This week topic for Financial Clinic is Paying Your Debt.
A very retail credit knowledgeable friend of mine told me that it’s a very Indonesian way of thinking to depend your life in debt.
If you have to choose between borrowing money and investing their money, most people in our beloved country would rather borrow.
I don’t know if this is culture, or little knowledge in investment (karena jawabannya : kan takut ilang, gue gak berani…), or simply couldn’t be bothered to weight the choices.
The US market for example has this condition. Credit card debt is very common, their social security cannot support our generation. The scary thing is, usually we are 15 years behind. So my concern is whether most of us will be in so much credit card debt and cannot support ourselves properly.
Jadi.. Boleh Ngutang Gak Sih?
The answer is : YES of course.
Having a debt is not so bad at all. There is just one catch… you have to be able to pay the installments! So can you pay your installments?
Here’s a quick check.
Most of our ‘financially healthy’ clients have this composition with their monthly income expense pattern :
- 30% Investment
- 30% Loan installment
- 20% Routine household expenses
- 20% Lifestyle expenses
It means that if you earn Rp 10 mio per month, you can only spend Rp 2 mio for loan installments. So if you’re driving a rather fancy Japan made sedan, the installment is most likely to be Rp 4 mio per month… it means you can only afford that if you’re making Rp 13 mio per month.
So have ago… check it out… see if your monthly income expense pattern is healthy enough.
As for myself… we do buy our electronic goods using 0% loan installments. Only, if we already have the money to pay it. We had the DVD player 3 years ago, I had the fancy stove 2 years ago, Don bought his iPod a couple of months ago, and ofcourse you’ve heard of his wish to have a fancy flatscreen HD TV (the size grows an inch everyweek ).
Finance Should be Practical!