Once there was man named Ah Chong. His wife joined a homemaker entrepreneur’s club. As a husband he was very proud. Most wives would have been contented being just a homemaker, but no, his wife wants to do business. Anyway the children have all grown up, what was the wife to do? Unfortunately, the wife’s business was slow, the club that loaned capital to the wife wants it back, wife paid it back, case close.
Not so. What the wife failed to tell the husband was that she borrowed from ah longs to pay back the capital. She felt shame to tell her friends that she had trouble paying, she felt shame to admit to her husband she wasn’t the capable woman he thought she was. Slowly she suffered, one day, the husband noticed that the wife was getting thinner, the children wanted books but was turned down by the wife. He exclaimed “Honey, what’s the problem? I’ve been bringing home the money from work, we are not want for anything, why can we not afford this?” The wife sobbed and told her husband, this was the first time he heard of it. She had been paying ah longs every week. As she is unable to pay down the principle, she borrowed from different ah longs to pay to another, she has been alternating paying the different ah longs and pacifying one ah long after another, always getting threatening phone calls. She skips on her meals just to make payment. She is fearing for her family’s safety.
When Ah Chong came to me with the problem, I wasn’t even a financial advisor. I could only bring it up to the only avenue I knew, I brought him and his wife to the MCA public services bureau. There were two lessons I learnt. First is that every borrower wants their money back, and if we can find a sustainable cashflow to fulfill it, it would be in both parties’ interest to let the borrower have a fighting chance else the only option would be to see the borrower disappear. Second lesson is that borrowers can easily dig themselves a deeper hole under duress. When ah longs call to collect and threaten the borrower, it is easier to reach for the phone and borrow from another ah long to pay the first just to keep one’s peace for another day.
Vasanthi suffered from the same issue. When she first approached me, her husband had many outstanding personal loans and credit card debts with many banks. “How did this happen? I exclaimed.” “He wanted to renovate the house, to make the house of our dreams, he overspent on the renovation. After that, there are unexpected medical expenses, holidays with family, he can’t let them know he was in financial trouble, can he? After all both of us had jobs and a nice house, how to tell people cannot go holiday with our own parents? They would think less of us!” The good thing is there are no ah longs involved, but there is the same pattern of borrowing from a source to pay off another, all the while accumulating debt. The husband’s case is under AKPK now, the solution again is sustainable payments and a definite end to the problem. Vasanthi is still struggling, helping out with the family expenses since her husband can’t contribute anymore but with proper awareness and cutting down expenses, some use of EPF account 2, things are finally stabilizing and she is hopeful for the first time.
Ali is another case I receive, he is really an intelligent guy, able to analyse and dissect the market, however due to a misstep, lost a great deal of money in a very short time. That was when his problems begin. Borrowing from a source to deal with another. The emotional hangup was that failure hounded him and he was unable to formulate a coherent strategy out of his mess. Fortunately, it was early and the illegal moneylenders were managed to paid off without much damage. The interest payments were killing him and his relationships suffered as he could not find time to worry about anything else. Without the illegal moneylenders, the payments were sustainable and a workable plan came out.
Many people think people with debt issues are not intelligent, not financially savvy or have an issue using rationality to solve their problems. But when shit hits the fan, there is really not much rationality we can put into it. When such things happen, it is important not to judge but to empathise and to offer a second pair of eyes. Usually the offer will be accepted after trust is gained. A sustainable payments plan can then be worked out using whatever financial tools and tricks available. But most importantly the emotional and heart problem must be addressed as well.