S$900 000 In Debt: A Story Of Financial Mistakes [Chills 44.1 with Adrian]

S$900 000 In Debt: A Story Of Financial Mistakes & Recovery [Chills 44.1 with Adrian]

Can you imagine having a debt of almost a million dollars? That was what Adrian, a serial entrepreneur and father of four experienced at one point in his entrepreneurial journey. He shares his raw and honest story in this week’s Chills with TFC. This is Part One of Adrian’s story as he explains what got him into this predicament, how it affected his life & the lives of his loved ones and the initial steps he took to get out of debt which included counselling at a local organisation and some debt financing strategies that he learnt along the way.

There is a lot of stigma in society when it comes to debt. Through this episode, our guest Adrian goes against the grain and shares his story of how a lack of financial literacy and training coupled with some business decisions that went awry contributed to a debt of S$900 000. It took him some time to finally realise that he needed to do something about it. With determination, he started his journey towards financial recovery. 

Adrian also shares useful resources and strategies that are available in Singapore for people who are heavily in debt. While getting out of debt seems like an impossible task, Adrian has shown that it is possible and his story gives hope to others who might be in similar situations.

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podcast Transcript

Andrew: This episode is a real and honest account of how a father of four cleared S$900 000 in debt. How has this journey shaped him and his relationship with money? What key values and financial knowledge will he impart to his children from this experience? This is a story of debt, financial mistakes, recovery and taking responsibility.

Expand Full Transcript

Hello, my name is Andrew, and welcome to another Chill with TFC session. In this series, we hope to bring on interesting and relevant people to help us learn better from various perspectives. Life is not always about learning from the people you agree with. Different perspectives shape us to be more well rounded in our thinking. 

So in the pursuit of the life and love while managing our finances as well, my guest today is a serial entrepreneur in the recruitment, career search and HR consultancy space. He also has his own podcast and YouTube. You can check out his work at adriantan.com.sg. 

But today, he’s going to share with us a personal story of how he has overcome his debts while raising a family of four kids at the same time. Let’s welcome Adrian! 

Take us through your story. What were the event or series of events that got you into debt?

Adrian: I think the whole thing really started around when I was 24 years old and it was really way back. When I first started my business, I also just applied and gotten my first credit card. When you get your first credit card without the right amount of financial literacy and training, you sure anyhow spend one. 

Andrew: Freedom. 

Adrian: Yes, yes. Freedom… what happened of course, as I started my first business with a few friends, we did not pay ourselves salary for close to one and a half year. In fact, when we got our first paycheck, it was $300 each. We were so bloody happy but before that, we have to sustain and since there’s no income, there’s only one way to pay for stuff which is to use credit cards. 

So it essentially became what is termed as a revolver: just keep spending and then every month pay the bare minimum. That was how I managed to sustain myself until of course I started to draw salary. Now the prudent thing, of course… okay, I draw salary. I should clear all the debt. No, you’ve got more money. You want to spend more so that is how it snowballs over time. 

Of course, it went up, it came down but also at certain junctures in my business, I had to finance something. I have to become the bridge loan for something that’s happening at work and being a very naive business person, I just do it with no condition attached so if I have to bridge, I will bridge. If I have to incur the interest, I will do it in my personal capacity. It wouldn’t affect the business, but of course, over time, it really affected myself to the extent at the peak of it, I remember I was owing the bank close to S$900 000. 

Andrew: It’s almost a million there. Help me understand the term revolver, it’s a term used to describe this behaviour or…? 

Adrian: From my understanding, yes. So you basically just spend as per normal on your credit card, but when the statement come, typically you are encouraged to pay everything that is due or you can pay the minimum. For people who consistently pay the minimum, they call them a revolver.

Andrew: Okay, okay. I wonder where did the term come from. Did it come from a revolver gun or something? 

Adrian: I have no idea. 

Andrew: Okay, and that’s the behaviour. So it’s a combination of you running your own business and having credit card and also, you having to take a bridge loan and it accumulates. Can I say this is the main event that caused you to rack up debt to $900 000?

Adrian: Yes, yes. It’s not a one off incident. It really built up and snowballed over time. As I said, there are of course good times where I’m cashflow positive, but there were also bad times and also from a business perspective, I wasn’t really the most savvy business person, the 10, 20 year old… ago kind of Adrian. It also led me to a lot of stupid business decisions that of course resulted in the company needing more money and again, that is where I came up as a white knight again. 

Andrew: That is your first business?

Adrian: Yes, that’s right.

Andrew: Okay. Don’t mind if you paint me a bit more details. How long do you take for you to get to S$900 000 in debt? What happened in between?

Adrian: I was managing a business for close to 11 years and actually the S$900 000 was close to the end of it, towards the tail end. The S$900 000 also include a huge portion of bridging, which could easily be fixed. Essentially, what we do back in the business… it’s a recruitment business, but we also do payroll outsourcing. One of the things that we have to do is we have to pay money out to employees of other companies and then customer will pay us. 

Now, in typical circumstances, especially for one of our big customer, they will pay us in advance then we will pay out to their employees and we will take the difference as margin. But sometimes, the cashflow is so tight. When they pay us, we need to use the money to do other things first and then we are in the situation (where) we don’t have sufficient money to pay the employee so that is where I come in to bridge. 

Of course after the incident, I think immediately we managed to get a next wave of cash flow and we cleared off most of it. But having said that, I think after I exited from the business plus all my cash out everything, I still owed the bank… I think close to S$400 000 – 500,000. 

Andrew: As a personal loan, not a business loan?

Adrian: All of it are personal loan, yes. Because as I mentioned earlier on, I was trying to… I was living in my fantasy to be a white knight for my own business so everything I incurred at the personal level. 

Andrew: To save the day, right? To be the hero. 

Adrian: Yeah. There were business loans, but of course the one is very much separated. Company will just slowly pay it down.

Andrew: Right. So 11 years… you didn’t get to S$900 000 from the start. Was there a moment you realized “this is it, man. This is serious. I better do something about it”?

Adrian: Oh yes, yes. There was a moment where I thought I need to seek help so I was searching around on what to do and one of the key thing… if you were to do any search in Singapore, the primary advice is for you to go to CCS (Credit Counselling Singapore). I think they are a NGO but essentially, they will have people to help better understand your financial situation, help you to even reach out to all your banks to do debt consolidation and even maybe to the extent to help you to submit for bankruptcy. 

I registered for one of the events because for anything that you want to do with them, you need to attend their workshop first and it is a group workshop. So I attended one of it and it really gave me a better understanding of what needs to be done. I guess in a way, it also helped me feel better because I realized when I was at the event, some people got it worst. 

I remember in one session, the lecturer or the trainer was asking “how many of you owe more than $1 million?” This guy put a hand. “I owe $1.6 (million)” and then another guy put up the hand. “I owe $2.3 (million)”. In my head, I’m like “okay, actually I’m not so bad” but still, it also helped me to understand that the debt situation especially in Singapore is quite troubling because CCS, at that point in time, I think until today, they hold 3 sessions per week and each session, I think estimated maybe about 80 over people. I still remember the session was held at one of the rooms in National Library in Bugis and it’s always full house. 

Of course, if you look at all the stats, Singaporeans or Singapore in general has a very high portion of unsecured loans and it’s going up year by year. All these really hits me, but having said that, this session was attended many years back. I’ve learnt something, but it did not really hit me at that point in time, hard enough to really take action. I did take action, but it’s very incremental. 

Andrew: Okay. Do you remember how many years back was it? 

Adrian: This was probably… I would say 8, 9 years back?

Andrew: So 9 years ago, three sessions per week and each time, it was full house, about 80 people roughly, you were saying and this is one agency, right?

Adrian: Yeah, correct. 

Andrew: So you Google or you went to do a research and you found this CCS: Credit Counselling Singapore? What goes on in a typical session? It seems like a seminar style. Everyone has the same room and then you have someone asking “who owe more than one millon”. Tell us a bit more.

Adrian: Based on what I can remember, they will of course break down for you what’s going on, what are the repercussion, what are the options for you if you go option A: debt consolidation, what are the pros and cons; if you become bankrupt, what are the pros or the cons. Essentially, just paint you a picture of what are the alternate journey you can take from here so that you can make a calculated decision. 

But I think on another spectrum is also to give you hope, hope that actually this can be over and that is also something to try to drive across because they don’t just focus on the negative. They also tell you about the positive, people that may have approached people 5 years, 10 years ago and over this period of time, they managed to get out and things are much better for them so I think those are very good learning that everyone picked up.

Andrew: Do you have a one-on-one session where they break down for you? How does it go?

Adrian: Unfortunately, I did not hit the stage. The group briefing is step one and then step two, you have to submit then you go for individual. I do not go individual for very stupid reasons because the thing for me… the practical thing that makes sense for me at that point in time was actually debt consolidation. That means you have to essentially cut up all your credit cards. You would have to of course, survive on paying down this account that consolidated everything there. I was at a stage where I actually still need margins to survive. I still need the margins from credit card. I still need that credit limit to pay for things to sustain myself and not for all practical reasons, for some frivolous reasons as well.

So I thought I cannot do it. I took things into my own hand and tried to see where I can cut corners and all that but I think until you really have a very disciplined approach, all those are just vanity action. It does not really help anything. It’s just shifting money from here to there.

One of the common thing that I believe a lot of people like myself would have done is to borrow from one bank to pay another bank so in order to… because you may not have even sufficient money to pay off credit card A, but you have limit with credit card B so I just borrow from there and you pay over credit card A. When B comes to you with a statement, bank due and all that, then you continue to look for others. 

I was playing this game for the longest time and I tell you, it’s so painful because you will reach a stage, you don’t even recall when you are due for which card because you have so many outstanding and it became this round Robin musical chair thing that isn’t just fun to play. It’s not fun at all and of course, when you hear the stage where there’s so many things going on in your head, other aspects of life stressing you down in addition to this, it can really get to you. 

Andrew: Hmm. So let me understand the whole timeline, break it down and then we can go into the details of each step of the way because in preparing for this interview, I went to read up success stories of clearing debt, but sometimes it’s very surface level. You don’t really get a lot of details and prior to the call, you and I… we chat about it and I think you have a very great story. You’re very willing to share so I think we can really go into the story and understand what are the things that we might not expect when we talk about debt? 

You were running a business about 11 years. Your only source of income was from your business and then you were racking up credit card debt. You were taking personal loans and then you realize you need help and therefore you went to Credit Counselling Singapore and then that’s the debt consolidation process. I want to dig a bit deeper into the part where you realized you need help and you took the initiative to look for CCS. What was it really that drove you to look for help? 

Adrian: I guess it is the realization that I cannot play this revolving game or borrow-from-A-to-pay-B kind of game in a very sustainable manner. To another extent, I guess it’s also because it coincides with the arrival of my first kid and that became an eye-opener for me that I cannot just eat ramen or instant noodle every day. I need to also prepare for my kid so that really cement my actual journey in trying to take the first few baby steps to clearing off all these debt. 

Andrew: So the arrival of your newborn. 

Adrian: Mmm. 

Andrew: Okay. You’re still running your business before that and then you got married and then you have your first kid. What is it like? I mean, you got a wedding and in between, you’re still racking up debt, right? What was the emotional process for you?

Adrian: Oh, it was tough. It was tough. Of course, when the amount is low and you know that good times are coming, you don’t really care much about it. But when you’re really down and out, I remember… I literally woke up in cold sweat almost every night and every night, I try not to sleep because I know that when I sleep, it is the next day. It is one day closer to the bank knocking on my door. 

Of course, you have situation where you get advance notice from bank. They will send you the red letter. They may call you. You tend to avoid calls from… 

Andrew: When you receive a phone call, do you get cold sweat? 

Adrian: Yes, yes, all those unlisted number. Yeah… you get cold sweat and all that. Very PTSD, very stressful, that kind of experience. Of course, when you have to go out and buy some things, sometimes even groceries and the card will not go through. All these are really very embarrassing, especially when emergency come along. You can don’t buy another bag, another computer. All these are good to have. But sometime, emergency. Need to pay for hospital bill, need to pay for a leakage repair and you realize that you don’t have the money. That is when it really hits you.

Andrew: I have been cash strapped for a period of time in my life because I was jobless for a year, thereabouts. While I did not incur debt, I can feel the whole constraints, like you top up your Ez-link card $10, that’s it because you have to budget, right? You cannot do more than that but $10 gets used up very quickly and then you have to really think about what meal and how much you spend and all that but I’m sure it must be like 10 times more difficult for you in your daily life. 

Adrian: For sure. Yeah, because there’s so many… and as I was saying earlier on, I did not make the wisest personal financial decision along the way. When I was doing my first business, when time seems to be better over and above, moving from a HDB to a penthouse, we bought a BMW. Honestly, that is the worst decision ever because even though things looked good, we were not completely debt free so it’s quite stupid to jump from where we were to something even worse. That means we have to finance even more stuff, the car, the house and that naturally took a toll on the amount of money we can save or the amount of extra money that can be made to be used as a debt paydown. Again, that created a new situation or amplified the situation for us.

Andrew: So there were times when the business was good and that you bought a car and moved into a penthouse, but there were times when the business needed more bridging loans and you took out loans. All of this is while the previous loans were still racking up in the background. 

Adrian: Correct, correct. And as you know, housing and car not so liquid one. “Oh, tomorrow I’m in debt. Okay lah, sell my car, sell my house”. You can’t do that. There’s a lot of things in play. You have to buy the house and you have to… I think my loan locked us in for… I can’t remember, 2, 4years? I can’t remember. That means your house is not liquid at all and car… you know in Singapore, especially. You sell, you sure lose money one. All that played a part in the manifestation of this situation.

Andrew: How did it affect your relations with your family?

Adrian: I think it can really be very bad because of this thing that always is clouding in my head. A lot of… one tend to be snappy, very temperamental and you can’t really think straight. To a large extent, you also tend to look at ways to not really solve the problem, but try to make you forget. Things like smoking, drinking a lot, it helped you to forget for the time being. Of course, it hits you even worse the next day. But having said that, those are the stuff that I think are quite common for many people when they are under tremendous amount of stress. They would just try to look for small little outlets to make themselves feel better and that was what I did as well. 

Andrew: Were there moments, if you think back, like you shouldn’t have done it and it was due to the amount of stress that you were under and therefore… maybe you snapped at a loved one or you said something you shouldn’t have said? Do you recall something like that?

Adrian: I recalled I had a few time because of the amount of stress that I was handling at that point in time. I actually slapped my son across his cheek and I felt very bad because he was very young but he did something which I thought at that point in time wasn’t right and I snapped and I did that. These are things that in today’s context, I will not do because firstly, I will catch myself doing that and I think also I will be more present and be more mindful of what am I trying to achieve by doing all those kind of stuff.

Andrew: Mmm, okay. How did your parents take to your situation? Did you tell them about it?

Adrian: My father passed away when I was in Sec One, when I was 14. My mum, she knew at one point in time. I actually reached out to her for help but she wasn’t able to support and help me so I just have to tide through on my own. We were, at that point in time, just looking at ways we can try to find money, pay things down here and there, trying to push things off. 

Honestly speaking, if I were to imagine myself back then, I really have no idea how I managed to get out of that situation. But I guess the thing is if you work hard enough, you have a plan and you work towards it, it’s definitely doable.

Andrew: Okay. Earlier on, you’re mentioning about debt consolidation. Could you help us understand a bit about the whole process of paying down a debt? You mentioned you have to cut your credit cards but is it like a legal procedure or you have do it on your own? How does it work? 

Adrian: There’s two ways. The do-it-on-your-own-way means literally just cut off your cards so you don’t spend. 

Andrew: But no one is overlooking you, right? 

Adrian: That’s true, that’s true so you need a lot of discipline, which is why in Singapore, there’s this thing called a DCP (Debt Consolidation Plan). I think I should have gotten it correct… I did not pursue it but I did read up on it. Essentially, CCS will come into the picture or you can even approach one of the banks. There are a few banks that actually has this option and what they would do is if they approve and accept you as a customer, you have to work out how much you owe across all the different banks in Singapore. They will then of course bring all those debts into the banking system so instead of owing 10 banks, you only owe 1 bank.

Andrew: Into 1 bank?

Adrian: Yeah, and because this is a specific program, if I’m not wrong, I think that interest rate is about 3.5%. Very low, compared to your credit cards… some even 25%, 26% nowadays. Then you slowly pay down but of course there are terms and conditions. You cannot have any credit cards with all the banks including the one that you’re holding. You can only have a debit card kind of thing. You are also forced to be very disciplined and financially prudent on what you can spend and what you can’t spend. 

Andrew: But like you said, no one is really overlooking what you’re doing so it really depends on your own discipline and therefore you still are using the margins or so-called the credit limit available, right? On your existing… 

Adrian: If you go on DCP, there’s no way you can get any more credit card. 

Andrew: Okay. 

Adrian: That’s the situation I avoided because at that point in time, I needed some cards, I need one card for business reasons.

Andrew: Debit or credit?

Adrian: Credit card. If you go straight into a DCP, you can only get debit. No more credit card for you, so it’s a very disciplined way to pay down. For me, because I did not choose to do, I have to do my own DCP. I basically consolidated everything as much as possible and for those that isn’t worth consolidating because amount too small, running down… so those are the ones you focus on first. 

I have read books and also listen to podcasts on how to pay down your debt. There’s debt snowball, which means you pay down the lowest amount. You don’t care about the interest. You just pay down the lowest amount and once it’s off, you pay the next lowest amount. That one is more psychological so that you can actually see achievement. 

The other way is debt avalanche which means you look at the debt with the highest interest and you whack that one first. But of course, psychologically, that one may be a bit tough. It’s like if you first time go to the gym, you do 10 curls and then like no muscles leh. Then you get jaded and then you never go back to the gym again. 

Debt snowball is a way to encourage you. “Actually, I see some results. Let me try to push on”. So I took a bit of both, experimented with both but I think primarily, it’s very much on debt snowball: trying to pay down the smallest and at the same time, trying to do my own consolidation as well. 

That also means doing a lot of reading on which one has the lowest interest rate and all which I think in Singapore’s context, fortunately over the past few years, maybe even decades, you have websites like SingSaver, MoneySmart. You don’t have to go to one bank (by) one bank and see which one is the lowest. You can just go to the website… which one is the lowest, then you go to that one. I think because also for the fact that there’s so many banks of Singapore, they are very competitive. Most of them will want your business, unless you are what many people will term as a “chao kar”. Your reputation is so bad…

Andrew: They don’t want you already.

Adrian: There are no banking system (that) will welcome you and of course, they can see it from your credit rating so if you don’t really have that bad a credit rating, then you’re able to pursue that kind of strategy, which I did. 

Andrew: Mmm, so you mentioned two frameworks for clearing your debt. One is you pick the smallest one and go for it to build up and the other one is you go for the highest interest. You realized what works best for you is going for the smaller ones and just keep going for the next one, like a level up kind of thing. 

Adrian: Yes. That’s right. But of course having said that, it also means you cannot continue to live your normal lifestyle, that one for sure. You cannot expect to have your cake and eat it so you still have to make cuts. What we did back then was… of course, we sold the house, we sold the car. We rented for a period of time and for a period of time, I was actually driving for Uber and that was… I think somewhat in between jobs kind of situation and I must say I’m very glad for something like that, because imagine if that were to happen like another 10 years before when things like Uber, Grab were not around. It would be so much harder for anyone with the right asset to make a living or to get more money in order to sustain themselves.

Andrew: Okay. Previously when jobs like Uber driver or Grab driver is not available… that’s what you’re saying. Let me go back to the debt consolidation. You mentioned that before that, you were actually using margins or credit limit to… you borrow from one bank to pay another bank or borrow for one card to pay another card. You realized that you cannot do that anymore and therefore… you could have gone into a DCP (Debt Consolidation Program), but you chose not to but you did your own DCP. Any reasons why you did not consider bankruptcy? What do you have to… what are the criteria before you can declare for bankruptcy?

Adrian: I didn’t read enough to know. I think as long as your amount of liability outweigh your asset as well as the ability to pay, you always have the option to do so but if I’m not wrong, I think you also have to hit more than $100k. At least, that was based on what I’ve read before, the number may have changed. 

Andrew: Liabilities, you mean? 

Adrian: Anything below $100k, they will ask you to go DCP.

Andrew: But yours $900k, right?

Adrian: After I cleared off the amount that was needed for bridging, it was about $400k. But again, as I shared, it was a personal decision not to go into DCP. In terms of bankruptcy, yes I could potentially look at that angle, but of course that is not something anyone want to do so because not just because of the taboo associated with it, but there’s a lot of things that automatically you cannot have. 

You cannot even own your own mobile phone number line. You need to get someone else to subscribe for you because you literally cannot own anything with exception to things that you pay for with your CPF. So your HDB, they cannot touch. But imagine if you were staying in a private or you took a bank loan, they can touch your house so that means overnight, you…

Andrew: They take it, you go and rent.

Adrian: You’re homeless. You have to rent. Of course, your car no longer belongs to you. In fact, anything that has your name to it, they can take away: your TV, whatever. That is really the kind of situation and honestly, another set of stress that I don’t think I want to go through.

Andrew: I know some listeners might have a negative connotation towards the word “bankrupt”. I know people who’ve been declared bankrupt and actually it’s a form of protection mechanism. You take away some level of freedom but it is to protect you from incurring more debt and your only goal is to clear down your debt and then you can be declared out of the position, of the whole bankruptcy. I’ve seen how it plays out but of course, it’s a personal decision. You’ve done your homework and you decided okay, you can do your own DCP instead of going for the bankruptcy route.

Adrian: Yep, that’s right. I think there’s really nothing wrong with going that route, especially if you were to really put it down into an Excel sheet and you realize it’s just going to take so much time or even impossible for you to achieve your end goal which is to clear everything, then going through bankruptcy where of course all your creditors will sit down together and decide “okay, I would absorb 90% of what is owed, so just pay me 10%” and all that and then, you just work towards a plan. 

From my understanding, once you are bankrupt, of course you will have to put together a plan every month you need to pay how much to Official Assignee, which is essentially this stat board that manages… and when they get the money, if I’m not wrong, I think they’ll distribute to all your creditors so you have to continuously do this. 

Before that, of course they’ll sit you down. “Okay, so you make so much money. What’s your expenses?” “Oh, I need this for food and I need this for commute”, so on and so forth and then work out a number. Then every month, you should pay this amount to the Official Assignee and then they will start to just continue to pay down this cycle. 

Over a period of time, of course, when you pay on time then you may want to tell OA that… “I want to pay a bit more”. It is a sign of good faith to pay a bit more and again, after a period of time, then you can write you in to say “can I be discharged from this whole thing?”

Andrew: Okay, so the route that you choose was your own DCP and you mentioned that you want to go for the smallest loan to clear first but does that still apply when you consolidate it all under the same bank?

Adrian: Oh, if you consolidate it all in the same bank, then you only have one. 

Andrew: Yeah. There’s a 3.something percent, you were saying.

Adrian: Yeah, so we just have to pay down that one. It depends on the tenure that you actually have with the bank. 

Andrew: How much were you paying per month back then? 

Adrian: Wow, roughly… could be around $2000 to sometime $4000. It depends, because honestly, I’ve gone through this exercise quite a few times. As I mentioned earlier on… 

Andrew: You can choose to pay more, right?

Adrian: Not exactly, but I had to consolidate many times.

Andrew: With different banks, or…?

Adrian: With different banks and I’ll tell you why. Because sometime when I try to work it out, you will tend to be over-optimistic. You would tell yourself “okay, I would just have a 12 month plan”. So I tell the bank “I want 12 months instalments”. 

Andrew: That might be $5k… I don’t know, $10k? 

Adrian: Around there, thinking that everything swee swee (perfect), within 12 months you can clear everything. And then shit happens or you may overcommitt yourself or maybe you are just not disciplined enough to keep up with that amount. When month 12 hit and you realize “I still owe them 50%, how?” Then you have to go to another bank to [indiscernible]…

Andrew: To re-consolidate.

Adrian: … to clear this one off, and that starts another 12 month track or how many months that you have planned for.

Andrew: Okay, then the new consolidation might be… I don’t know, $4k, for example, per month and your main source of income at this point in time is your employment and some side hustles, side gigs that you’re doing? Is that correct? 

Adrian: Yes. 

Andrew: Sometimes, there might be fluctuations in the income and therefore, it’s very stressful. 

Adrian: And also at that point in time, it’s not just my employment because I also started a few businesses and I was also in between certain jobs which were not exactly very stable. So there was also a lot of changes and of course with all these changes, it also means that your income is not stable. 

Andrew: It’s not stable. 

Adrian: It’s very hard to make the projection. 

Andrew: Okay. Did you take loans for those new businesses that you started during this period of time?

Adrian: Oh no, no. Fortunately, all my businesses all bootstrapped. 

Andrew: Okay. Would you consider that like a lesson learnt and therefore, you have a different way of approaching your business? 

Adrian: Well, even for my first business, (it was) bootstrapped, but I guess it’s also because we never had the concept of getting seed money. In today’s context, of course we’ll get a business site. I think I would actually get seed money because for a variety of reasons. Not so much because I do not want to get myself into a situation, but more for business scalability, the speed and efficiency instead. But at a personal level, of course, you wouldn’t try to touch on any more borrowing.

Andrew: Okay, okay. So can I say that from a logical point of view, the steps to clear debt is to reconsolidate it so that it’s easy instead of coming from all different directions, different banks issuing you the statements so you have it under one place. You know the amount of interest. You have the set amount that you pay every month, depending on how long the tenure is and every month, make sure that your income covers that amount that you’re paying out and then whatever is left is for your daily expenditure and you don’t spend so much. Eat hawker centre instead of restaurants, for example. That’s logically the step. 

Adrian: That’s logically the step but I just want to add one more thing. You would think that if I make $10k for example, I clear all my expenses: food, everything in. I’m left with $5k. $5k, I pay to the bank to pay down my debt. That seems logical. But often, one would overlook emergency fund. 

If you just make sure that you net zero with no emergency fund buffered into this whole thing, you will definitely inevitably come across a situation entirely outside of your control that will just happen. 

Andrew: Example? 

Adrian: For example, car repair. 

Andrew: Because you have your car?

Adrian: Yes, or something happened at home. The fridge broke down. You need to get someone to fix the toilet or someone has to go into the hospital. 

Andrew: Someone fall sick.

Adrian: Need to do an emergency surgery and all that. If you don’t buffer for all this, I tell you, you are going through another spiral. I’ve gone through so many spirals because I paid everything so nicely in my attempt and in my haste to quickly pay down, there’s no emergency fund. It is so tight that even if something unexpected, $1 come out, you also get caught dumbfounded. That is something that you have to buffer in and even though it may lengthen the period of your pay down, it will definitely give you much more sanity check because one thing is for sure: the unexpected always happen. 

You cannot control it, but when it happens, you know okay, I don’t have to worry. I have my emergency fund, I just trigger and then over time, I try to put back as much as I can. It’s like how we are dealing… how Singapore government is dealing with the pandemic. It’s because we managed to save so much money over the past few budgets, they can… “okay, we’re going to take so many billions of dollars just to safeguard the airline…. but if that has never been planned for from the get-go, we would be in a very bad situation now. 

Andrew: So you’re saying you have packed everything in a box so neatly, there’s no more room to manoeuvre and emergencies will happen so you’ve got to factor that in in your payments. That’s the whole logical process, but we know paying down debt is so hard. What is the biggest challenge in your opinion? 

Adrian: Oh, biggest challenge would be all those kinds of things that would attract your eye, all the other shiny objects that will come along your way and sometimes you get influenced from your friends to get into this, to buy this, buy that. If you love to travel, going for any traveling trip especially as a family is going to set you back by so much money. 

Those are stuff that is very hard to say no logically because it’s really very tempting to go through and incur all that. Of course, sometimes you may also have situation when you have some specific events like Euro, World Cup. You meet with your friends… “how? You want to put some money behind it?” “Okay lor, put some money behind it”. 

Also, I think this happened about 3, 4 years ago and this was again in my haste to quickly pay down my debt. That was at the peak of ICO: Initial Coin Offering. This is a term from people in the crypto scene. Essentially, it’s like IPO (Initial Public Offering), but instead it’s more of a coin that they issue and the coin supposedly has some value so I took about $10 000, invested in three of them. Almost zero due diligence. Back then, it was very… 

Andrew: Frenzy, hyped.

Adrian: It’s very cowboy. I have a friend who’s a pool master. He basically… “you know, you should do this” I’m going all in. I’m going to the moon”, those kind of stuff so you’re like “okay lor, let me…

Andrew: To the moon… that’s being used nowadays. 

Adrian: So I just put in $10 000. I was thinking if this one can 3X, 5X, 10X, I can… 

Andrew: Can help you. 

Adrian: Yeah, but of course instead of going up, it went down so I think my $10k right now is worth less than $50, I think?

Andrew: Yeah, a lot of them fizzled out after 2017. 

Adrian: These are the things that… it will come and when it came, you just feel that it seems like the right gamble to take and when you take it and you realize it’s actually going to set you back even more, then that is where you wake up. But that only happen when you really got the slap in the face. 

Andrew: That was part one of Adrian’s story. In the next episode, we’ll get an update on his debt situation. How is he educating his children about finances from these experiences and what’s next for him? Subscribe, follow, turn on notifications so that you don’t miss it. 

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