Irresponsible Spending

The last few years, I’ve been involved in helping one of my relatives with their spending habits outcomes.


RM 100K+, consisting of:

  • car loan RM 45,000+
  • credit card loans RM 39,000+
  • personal loan RM 28,000+

This is on top of their student (PTPTN) loan, daily spending etc.

I can’t tell you how vicious is this cycle, because…having such a bad loan, they can only try to loan more money from family, friends, institutions in order to pay of the minimum, but barely.

And it’s so vicious, because they feel so bad, they think/feel that they need to feel better, so they spend what little/nothing they have left, and that brings them deeper into debt.

To make matters worse, they couldn’t secure or keep a stable job.

Yep – imagine the horror.

vicious debt cycle
As they start to break psychologically, they feel the need to relieve their stress, so they justify adding a new debt…then they take on the new debt that they actively sourced…and then they think “shit” and feel bad, and feel more stress…and the vicious cycle goes on.

In between interviews and jobs, they turned to doing Uber, and even that, is on an ad hoc basis “because there are good times to work and bad times to work” on Uber.


They don’t cover their loans, expect others to chip in.

After trying to help solve this problem for some time, one day, they used their mobile phone account to buy credits on Steam wallet and iTunes. When prompted they replied they did that because “they were bored”.

Annoyed, told them that wasn’t a smart move, and they asked me

Nigel, are you mad at me because I spent some money?

I said, I don’t mind spending if one earns more than what one spends.

But clearly, they don’t understand this basic concept, and that’s why they’re in that situation right now. (To put things in context, despite having RM 100K+ debts, they can choose to leave jobs or not worried about getting jobs because the job was bad – like the debts wasn’t worrisome).

This relative of mine had always pursued “societal riches for sake of flaunting” eg they would aim and actually buy luxuries like:

  • BMW cars
  • Expensive watches that are five-figures
  • Going to restaurants

And using the famed credit card and loans that obviously shouldn’t be done if one cannot afford it.

This is a very clear case of irresponsible spending that leads to bankruptcy, no assets and no money. A very sad state of living.


They don’t get this fact: buying luxuries directly from one’s loans and income is very limiting, because it’s limited

  • to how much one actively earns
  • how much one saves
  • how much one is able to save after deducting such loan/credit costs
  • and the problem if one loses their job

That’s why I highly recommend that assets pay for luxuries and lifestyle.

Two different examples:

#1 A takes home nett RM 10,000 per month, but spends it all on food, credit card loans, personal loans, car loans etc. At the end of every month, he has a car, some nice toys – but reality checks in, and he knows that he is actually very, very broke. All he does is work in hopes/looking to his next paycheck so that he can pay his bills and maybe eat something “nice”. If he loses his job, he’s in deep trouble as he has years of bills to pay for the toys that he had bought in advance.

#2 B takes home nett RM 5,000 per month, and she decides to pack aside RM 2,500 a month to dividend stocks/index funds/fixed deposit, which gives her back a fixed 5% per year. She does this for 5 years, and she realizes at the end of the 5th year, due to compound interest, she had amassed RM 212,345.83. She then decides to take half of the 5% dividends, which translates to RM 5308.65 per year to spend on whatever she wants – guilt free. AND SHE KEEPS HER ENTIRE PRINCIPLE AMOUNT and still gets to reinvest the 2.5%.

Which do you think is more sustainable?

Well, obviously person B’s approach.

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