossessed.

3. No problem when you have a temporary lost in income such as when you move between jobs. I have a few friends who are being laid off from their companies and are still jobless because of the current economy situation. You certainly have one less headache to worry about. When you are out of job, bills still need to be paid and cause you sleepless nights. I have been in that situation once before, I know how it feels.

4. Not enslaved to the bank. We have discussed about this before, didn't we. He he.

I am now reading an interesting book. I don't want to list the title here, the book is not everybody's cup of tea and the content is thought to be controversial to some. Hint, you can't get this book in Malaysia. I bought it through Amazon.

Well, this book talks about how we are enslaved by the modern things. We are brainwashed into thinking how cool it is to get this and that. Look around you, the media and the advertisement are always subtlely or boldly trying to tell you, "Hey, get this new car, you'll look cool driving it."

The main culprit is the media. It's always showing us it's cool to get this kind of new gadgets even though we have been living almost our entire life previously without it. Suddenly this new invention or creation is a must-get for everyone. Suddenly, you just have to change your car even though the car is running perfectly fine.

That's where we are stuck in the slave world. When we fall into debts, we fall into slavery.

Don't be suckered in. Spend within your limit. I have a friend who budgets RM10 for his daily spending. He is in debt and earns a small package. That's surely a way to save because you limit yourself to how much you can spend a day and you know how much you can save. If RM10 is too little for you, then work on a budget. You will soon be surprised how much you can save and how much things you don't really need and can still get by with your life.

The temptations are always there to spend. I have this mantra, "Don't buy it if you don't need it." That means if it doesn't serve a good purpose that can add value or enhance my life, I won't buy it. Or if you already have something similar at home that ain't broken, don't buy a new one. Look for ways to fix up the things that are not workable, probably can save more.

Well, when you don't spend so much, you have enough money to buy certain things in cash. My friend told me he can't afford to buy a used car cash the way I could. I said, if you have only saved up and not spend so much on the spanking new car, you would be able to buy one.

Enough said, adios.