Getting into debt isn’t like transferring $10,000 to your new Nigerian friend who also happens to be a prince. In other words, it’s not stupid 100% of the time. Yes, you heard that right, there are actually some good reasons for getting into debt, as we discovered elsewhere on Moneysmart.
Unfortunately, Singaporeans usually err on the side of stupidity, as a recent report revealed, incurring debt so their friends will think they’re cool or by having a bit too much fun at the casino.
If you get a mini heart attack every time someone knocks on the door, never answer calls from unknown numbers and can’t walk into a bank branch without hiding your face, it looks like someone’s debt has spiraled out of control. Here are the top 3 idiotic reasons you might have gotten yourself into this sticky situation.
It’s very telling that the number one reason cited by debtors for their sorry situations is not a disastrous fire that decimated their homes, a tragic medical emergency or having eight kids to feed.
It’s simply overspending, which 49% of Singaporean debtors admit that they’re guilty of.
Overspending means treating yourself one too many times, opening one too many bottles of whiskey and buying one too many pairs of shoes.
The key to curbing overspending seems simple—just create a budget and exercise some damn discipline. Doesn’t sound that hard, right?
Except that for many people, overspending isn’t just about mathematically exceeding your monthly income. It’s a problem with deeper psychological roots than simply being bad with a calculator.
People with uncontrollable spending habits are often battling problems like low self-esteem and depression, even if they don’t realise it.
Alyssa, a 30-year-old general manager at a restaurant, has more than 7 years of full-time work experience, yet has barely any savings and struggles to pay the minimum sum on her credit card bills each month.
“I suppose self-esteem issues could be at the root of it,” she admits. “When I was younger, I used to buy a huge amount of clothes and makeup. I hated going out without being at my best. Nowadays I’ve cut down a lot on my purchases. Most of my money these days goes into travel.”
2. Being too reliant on their jobs
Low unemployment rates in Singapore have made people somewhat complacent about job security. In fact, many people behave as though they’re sure they will never ever be fired. If you don’t believe me, try calling up a customer service officer for actual help or getting an angry receptionist to fix you an appointment with her boss.
This means that few Singaporeans are prepared in the event of job loss or retrenchment. Many think nothing of upgrading their lifestyles the minute their salaries increase. Got a $1,000 raise? Great! That means you get to buy $1,000 worth of new outfits every month! In fact, a recent survey showed that nearly half of Singaporean households live paycheck to paycheck.
Being ill-prepared for job loss has caused many Singaporeans to slip into debt, with 46% of debtors citing retrenchment and pay cuts as a reason for their straitened circumstances.
Liting, a 38 year old personal assistant, had to leave her kids at home and find employment in order to help her husband, 42, repay his escalating debt when he lost his job as an engineer.
While he has since found another job, she recalls the harrowing experience of realising they had no buffer when he was first retrenched.
“We were living quite comfortably with our three daughters when my husband was working, and I didn’t really think about what would happen if he lost his job. We didn’t really spend a lot, but I still let myself enjoy little luxuries like a few Louis Vuitton bags and new mobile phones and iPads. After this incident, I’ve realised the importance of having enough savings and investments to tide you through the tough times, especially as we’re both older now. That’s why I’ve decided to continue working even though my husband has found another job,” she says.
If there’s one good thing about getting into debt for silly reasons, it’s that going off the deep end tends to make a lot of people smarter overnight.
If you’re not a punter, the idea of someone ringing up debt at the roulette wheel can seem a little fanciful, like meeting the Cheshire Cat in the middle of Tekong Jungle.
Well, there’s a reason Singaporeans have to pay $100 to enter the casinos here, as 22% of Singaporean debtors cite gambling as one reason for their predicament.
And at least 50% of Singaporean males will in their lifetimes fantasise about becoming a professional poker player or calculate the most auspicious hour to enter a casino.
Arnold, who is 32 and self-employed, visits the casino at Resorts World at least once a week, paying the $100 entry fee each time. Most recently, he lost $2,500 after a long winning streak, but is determined to return after taking a break to allow his luck to turn around.
Although he is nearly debt-free at the moment, Arnold had a few brushes with danger in his younger days when he turned to borrowing money from family and friends, liquidating his investments and using his credit card after losing money at floating casinos Royale Star and Long Jie.
“When you’re down, you know that just playing a little longer might turn your luck around. There were many occasions when I was down by a few thousand dollars but managed to win back all my money by the end of the night. The problem is you need capital to do that,” explains Arnold. “Although there are times I have lost, I would say I’ve broken even over the years, and that wouldn’t have been possible if my friends hadn’t lent me money when I was in need.”
Have you ever gotten into debt for a stupid reason? Share your experience in the comments!