So easy to spend, so hard to pay up
HE IS well-educated and only 29 years old, but Mr Tan has already racked up $85,000 in debt.
Every month, $1,000 of his salary - which makes up about 40 per cent of his pay cheque - goes towards repaying the amount he owes to banks.
The IT manager, who agreed to speak to The New Paper on Sunday (TNPS) only on condition of anonymity, has been making these monthly payments for the past two years.
With the help of a plan drawn up by Credit Counselling Singapore, he will be debt-free in another five years.
His credit woes began when he started a small business with a friend in late 2010.
The university graduate, who studied management, explains that it was the lure of easy credit that made it possible at the time.
"I had been working before starting that venture, and pumped my savings into it. On top of that, I also applied for cash advances, so it became possible to start the whole thing."
But the business failed just a year later.
When things went south for the aspiring entrepreneur, he spiralled into depression, which manifested itself in compulsive shopping and other spending.
"I would go on many trips to destinations like Hong Kong, Macau, and Bangkok, which made me feel better.
"I would go into shops and just spend. I felt like it was not something I could control.
"A trip to Hong Kong alone set me back $7,000 to $8,000," he revealed in a phone interview with TNPS.
At the time, he had credit cards from six banks.
"Signing is so easy, especially for those of us who have multiple cards. I signed practically everything on them.
"I got a shock only at the end of the month when the bills came," he said.
Reality sank in when creditors started hounding him for monthly payments.
"The banks started sending me writ of summons letters, and I realised I could not afford to make the minimum payments they were demanding, which at the time amounted to $4,000 to $5,000 a month.
"It was scary, as I had not handled such a situation before. It was also when the letters came that I stopped the compulsive shopping habit," he said.
Repeated calls from creditors stressed him out further.
"When I did not pick up the calls, they began to call my home number, and my parents later found out about the situation," said Mr Tan, who lives with his parents.
"They were not very happy with the situation, obviously," he said, declining to go into further detail.
Other than a few close friends and his parents, those in his social circle, including his bosses and colleagues, did not know about the debt.
Feeling helpless and desperate, he turned to Credit Counselling Singapore, which specialises in helping people with unsecured consumer debt problems.
"They helped to consolidate my debt, and to liaise with the banks to lower the minimum amount I had to repay per month," Mr Tan said.
While the debt repayment plan brought some assurance and reprieve from incessant worry, keeping to it was a challenge, especially at the start.
"The debt repayment specialist looks at what you earn and tries to maximise the amount you can pay.
"So I was left with an amount which was barely enough for food and necessities like transport and insurance," he explained.
He maintained that he had been faithfully paying the monthly repayments, slipping up only when there were events like wedding dinners he had to attend.
He does not carry any credit cards now.
"Getting a credit card is easy, and signing even easier. People tend to use 'future money' without worrying about it," said Mr Tan.
He is looking forward to the day he will be debt-free.
"I will be about 35, and then I can start thinking of saving to buy a flat."
THE NEW PAPER