How I survived financial turmoil

After I let my financial state take a leap off the roof (refer to my previous post), I suddenly realized how stupid I had got. Here I am, so called someone who loves numbers, mathematics, spreadsheet and accounting, but being selfish had caused me to close eyes on my degrading financial state and allowed myself to dump into a very difficult money problem.

During that time, I was $100,000 in debt for credit cards and personal loans. To top that, I still have mortgage to pay and hire purchase for my car too. My salary was not even close enough to maintain the minimum payment especially on the cards and loans.

I knew that I had to do something. Actually, I knew deep in my heart what to do, but for some malevolence reason, I just unable to do it. I heard it all, spend less, do not use credit card, do not eat fast food, etc. But never once I was actually follow those brilliant ideas.

I asked myself why. My mind would drop a million reasons for that but I knew it was just simply excuses. Excuses from admitting that I am not rich. Excuses to admit that I was not entitle to live as lavishing as I am doing back then. Come on, I am in management line and making $60,000 a year. Why I can’t afford all this? Other person seems to afford it.

Then, it hit me. I am not other people. All those things that I have spent were most of the time to show off. To deny or hide myself from the fact that I am not rich. I am showing to others that I can live extravagantly. But why? Why did I worry so much over how others look at me? Will I loose my friends just because I eat at home? Will I loose my friends if I do not keep up with all the electronics gadget technology wave and ever changing all so often? Will people look down on me if I do not dressed in designer style clothing, or drive a local car? Will my friends left me if I do not go shopping with them, or go out every night or lepak at coffee shop or go clubbing every weekend? I asked my friends these questions, and being such a darling friends, they smack me with same answers, “we just like you as who you are”.

If that is what other people look at me, then why did I spend on all those lavishing lifestyle? The answer was simple, it was for me. I am the guilty one. I am the selfish one. I want to look and live the best (even though no one else care how I live my life) and I denied that I was not smart enough to maintain such lifestyle.

That very moment, I made a pledged to lower my expectation in life. I should live as who I am, not as who I want myself to be. But for the last 15 years I have destroyed my life, I need to make some drastic measure to repent that.

Tame My Credit Cards
Mathematically, my credit cards must be the one I need to tackle first. The 18% per annum interest rate is the highest compare to all my other commitments. By that time, I had in total $60,000 of credit cards debt.

I had to stop the 18% interest rate because it was draining my hard earn money fast. So, I went or called to all the banks that hold my account and discussed over term loan.

1. Citibank – They provided great support for the term loan. After talking to their representative through phone, they promptly faxed me an application form to fill up and signed. I then just have to fax them back the copy. Within 2 weeks, I received through snail mail, an agreement to sign and post to them back that copy. They converted my credit card to term loan with 12% interest rate. Good service, but still not very good loan term with 12% interest rate though.
2. HSBC – They also very supportive. Just have to call them up and they sent out the agreement through snail mail. Once signed and returned them the copy, within 2 weeks, my HSBC credit cards was converted to term loan at 9% interest rate. Cool.
3. Hong Leong – I had to visit their branch to asked for term loan. After filling up the form, it takes around 2 weeks before they passed my account to collection center and arrange an agent to work on my account. I received their agreement through snail mail, but they require me to send them backdated check for all the agreed 60 payments. I had to create a current account first for the cheque. After everything settles, they converted my credit cards with 9% interest rate. Fair enough.
4. MBF – This is not a bank. They are just the card provider. Since they hold their credit to AmBank, they asked to go to AmBank branch for the term loan application.
5. AmBank – I also had an AmBank credit card. So, I planned to work with them for the term loan on both AmBank and MBF credit cards. But it seems that both account handled by different agents. So, end up, I have to double up the trip made to AmBank to discuss the term loan agreement for AmBank and MBF differently. All discussion and paper work must be done at the branch, so it was quite a trip since it was not a one day things to settle. I have also had to surrender 120 backdated cheques to cover the payment on AmBank and MBF separately. After 1 months of application, they converted my credit card to term loan for AmBank and MBF with both 9.5% interest rate.
6. Standard Chartered - I went to visit their branch but their customer service told them that they did not provide term loan.
   
7. Maybank – They do not have term loan. A talk to their agent through phone was shut off with, they cannot offer anything. They just advise me to pay the 5% until my outstanding balance cleared off…duh.
8. RHB – They also do not offer any term loan. Same with Maybank, they adviced to pay 5% on both cards (since I have 2 cards with them). Once one of the card clear off, then pay more on the other card. Brilliant ideas. (Pretty obvious is it?)
9. Aeon – They do not offer term loan to. But…well, that was just that. No but. They just warn me not to miss my next payment and then put down the phone. Quite friendly indeed
10. EON – Worst one. That is why I kept them at the last. First, I called them. The operator asked me to visit any branch to discuss on this. I visited one of their branches, their agent told me that they do not have term loan. Instead, she called someone on phone, right down something on a piece of paper, and quietly pushes the paper to me. She told me to go to the written address and asked for personal loan which can be use to settle the credit cards debt. I went to the address to an office that do not have any sign, which I assume some kind of loan shark or “along”, which cause me to drop the whole ideas. I then called again their center on phone, greeted by a lady, which end up scream at me saying that they do not have term loan. Before ending the conversion, she told me, which I know I will remember this for the rest of my life, “Lain kali, kalau takde duit, jangan la nak pakai kredit kad", which translate to, “Next time, if you do not have money, do not use credit card”. Thanks to that lady’s brilliant advice, I hate all banks now and understand that, to them we are just customers that generate profit for them and all those sweet talk or promotion is purely selling rubbish. My advice, when dealing with bank, make sure you read the footnote or fine-print.
    

Handle Personal Loans
Quick information on personal loan. Whenever you applied for personal loan, there were an agreed tenure and per year interest rate. Once you are approved a loan, the total interest throughout the agreed tenure will be sum into your capital and then calculated the monthly payment. So, as soon as your loan approved, you are already been charged by total interest.

Since the interest already been absorbed into your account, it is so unwise to go take other loan to pay personal loan to consolidate your loan. You will be increasing the amount of interest paid. So, never settle your personal loan by taking up other loan.

However, in my case, the 4 personal loans (BSN, Alliance, Citibank and Aeon) are causing my monthly spending too high than I able to cope. What I did, call the bank and ask for their advice:

1. Alliance – The bank asked me how much I can pay them every month. On the agreed payment, they ease up my payment and allow me to pay the amount I can afford for the next one year. They will review my status again after 1 year. Good enough for me.
2. Citibank – No further offer from them.
3. Aeon – No further offer from them too.
4. BSN – They asked to come to the branch to fill up form. Apparently, being a bank supported by government, they have a scheme to support such financial difficulties. I met with a very friendly lady there to fill up form to apply for a lower monthly payment. After 2 weeks, no update from them, so I called their bank again. They passed me from one agent to another, my call traveled from Melaka branch to KL HQ, when finally it reach an agent that said that they do not offer such service (lowering monthly payment) and they do not have any record for my application. That end of conversion confused me and I do not do anything else after that.

AKPK – My lifesaver
After all those tiresome bank deals, my monthly payment is still sky high. Even though some of the term loan manage to tame some of the payment, but those loans that unable to convert to a better offer was really hurting me.

From my tracking, I knew that I had to find ways to lower down my monthly payment on the loan and some of the cards. I thought about going through a financial consultant. But my friend told me they could cost me about $2,000 for the service. If I have the money, I should be paying for my debt, rather than pay some else to “think” about my debt, right?

I was very lucky that during this crucial period, Bank Negara Malaysia was promoting about AKPK (Agen Kuanseling dan Pengurusan Kredit). The promotion was everywhere, billboards, TV ad, footnote on all my bank statement. I browsed their website and noticed that they provided 3 services:

1. Financial education
2. Financial counseling
3. Debt management (Yeay!!)

Best of all, all their services are free of charge. I read through their success stories and was touched. I know now that there were so many people out there, were in financial turmoil worst than mine. With the support of AKPK, they managed to get out of their problems.

I quickly approach this idea. I filled up the application form online and then post to them copy of all my bank statements. After 2 weeks, I received a call from my counselor (they appointed counselor for each client) where we discussed the total monthly payment that I can surrender to the bank. The counselor told me to handle my home loan and hire purchase myself and they will look after other loans. After discussion, I agreed to surrender 50% of my salary to pay monthly for all my other loans including personal loans and credit cards.

The whole process took around 2 months. During this period, all banks’ agent called me up to notify me that they were approached by AKPK and my account is currently under their AKPK bank agent. After the 1st month, I received an official agreement from AKPK underlining the payment that each bank will get to utilize the amount that I agreed to surrender. After signing off the agreement, I received agreement from each bank separately through snail mail on the new term.

During this period, some of the bank took quite a tough action on me. I received lawyer letter from BSN to pay my entire outstanding loan. Those banks that were not yet in term loan, charge high interest and late payments. Red notices through snail mail also keep coming to my mailbox every month threatening me that they will go for legal action if I do not pay them up. But, as soon as AKPK term was effective, here was what happened:

1. My AKPK counselor told me to ignore the lawyer mail. When the lawyer called me, I told them that I was under AKPK and they apologized, blaming BSN for not updating them according.
2. Most banks waived their late payment through out the process of AKPK taking effect.
3. No more red notice or bank collection center calling me to pay them every month.
4. The monthly payment was paid to AKPK through Maybank online and AKPK agent will distribute the money according to each bank.

Now, after 1 year with AKPK, I am finally feeling most relieve in my finance. Being with AKPK, all my credit cards were blocked and I will be denying for any future loans. I do not see that as a problem, because the actual root cause of this entire problem was that I do not know to correctly handle my loans. They can block me from applying loan for all I care, because I saw that as a blessing in disguise.

During the recession period by end of 2008, I did call my counselor for advice because I am worried that I might lose my job. My friendly counselor told me not to worry and comfort me that if any problem happens in future, they can review back my monthly payment accordingly. Lucky for me that I still manage to keep my job and never have to ask AKPK for a lower monthly payment. Within the next 3 years, my AKPK account should be able to be paid off and I will finally be able live a debt free life.