If you have high-interest debt (Credit Cards or Personal Loans), your financial bucket has a hole in it. No amount of investing will make you rich if you are paying 18% interest to the bank.
We are going to use the Domino Strategy to kill your debt.
The Preparation
- List them out: Write down every single debt you have (except your house).
- Sort them: Arrange them from Smallest Balance to Largest Balance. Forget the interest rate for a moment. We need a psychological win.
The Domino Effect
- Step 1: Pay the minimum on all your debts except the smallest one.
- Step 2: Attack the smallest debt with “super-payments.” Sell things on Carousell, do Grab on weekends, cut your bubble tea budget. Throw every extra Ringgit at that small debt.
- Step 3: When the small debt is gone, you celebrate! Now, take the money you were paying on that small debt and add it to the payment for the next smallest debt.
- Step 4: Repeat until you hit the big car loan.
The Malaysian “Cheat Codes” for Debt
While you are fighting the war, use these tools to lower the difficulty setting:
1. The Balance Transfer If you have RM10,000 on a credit card charging 18% interest, you are bleeding money.
- The Hack: Apply for a Balance Transfer card from banks like RHB, Public Bank, or AmBank. They often offer 0% interest for 6-12 months for a new credit card application or a small one-time fee.
- The Result: You move your debt to the new card. The interest stops growing. Every Ringgit you pay now goes 100% towards reducing the principal. Warning: Do not use the new card for spending!
2. The “Nuclear Option”: AKPK If your debt is so big that you can’t even make the minimum payments, do not go to a loan shark (Ah Long). Go to AKPK (Agensi Kaunseling dan Pengurusan Kredit).
- What is it? A government agency set up by Bank Negara Malaysia. It is free.
- The DMP: They can enroll you in the Debt Management Programme. They negotiate with the banks for you. They can often freeze interest and extend your loan tenure to 10 years, giving you a single, affordable monthly payment.
- The Catch: Your CCRIS record will show you are in the DMP, meaning you won’t get new loans/credit cards until you graduate. But this is a small price to pay to avoid bankruptcy.
Your Homework:
- List your debts on a piece of paper.
- Call your bank and ask: “I am looking at a balance transfer offer from Bank X; can you lower my interest rate to keep me?” (It rarely works, but it’s worth a 5-minute call).
- Start the Domino. Kill the smallest debt this month.
Continue to step 4