Many people in Malaysia are taking loans to help them cope with their larger, more expensive costs in life. However, some people may overstep their boundaries and take on one too many loans to the point where they have run out of ways and ideas on how to settle these loans.

Whether you’ve taken a housing loan, credit cards, car loan, personal loan or any other debts, it takes a lot discipline and self-control to settle them. This is because missing even one payment will make your loan accumulate to the point that it gets more and more difficult to pay.

Here are some of the most common strategies for debt repayment:

The Snow Ball Method
In the snow ball method, you attempt to settle your smallest debt first while paying the minimum on all the other larger debts. The first step is to calculate the total minimum payment you need to pay monthly for all your debts. After that, determine how much more you want to pay in addition to your lowest minimum repayment.

For example, you earn RM3000 a month, and you have set aside RM500 a month to repay debts. Your total minimum repayment rate is RM360. Therefore, RM500-RM360 = RM140. Therefore you can add RM140 to your lowest minimum.

After the smallest loan has been settled, add the extra amount that you had added to your lowest loan to the next largest loan and so on until all debt are settled.

Don’t Create Any New Debts
A little self-control can really go a long way in saving you from future burden. Do not make any more small or short term loans and especially avoid long term loans. Focus on dealing with the debts you already have. Never ever take a loan to pay for another loan. Cut your credit cards if you have to and don’t apply for new ones.

Don’t Create Any New Debts
In order to lessen the interest on a credit card that has a high debt level, you can transfer some of the charges to another credit card and settle the charges on the original card before the transfer period ends.

Invest Your Savings Account to Create More Passive Income
Use your savings to invest in a wise investment scheme like stable open listed stocks, bonds, mutual funds, fixed deposits or foreign currency to generate some extra income that can ultimately be added to your debt repayment scheme.

If you receive any bonuses from your employer, it should go towards settling your debt and not towards a shopping spree. Also if you have any disposable assets, now is the time to sell it and use the money towards settling your debts.

Use the Snowflake Method
The snowflake method of repayment if when you remit small amounts daily towards settling any of your loans. These small micro amounts should not be underestimated as amounts as small as RM10 a day can add up to RM300 plus at the end of every month.


(中文版请看这里:http://www.durianproperty.com.my/blog/article/1350)