How To Avoid Struggling With Debt Like Simu Liu

Shang-Chi star Simu Liu recently shared a post thanking his former boss for firing him from his job 10 years ago. He also mentioned how he had struggled with credit card debt and had to eat into his savings. Here are four ways you can prevent that from happening to you.

By now, news of Simu Liu’s celebratory post on his ‘firing anniversary’ would probably have flooded your social feed. 

The Shang-Chi And The Legend Of The Ten Rings actor, posted a lengthy post on his Twitter account on 12 April to thank his former boss at Deloitte for firing him from his accounting job 10 years ago. 

The post read: “Soon it’ll be 12 April, the day I got laid off from Deloitte. I owe my life to being let go from a career I hated. Accounting = not for me.”

“Ten years ago to the day, I was lead into my managing partner’s office at Deloitte and told that they were terminating my employment effective immediately.” 

Liu mentioned that he was escorted by “a lady from HR and a security guard onto the floor in front of the entire open-concept office”.

He added: “the entire office was so quiet that you could hear a pin drop. Nobody moved, offered a whisper of encouragement, or even looked in my direction. I fought back tears of humiliation, grabbed my things, and never looked back.”, he added. 

Liu went on to say that he thought his life was over, and that “he had wasted countless time and money that (his) family had wasted on (him)” and that “years of schooling, gifted programs, trying to live up to my parents’ expectations. It all came crashing down in an instant.”

In his post, he also shared how he spent four years “running like a headless chicken” trying to figure out how to break into the entertainment industry, while struggling with credit card debt, and another three years sinking into his life savings to pursue his dream. To support himself, he also took up any job he could find.

Thankfully, his risks panned out well for him in the end.

However, the reality isn’t always this romantic, and struggling with credit card debt and burning through our life savings are disastrous ways of managing your money.

With that, here are some tips to avoid struggling with debt.

Don't rack up credit card spends you can’t pay off

When used responsibly, credit cards offer many rewards while helping you to save money. For example, you get cashback on spends or rewards like air miles.

However, trouble arises when you rely too heavily on your credit card and overspend your credit card limit. Credit cards are also notoriously known for charging high-interest rates for missed payments; some banks charge an interest of 25 to 28%!

Remember that interest is charged on a daily basis based on the outstanding amount, and any interest that has not been settled will also snowball to the following month. And if that’s not bad enough, you’ll also be charged a late payment fee every month. 

Bad credit history also negatively affects your credit score, which in turn, affects any potential future loans that you apply for from a financial institution. 

There are a few ways to manage your credit card spending; one way is to limit the number of credit cards that you own to just one or two (e.g. one for cashback, the other for air miles). 

Another way is to determine how much you can spend each month by drawing up a simple financial statement that contains all your income and expenses. This way, you get a better sense of where you are spending (and any surplus that you might have). Of course, the best way is to pay your debts on time!

Financial institutions typically offer credit card promotions every month, so you can check out this article for the latest rewards. Want to compare credit cards instead? Find and compare the best credit cards on SingSaver below.

Invest your money

Most people are intimidated by the thought of investing their money, and are more willing to place their bets on winning the lottery for windfall. However, as we’ve pointed out in this article, you stand a much higher chance of building your wealth by investing your money.

Plus, contrary to popular belief, investing doesn’t have to cost an arm and leg; some investments such as exchange-traded funds (ETFs), require very minimal investment while providing you with the opportunity to invest in some of the top companies in the world such as Apple, Tesla, and Microsoft. 

Then there are also safer investments such as Singapore Savings Bonds (SSBs), and all you need to do is to park your money and wait for it to mature. You can invest as little as S$500.

Another popular but inexpensive investment is real estate investment trust (REITs). With REITs, you can invest in real estate without forking out large sums of money to buy a property and still receive passive income in the form of dividends.

What's more, the average return of REITs is 5 to 6% on average, which is higher than 2% for properties.

Investing your money is a good way to build your wealth and help you cope with inflation. In case of an unfortunate event, such as a job loss, your investments can help you to lessen the impact; you can liquidate your investments quickly, and your passive income investments can also offer more financial stability.     

Build an emergency savings fund

Speaking of unpredictability, life is full of curveballs. That’s why is important to set money aside for emergencies, whether it’s a car repair, job loss, or illness. Most experts recommend saving three to six months' worth of your household expenses. 

While that figure may sound overwhelming, it can be achieved if you set a goal and consistently stick to it. Start by determining your expenses each month so that you can work out how much to save and can work from there. To make it easier, you can set up automated transfers to a high-interest savings account each month. 

Make the most of your money

While it’s great to earn big bucks, it’s more important to make the most of your money. How much money you make wouldn’t matter much if you don’t manage your spending. That’s why it’s not uncommon to see some people earning six-figure salaries but are still living pay-check to pay-check. 

To manage your spending, group them into needs and wants. This way, you set feasible savings goals and look for ways to trim your expenditure. By putting in a little effort to track your spending, ultimately you'll end up saving more by trimming a few expenses here and there. 

Read these next:
Clear Credit Card Debt Quickly and Reliably With this Step-By-Step Guide
REITs VS Commercial Real Estate In Singapore: Which One Is A Better Investment?
Best REITs In Singapore 2022 For Your Investment Portfolio
4 Ways to Pay Off Credit Card Debt in Singapore
How to Build a Passive Income Portfolio Using ETFs (And Why You Should)