Debt Management

JC Project Freedom Debt Management

This morning I spent time with two old friends to catch up over coffee. One of them had to leave earlier to spend time with family and I continue to have a deep conversation with my friend. He had a gambling addiction and finally it had came to light over the years. Currently, he owes his parents a lump sum and left a few credit cards debt. He is on his path towards complete recovery and will eventually get out of his debt issues after the debt consolidation. We all fall down somewhere and just need to get up from there. I have an addiction as well, I like to buy books and stack them on the book shelf. It is hoarding. Another close friend of mine told me that I have a shelf of knowledge but I did not use them.

I will start this article on the idea of habit. A habit is formed as shown in the figure below. There is a cue which triggers a routine and you will feel rewarded. This becomes a close loop cycle and over time (after minimum 90 days) it forms a habit. Whenever, I feel that I am stressed or I have accomplished something (this is the “cue”), I will go to the bookstore or online bookstore to buy a book (this is the “routine”), when the book arrives and find its place onto the shelf, I feel satisfied (this is the “reward”). For my friend, whenever he feels that he requires acceptance, he will place his bets with online gambling websites, when his bets are accepted, he feels satisfied because he feels accepted. It forms a habit.

Figure 1 – The Habit Loop

In order to break this habit, we need to introduce a new routine. If he requires acceptance, he has a community(support group) to turn to, he can share with them his stress and issues at work, he will feel better after talking and accepted by the group. This will form a new habit loop over time. This is why it is important to constant go back to the support group.

How to manage debt?

Debt is a form of leverage, if it is been used correctly, it can create multiple folds of wealth. Use it to facilitate personal consumption and gambling, it will cause bankruptcy or creates a vicious debt cycle where you borrow from one money lender/credit card to pay the other money lender/credit card.

Consolidation of Credit Cards Debt

The first step is to adopt the Debt Consolidation Plan which is a debt refinancing program which offers bank customer the option to consolidate all his unsecured credit facilities (such as credit cards and some types of unsecured loans) across financial institutions. It is important to consolidate all the debt into one bank to deal with. You can also work with a financial adviser who can work with you to consolidate the debts from one credit card to another credit card.

Dealing with Money Lenders

There are licensed and unlicensed money lenders. For unlicensed money lenders, it is important to report your situation to the authorities and stop all payments. When faced with threats, always need to remain calm, don’t be intimidated by them.

Appoint a “custodian” or “trustee”

Pass all your credit cards to someone (usually family member) who you can trust while you are in a Debt Consolidation Plan. Remember to terminate all your credit cards once you pay off your debt. Your custodian should have full control of your bank ATM card and he/she will give you an allowance on a weekly basis for your basic needs such as transportation and food.


We have our own vulnerabilities and needs. If you are in debt issue, remember that all is not loss, there is always the next day to fight for. I pray for my friend to get out of his debt soon and become a stronger person. It is just another 1-2 years more and you will be debt free!

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