Read the full article from CNA here –How a S$3,000 bill became S$30,000?
One of the challenges in advising a client is managing the cash flow. The big purchases such as a holiday can be controlled but it is difficult to manage fixed expenses such as these tiny little installments that add up to an amount that ends up more than the income.
Personally I don’t mind installment free payment via credit cards but those in-house credit facilities is a No-No! My advice to my clients is if there is no ready cash, go for a lower priced item and save up to buy the ideal model. For e.g. if a TV cost $1,200, a 12-month installment will works out to around $125/mth. Try to save that amount for a year instead of committing to the loan. 2 possible scenarios-
1) You saved for 6 months and find that it’s not possible cos you over-budgeted. You are still richer by $750.
2) You managed to save $125 for 12 months. That’s $1500! You can buy a better or newer model 🙂
If we had just jump into the credit facilities, we are stuck with just bad debts and a depreciating equipment.