MORE SINGAPOREANS IN DEBT TRAP
Big spenders chalk up debts of more than a year's salary from splurging non-stop
By Yasmine Yahya, The Sunday Times, 2 Nov 2014
It is so easy these days to shop online 24 hours a day, book a trip to Europe on an instalment plan or even make an appointment for cosmetic surgery in Seoul.
So easy, in fact, that more Singaporeans are falling into the trap of overspending and chalking up massive debts.
Just over half of those who sought help at Credit Counselling Singapore (CCS) last year landed in debt after splurging on brand- name goods, holidays and clubbing, among other things.
"Debtors usually have more than one reason. They may overspend and then become more vulnerable to get-rich-quick schemes, time shares or gambling, and one thing leads to another and the debt gets bigger and bigger," said CCS president Kuo How Nam.
"But the first cause is usually overspending because many people are living lifestyles not justified by their incomes."
There may be more than 40,000 people who owe more than a year's income from credit cards and other unsecured loans such as personal lines of credit or overdrafts.
The Monetary Authority of Singapore estimates that 3 per cent of unsecured credit borrowers' debts exceed their annual incomes. Based on Credit Bureau (Singapore) data showing that 1.44 million people had at least one credit card account at the end of last year, The Sunday Times estimates there to be 43,000 people who had debts of more than a year's salary.
Last year, the average debtor who turned to CCS for help owed $84,447 to seven creditors, but Mr Kuo said that figure is skewed by gamblers, who owe the biggest sums. Most others have debts in the tens of thousands of dollars, and they make up a big group.
"A lot of it has to do with peer pressure or their own values. Some people say they feel they deserve to indulge themselves - they've worked hard, so they deserve to take more cab rides or a holiday even if they can't afford it," he said.
"I asked a debtor once, 'Why did you carry on spending like this?' And the answer was that he was hopeful that some day his income would rise to a level where he could pay off his debt."
Financial advisers say that is a common problem.