With the high cost of living Singapore is known for, it’s easy to find oneself with insufficient funds and take out loans. Sometimes, paying off debts requires making some adjustments to your lifestyle. It can be challenging, but it can help turn the tide against debt.
Challenges of Lifestyle Changes to Pay Off Debts
Borrowers who are serious about tackling their debt could consider making some lifestyle adjustments. The only problem with this approach is that it is extremely difficult because many habits will need to be replaced.
Here are some valid reasons why changing one’s lifestyle in Singapore to pay off debt isn’t easy:
High Cost of Living
Singapore is known for its high living expenses. Prices for everything are higher there than in many other places. This high cost of living leaves very little wiggle room for savings, making it harder to pay off debts, especially if you’re not making enough to sustain your lifestyle.
Social and Cultural Pressures
Speaking of lifestyle, you will notice a strong societal expectation to maintain a certain lifestyle in Singapore. This includes dining out, owning the latest tech, and going on vacations—pretty much a high-maintenance lifestyle.
This “keeping up with the Joneses” type of pressure can make folks spend more than they want to—and can afford—making it difficult to cut back on expenses.
Psychological Barriers
Debt can also cause significant stress and anxiety. The psychological effects of debt can make it hard to focus on adjusting and adopting some necessary lifestyle changes.
Changing long-established habits is also never easy and requires a lot of determination and discipline, which can be hard to pull off when you’re under a lot of stress.
Lack of Financial Literacy
Many people lack a deeper understanding of how to handle their finances properly. Without the proper foundation that financial literacy provides, most borrowers end up in a vicious cycle of debt.
The lack of financial literacy can lead to common borrowing mistakes. Bouncing back from financial distress is possible, but the road to financial freedom might be a hard one.
Practical Tips to Make the Process Easier
Recovering from debt is difficult but never impossible. You can take some practical steps to make the necessary lifestyle adjustments without being too hard on yourself.
1: Create a Detailed Budget
The first thing you can do is keep track of all your income and expenses. A detailed budget will help you see where your money is going and identify areas where you can cut back on spending.
Doing this will allow you to manage your finances better and make sure you have enough to pay off your debts without compromising your other obligations.
2: Prioritize Debt Repayment
Focus on paying off high-interest debts first. These debts grow faster and can become overwhelming if you don’t take care of them quickly. Financial experts advise folks to take on high-interest debts first because once you’re done with them, tackling lower interest rates will be easier to manage.
We highly recommend setting up automatic payments to avoid late fees and stay on track. This is especially helpful if you’re busy or are forgetful.
3: Adopt a Minimalist Lifestyle
Keeping your spending low is key to saving more money. That said, downsizing and going minimalist can do wonders for you. Understandably, it will not be easy, especially if you’re used to having plenty of stuff around. But embracing a simpler lifestyle by cutting back on non-essentials will help you save more money that can go to debt repayments.
Yes, this means dining out less, avoiding impulse purchases, and finding free or low-cost entertainment options, as well as other stuff you’re not used to. However, once you adjust to this new lifestyle, it can be very rewarding and liberating.
4: Seek Professional Help
Singapore has many institutions offering financial counseling services that can give you the guidance and support you need to bounce back. Many people have experienced financial freedom just by getting the counseling they need.
Another option is debt consolidation. It will help you simplify payments and get you potentially lower interest rates. Be sure to only deal with a licensed money lender who will give you an affordable deal.
5: Increase Income
Lastly, look for ways to boost your income. It might involve taking on side gigs or part-time jobs.
Upskilling can improve your job prospects and lead to higher-paying opportunities. You can also start a small online business that doesn’t require a massive inventory.
For instance, if you’re good with graphics, you can probably go to Etsy and sell some printed stuff. Or perhaps you could buy and sell goods. If you’re going minimalist, you may also sell some of your stuff to add to your income.
A side hustle—whether it’s part-time work or a small business—will be time-consuming. You will need to manage your schedule well so it doesn’t interfere with your other priorities, especially your family and primary income source. But, if you’re willing to make the necessary adjustments to accommodate the extra hustle, it will help turn things around for you.
Wrapping It Up
Making lifestyle changes to pay off debts is not easy, especially in a high-cost environment like Singapore. However, you can achieve financial freedom by understanding the challenges and implementing practical strategies. Taking proactive steps toward managing your debt can lead to long-term benefits and a more secure financial future.
