Of all financial woes on the nightmare list of people, bankruptcy is a problem feared most by them all. It’s because bankruptcy isn’t just a roadblock; it’s often a dead end for your future. Singapore happens to be one of the world’s most progressive economies and the most expensive city in the world at the same time, which means that opportunity walks hand in hand with risk at every step.
You can go from pouring vintage vines to pawning empty soda cans with a few bad financial decisions under your belt. Fortunately, the demon of bankruptcy isn’t something that can catch you off-guard, and it offers plenty of ominous signs in anticipation of its arrival. You just need to free your mind from the cloud of greed and keep it open to intercept these warnings and pay heed to them at the right time.
If you’re a financially savvy Singaporean or someone willing to step up your game to become one, here are a few surefire signs that are indicative of an impending bankruptcy that you need to pay attention to:
1. Irregular Employment Pattern
Employment without stability and a steady stream of income isn’t necessarily frowned upon by society because of their hidden jealousy against your flexible schedule. It’s because hyper fluctuation in cash flow is not a healthy way to service your credit payments and manage your day-to-day expenditure.
When the promise of a good payday is not guaranteed on a regular basis, then the chances of you ending up with pennies in your bank account when your bill payment hour arrives are significantly high. Hence, such people usually end up resorting to extensive credit card usage to address their debt problems in emergency situations, which may inevitably lead to dozens of unnecessary interest payments and penalty charges.
2. Herculean Loan Obligations
Due to a super competitive job market and the rising costs of college education, the youth of Singapore is tumbling into a gigantic snowball of education debt over the past few years. Earning a graduate degree does not equate to getting handed a job like it’s a piece of cake anymore. Unemployment is a cruel reality that Singaporeans have to be prepared against, and expensive student loans are only making their credit history a nightmare for them.
Hence, it is essential to have a reliable emergency fund that is built with at least six months worth of income in order to support your loan obligations. A lack of contingency plan can lead to a premature bankruptcy.
3. Repossession of Assets
Repossession of assets, irrespective of their value, is a dangerous indicator that something is seriously amiss with your finances. Not only is it unimaginably embarrassing to be subjected to this treatment, it means that the financial institutions you have associated with have finally run out of patience and will no longer offer you a flexible set of solutions to pay back your debt.
In order to circumvent this, it is recommended to undergo credit counseling and fix your credit score and start living as frugally as possible to maximize your savings.
4. A Complete Absence of Insurance Policies
Insurance is no joke. There is a reason why it is one of the most consistent investments made by all sections of society regardless of their income. Mortgage insurance in particular, is a great redeemer for your loan obligations in the event that you lose your income. It helps pay off the remaining debt of your house and permits you to retain ownership and sell it to raise capital rather than leaving you at the mercy of the bank’s repossession list.
Health insurance is another must-have asset by your side in order to avoid going broke paying off a ridiculously high amount of medical debt for the rest of your life.
5. Poor Credit Card Debt Management
Credit cards are a lifeline for Singaporeans, but misusing their power can lead to quite a few insurmountable grievances. Once you’ve reached a breaking point where you just can’t pay afford to pay off one credit card with another, you know you’ve walked yourself past the tipping point. At this point, your interest payments and penalty charges start piling up into a mountainous debt problem.
Hence, it is important to pay back the interest as well instead of just sticking to paying off the minimum sum to safeguard your long-term credit card score.
For more financial insights and economic optimization strategies, visit imoney.sg and learn how to treat your money right.
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