Why the young in Singapore don't view 'debt' as a problem

Tan Ooi Boon
Invest Editor

Sep 19, 2021

SINGAPORE - Most of us would probably have sleepless nights and no end to anxiety if our credit cards have debt that keeps piling up by the thousands of dollars.

So paying off this debt would be a priority - especially given the interest rate it attracts - even if it means hacking away at it, month after month. And many of us are prudent enough to know that you don't make it worse by chalking up more unnecessary expenses, such as treating friends to expensive meals.

But many people under the age of 30 have a different view when it comes to money owed to the bank.

It seems that some of these folk do not consider an outstanding credit card balance as "debt" and that so long as they can make some payment every month, life will go on and the merry-making will continue.

After all, this is what the word "credit" in the card is all about - it allows you to spend more than your income without the need to seek permission from anyone.

So when does "money owed" become a debt to these people? When they can no longer make the monthly payments or when the banks start to chase them to pay up.

Mr Lim Cheng Boon, Credit Counselling Singapore's principal counsellor, has spent years helping such youngsters: "I was actually quite surprised when I first learnt that they had such a different view about debt when compared to older people. So long as they can pay, it is not a debt. It becomes a problem only when they cannot pay."

A common reason is that young people, especially those who are single, have little to no family commitments and still live with their parents.

So they have the luxury of spending all their income on themselves and are seldom anxious even if they have chalked up a large debt.

"To them, the ability to enjoy and have fun with their friends is more important. So we have come across some cases where they still continue with their clubbing even though they are in debt," says Mr Lim.

What this means is that you wouldn't know that such people have money problems because you won't see a change in their behaviour or day-to-day routines.

So this makes it hard for their parents to know that their children have money troubles until it is too late.

"Once in a while, we would receive calls from parents asking us for help," notes Mr Lim.

"They want us to tell the banks not to lend any more money to their kids. But this is not a solution because banks won't act on such information."

How to know if your children have money problems

A better way would be to talk to the children and get them to confront their debt problems, he adds, noting also three telltale signs that would help parents know if their children are in trouble.

• If amounts you get from your children become smaller or cease altogether. It is a good sign of filial piety if your children start to give you a monthly allowance once they start working.

But if the allowance becomes smaller, infrequent or ends, it could be a sign that they are facing a cash-flow problem. Even if you don't require them to give you an allowance because you have your own income, you can still watch for other signs, such as when they start to avoid buying family treats and household items.

• When the serious mail starts to show up. You should hold the key to your home's letterbox if you want to know everything that happens in your household.

Yes, most companies, including banks, have turned to e-mail or e-statements to get in touch with their customers. But the "really serious" mail - such as letters demanding late payments - will still find their way to the letterboxes.

So you would know that someone in your family could be having money problems if you receive letters from banks that are different from the usual ones, and it would be prudent to have a chat with the recipient to find out more.

• More phone calls during the day. Frankly, many of us prefer to text each other rather than to call, especially if you are chatting with friends. So if your children start receiving regular phone calls during the day and they often move aside to speak softly, it could be a sign that they are hounded by bank debt collectors.

What should debtors do

If you have a debt problem, you should know that the problem will not disappear just because you pretend that it does not exist. Indeed, the more you avoid confronting it, the more painful it will get when the mountain of debt comes crashing down.

So if you truly love your family, you should let them know early so that everyone can chip in with a solution to resolve the problem.

And when you confess that you have a debt problem, do so honestly and don't try to make the situation less serious by telling a lie that the amount owed is smaller.

For instance, if you owe $20,000 but choose to tell everyone that you owe only $10,000, you may just get the help to pay for this amount. What this means is that you still owe the bank $10,000 and that it is going to be more painful to ask for help again.

Mr Lim has been advising young debtors to watch their spending and not to increase their debt just because they fear losing their friends if they cannot keep up with the group's frequent gatherings and spending.

"Everyone should learn to have the discipline to save and not overspend. If your friends know that you are in debt, chances are they will try to avoid you because they will worry that you will borrow from them."

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