SIBU: Those taking loans have been advised to exercise restraints, be disciplined and always live within their means.
Delta Leasing executive chairman Dr Gregory Hii Sui Cheng, who gave the advice, said this would be an effective way to help the country reduce its household debt which had exceeded the 80 per cent level.
He said: “Refrain from succumbing to the lure of attractive promotions or other cheap sales, and if we can all attain to that demand, then we can effectively help the country reduce the household debt.”
To improve, Bank Negara Malaysia (BNM) had introduced pre-emptive measures including reducing maximum loan periods for property and personal loans to 35 years and 10 years respectively and capping loan servicing ratio to below 60 per cent of net take-home pay, he noted.
“The apparent reason which leads to this high debt level is the easy availability of loans/funds from financial institutions for borrowers and aggressive promotion by these leading institutions including shadow lenders.
“As a result, many Malaysians, especially the young and the spendthrifts are induced to take on extra credit more than they can comfortably service.
“This eventually leads to default, legal actions by lending institutions to recover defaulting accounts and eventually bankruptcy as a last line of action,” he said.
Hii suggested as a good practice to set aside some 20 per cent or more of the monthly income as savings to meet the future need.
“This should be in addition to your EPF and/or private retirement scheme (PRS) contributions.”
He said some people could earn a lot but save nothing.
“In that case, your family’s net-worth will never grow and you will never be rich.”
Then, he said, there were others who earned little but managed to save some on a regular basis.
“That is definitely a better option.”
Hii said he had come across and had seen enough to suggest to all to live within one’s means.
“Always work out your family annual budget to know where you stand. Never over spend and always refrain from buying things which you do not need even if they are cheap. Regrettably, I have often seen housewives on buying spree.
“If you do not want to put your own finance in order, no one can help you, not even legislation,” he said.