Early Exit Plan: Consumer Debt

Failing to plan is planning to fail.
-Benjamin Franklin.

Read my previous post about new car ownership cost for 2 years. My goal now is to cut short the tenure from 7 years to 4 – 4.5 years and save at least RM900 – RM1,300. The figure might not sound a lot but money saved here is fund that could be used somewhere else instead.

Got this figure from AutoWorld if I settle it in 2.5 years
The figure if I settle it in 2 years

The Plan and Loan Balance
Duration: 24 – 30 months / 60 months (By June 2021 – Dec 2021)
Loan Balance: RM27,461.70 / RM33,000 (As of June 2019)
Amount to pay per month: RM483
Amount to save per month: RM667 (2 years) / RM450 (2.5 years)

The Plan
I will continue paying the monthly installment. As for the extra payment, I will transfer it to an interest-bearing account (M2u Savers) and save until I have enough to settle it within my time-line. For start, I will put RM500 into this account every month and any extra money I have left from my monthly allowance. Hopefully in 2 – 2.5 years I’ll be able to save up RM16,000 to settle my loan in one go.
I will have to pay the full RM27k if I follow my original plan. Got some advice from one of my IG post about car extra payment. (Thank you!!!)

I think it helps a lot to post your progress online. For instance, I created an IG account (@AiryLilM) and this blog solely for this purpose and to connect with like-minded individuals and get inspired by their stories and journey, they are one of the reason I’m determined to cut short my loan tenure. Been a silent reader for years before I stop procrastinating about starting to jot down my journey.
I hope 10 years later I can look back and say I’m glad I started to plant my little tree.

My little advice to those who wanted to do the same.
1) First, START. It’s the hardest part but don’t procrastinate.
2) Track your expenses, I’m using MoneyLover because I can see how much money I can spend before going over-budget. You can set a reminder if you’re the type that tend to forget about it.
3) Do a budget after payday and update your progress for previous month. I follow a zero-based budget where the Total Debit each month will be the same as my Net Salary.
Key to success is to not strain yourself. Tighten your belt bit by bit and do not go cold turkey!

Here’s my template. Feel free to save and adjust accordingly

4) Set your plan. Big plan (eg to settle PTPTN loan in X years) and break it into little parts with action plan (To pay Y amount per month). Again, don’t strain yourself. Set an amount that you’re comfortable with but make sure it’s higher than your monthly interest.
5) Be consistent. At first the progress will be slow but with consistency it will be possible.

All the best! And I shall post my progress here.


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