Earlier this year, the Malaysian Department of Insolvency (MDI) revealed that there are a total of 287,411 young Malaysians in the country have been declared bankrupt.
As reported, most of them were forced to declare bankruptcy for failing to pay off loan debts due to insufficient funds. It is saddening that most of them are young Malaysians who are still working. The statistics showed that personal loans, car loans, and business loans are among the major contributing factor to bankruptcy.
Even World Bank reported that young individuals are living beyond their means – resulting in drowning in debt. Besides, most young Malaysians aged 25 to 34 have limited financial literacy and it is easy to access to personal loans and credit card financing.
Recently, KY Tee, a financial coach posted on Facebook a case of a 27-year-old man with over RM200,000 in debt. Based on his sharing, the individual is single and earns RM5,000 monthly. However, he is drowning in debt.
“He has over RM25,000 credit card debt and RM180,000 personal loan.”
This is alarming because it reflects that the level of financial literacy among young Malaysians is still lacking. Based on the sharing, he is unable to pay off personal loans, and credit card debt and plus, he just purchased a new car with an instalment of RM1,200.
Besides, KY Tee shared that the 27-year-old man also borrows money from his friends. He hasn’t paid 1-2 months for his motorcycle loan.
Just yesterday, KY Tee posted on Facebook explaining how the young man ended up in over RM200,000 in debt. What can we conclude is, don’t easily take credit cards if you can’t control your spending. Think thoroughly before applying for personal financing loans. In this case, he used the personal loan to invest in a business which ended up the business failed due to MCO.
Many young people tend to take on personal financing loans and credit cards to keep up with lifestyle choices, which is alarming. Being financial literate is important as it will help you make good decisions when it comes to spending and help avoid you from overutilisation of credit cards and overspending.
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