She cooks almost all meals at home, has a productive garden and keeps chickens for eggs.

Since her kids are homeschooled, she has setup a study in her home, with bookshelves and desks, next to a cozy kitchen that is fully equipped although small in size.

She and her husband also have a trampoline in the yard for their kids physical activity and entertainment when she needs to do chores.

The notion implied is that she enjoys being home because other than above mentioned reasons, by being home often she and her family are making full use of their home mortgage.

It makes full sense doesn’t it.

A house that is fully used on weekdays and weekends, a place of shelter and comfort and more.

I mean our homes are often one of the most if not the most expensive asset one owns in their life, so shouldn’t it be used well?

A well used home would surely make the monthly mortgage payments feel more worth it.

A similar example may be to purchase an expensive high functioning iPhone for an older parent and have it used only for phone calls, Facebook, WhatsApp messaging and YouTube videos. Other inbuilt features such as advanced camera, fitness tracking, emails, internet banking, online purchasing or other apps such as ChatGPT , Maps, or tools like Google Keep Wallet or even ITunes are completely ignored.

So does it justify the high cost of the phone?

For most of us, myself included, we have busy schedules with work, children and family or social commitments. We enjoy dining out, going for date nights, bringing kids to the mall or swim, music, extra tuition classes.

Back to the topic of utilizing our home use, the thought may well be also that if we are not home often and have a lifestyle that requires travel for most days in a year, maybe a smaller home or apartment may make more sense.

As for me, below is an example of my family’s typical week.

On weekdays we typically leave the house at 6.40am in the morning with the children, and return home by 7pm at night. That’s more than 12 hours away from home.

Weekends we have language tuition classes, badminton or swim class, church and social lunches. Occasionally we bring the children to the mall for weekly shopping and they will then request for desert after which we usually indulge them, as they already have their days filled with school, study, extra curricular activities, and so on.

So do we maximize our home? Not as much.

But we do love our house, although it is further away from town.

These thought came to mind recently because I am on a 3 month maternity leave since February with our fourth child, and my husband was graciously allowed to work from home for the same period by his employer to be by my side, since we stay alone.

So for this duration I ‘felt’ we had fully utilize our house.

We were home most of the time with the baby, we cooked 80% of our meals at home, we went out less and we also brought our kids to the nearby parks and playgrounds, making it an evening walk out for better health purposes.

They still have school and their extra classes to attend to, but because we eat at home for most meals we would have talks around the dining table, catch up on what’s up in school and what they are struggling with, after meals they shower and prepare their bags for school, then read, watch tv, play with each other or play games be it MindCraft on TV or on their tablets .

Our daughter rides her bike around our house, the other started her mini play garden by plating papayas and green beans in little pots, while my oldest boy reads in the hall or in his room, or starts to chase his sisters around outside with his toy gun.

Because we go out less and are home more in this period. We saved on petrol, dining out, and time as we are not commuting around town which takes an hour round trip for us as we our house is located nearer to the suburbs.

And thus we are making the most of our mortgage, in this case.

Although we had already paid off our house a few years ago, I do think that this is a valid point with good reasons to spend more time at home.

To save money, to have more time with your kids and spouse, and now to make full use of your mortgage.

My leave will be ending soon and I will have to commute to work and back to office, but I know now the value of being at home more often.

What do you think?

I had long awaited the final payment on our house for a years, and it finally happened 6 years ago, just a month before the COVID pandemic started.

This was February of 2020.

We lived in a one-and-a-half-story bungalow lot, 60 by 80 feet of landed property, located 30 minutes drive from the city center. Location was not ideal, but the house was comfortable, bright, communally designed, and it fit our growing family. Kids loved the grounds to play and run on, and I loved the open concept design and the natural lighting of the house.

I had imagined coming home from the lawyer’s office with the official house deed documents, having our names stated as the legal and only owners of the house.

No longer owned by the bank, but ours.

Not to be dramatic, but in my head, I’d imagine that I would plant a homemade flag on our grounds, and then roll around the grassy yard knowing that the property is finally ours and we need not make any more payments to the bank.

Unfortunately, I couldn’t do that for two reasons.

One reason was that I was heavily pregnant with my third child, about 8 months along then.

And another reason was that we had a large golden retriever living with us and there were poop bombs in random locations on the grass.

So I did it in my head, and enjoyed a quiet lunch date with my husband instead.

But the feeling that the home was ours and that we need not worry about losing our home in the event we had a family emergency or loss of income, was wonderful.

It felt pretty good, I must say.

I felt freedom and relief for having a major financial burden lifted off our shoulders. Our household savings increased after that since we stopped monthly mortgage installment payments.

It may not be the best investment choice for others, but being a low-risk appetite person and one who has some level of anxiety, this was the better choice for us. We had young kids, and we both worked at the same company, stable though our work was.

I’m aware the money could have been invested instead and grown over the years, but each family will need to decide what works best for them, and we chose one that makes us enjoy our years better now, when we are younger and have our kids with us in the same home.

And when the pandemic hit our shores over a month later, and people were losing jobs and earning less, the choice we had made gave me a better sense of security. I had given birth by then and was on maternity leave, and I saw how worried people were then about money and expenses.

A few factors helped us, and one of them was that the house was purchased at a much lower cost than most freehold landed homes today, due to the distance from town.

The place we lived was near palm tree plantations back then, and even the developer then was unsure if it would sell well. Since then our neighbourhood had developed and other new housing and shops, and highways had opened around us, with house prices in the last few years doubling what we paid in 2009.

Another was that we made additional payments every month to cut down on the interest accumulation and to make the repayment period end earlier. We also did one-off payment chunks in the final years leading up to the full repayment.

It took us a total of ten and a half years to pay it off, from 2010 when the house was constructed, till we moved into the house in 2013, and then we made the final payment in early 2020.

We have lived here now close to 13 years, and here we built our marriage, careers, and we had brought our kids home to this place after their births.

We had barbeques, fireworks, pool parties, and family and friends over when we could.

The equity remains in our home, whether we choose to sell or rent it out. If we do move houses in the future, depending on our family’s needs, this home will still be ours, and it holds a sentimental value in my heart.

How many years of repayment do you have left on your mortgage? And would you also plan to repay your mortgage earlier than the loan duration?

I had written an earlier piece on the same topic years ago (and apparently had forgotten about it), today we had reimbursed to EPF account 2 all that we had taken out during those years for the early repayment of the loan. In case you wanted to read my thoughts in it from 4-5 years ago, below is the link:

https://beccawritesatnight.com/2021/12/12/we-paid-off-our-house-loan-early-and-have-no-regrets/

A senior colleague had passed by my desk, and seeing me there he stopped to ask me who would get my kids home, he had assumed I had to rush off to get them from daycare or school. 

He was not wrong to assume that, I know many young parents in the workforce relied on babysitters and day-care to watch their kids, especially those who had no family or stay-at-home spouses to care for their kids.

I was lucky that my in-laws had taken on the role of being the caretaker for my 3 children during me and my husband’s working hours. Two of my kids were already in school, and my youngest who was only 3 years old would be dropped off at their house in the mornings. There she will spend her day until her parents got off work and brought her home.

He then asked me this question.

“Just out of curiosity, I wanted to ask you. At this stage of your life now, would you be able to quit and become a homemaker?”

I stared at my computer screen and paused as I thought of an answer. His question surprised me, as I never really thought about it before.

I am a mother of 3 children who were aged 7 and below, and I worked full-time. 

Both my husband and I do.

So that question made me reflect on our current situation in life.

In our earlier years, even before we had our firstborn, we couldn’t afford for one of us to be a full-time homemaker. We had too many debts to pay, and living expenses needed funding. Later on with a new baby on board, we had added household costs, so we wanted to stock up our funds in case of any emergency. 

But now, things were different.

I did a very quick basic math in my head then and there.

Savings, emergency funds, bills, insurances, schooling, remaining debt, versus our income after deductions.

Luckily for our case, we had started keeping track of our savings versus debts and expenses shortly after we got married in a neat Excel sheet that was actively maintained. That helped us, both in keeping track of our family budgeting and our sanity.

You see, after working many years since graduation and having increased our incomes via promotions, it was actually possible now that one of us could, if we want to, be a homemaker.

It was possible not only because our incomes have increased, but also because we had paid up most of our debts by now (all but one, but that will be a different story on our one bad investment).

Some measures will need to be taken, we will need to cut down a lot on dining out and reduce our splurges on the random out-of-town holidays with the kids, and also on shopping.

But, it was doable, and we would be alright. 

Then this brings me to the second important point.

The key word here was if we choose to.

Because I’ve known for a while, and have been reminded again now, that I actually wanted to continue working in my corporate job.

It was in the manufacturing industry and there was continuous growth, in both skill and knowledge. It was something to sink my teeth into and to push myself to do well in.

In short, I still found joy and fulfillment in working. 

Looking back there were definitely times when work was stressful, new problems needed solving and pressure can get high from management and stakeholders. But after going through and out from the other end of those periods, there was a sense of accomplishment and camaraderie with work colleagues. 

In my mid-thirties now, I was not done with working in corporate as a material engineer. 

I still found work motivating, and I wanted to continue to influence where I may at work.

Sure, I’ve occasionally entertained thoughts of being a homemaker, the ability to be with my children more often, and being able to fully dictate their academic progress and emotional growth. 

I would probably write more, become a better cook, and scheduled more activities for the children in our home. But then again, my stress would be from managing my children’s tantrums and disobedience, so I would have to equip myself to be a better mother.

I would probably immerse myself in home improvement and other social activities, in a way, finding another form of work, one that did not require me to report to a superior who defined my target setting based on company needs. 

Sounds tempting, but I would pass on it for now.

Plus, the extra income and the benefits from working at a corporate job were alluring. That cannot be denied.

So all in all, for the above reasons, I would choose to continue working in corporate and continue pushing myself to do my job well.

So I turned to my colleague and told him this.

“Actually, at this point in my life, I could be a housewife, but I would choose to still work. It seems I still find some joy in working, and I am motivated to stay on in my job and contribute where I can”.

“Plus, my in-laws are supportive and they are caring for the children, so that really helps.”

He chuckled at my answer but I could tell my feedback gave him something to ponder on as well.

I was glad he raised that question. In fact, it made me understand my relationship with work better.

And it felt good to be able to say that we have finally come to the stage where we were financially stable enough to allow our household to become a single-income one. 

If we choose to.

The availability of this option alone was quite liberating.

Money is the means to get access to the availability of options.

Money also buys you opportunities.

The saying that money does not buy happiness is an overrated term, its meaning not fully understood.

It is a way out of difficult situations, and to avoid being trapped in your circumstances.

It may not prevent you from being infertile genetically, but it affords you the ability to seek medical help, IVF, even surrogacy.

It affords you childcare and education for your children. A live-in nanny, a maid, or even the best daycare centers. It could even allow you the option of caring for your children yourself, never missing out on their milestones, and full autonomy on how to bring them up.

For a woman, it allows them to be independent of men and be able to form a life on their own should they choose not to get married.

It affords you good medical treatment for aging parents and young children, especially in situations where free healthcare is not accessible.

It may not necessarily mold your personality to become more authentic, but it affords you opportunities to build up your knowledge, abilities, and experiences by affording you a good education and opening your eyes to other cultures beyond your limited circle.

It is a way out from being trapped into a cycle of working for the need for survival, to put food on the table and a roof over you and your children’s heads.

It buys you more time, making conventional work an option instead of a need, and when you do not need to work for money anymore and you can choose to stop working and get your hours back to pursue other personal passions.

It enables you to become a giver, as you can afford to give and give more generously to those who can use the support.

It allows you the ability to actualize your aspiration to help build up new social programs to support the local communities or fund them where there is a need. After all, philanthropy is something only the rich can afford.

It allows you peace of mind knowing you have the resources to buy you and your family security and knowing you have the means to able to enable your children to be all they could be in life.

So to simply say money does not buy you happiness is debatable, a phrase thrown around too simply without its significance understood.

Although I agree wealth does not mean a life without problems, it is always better than a life in constant need of income.

Money, if managed wisely, and the power and functions for it are well understood by those who have it, can be a mighty tool in a person’s hands.

So don’t shrug away the pursuit for money.

Instead, let’s put aside the pursuit of money for the want of material possessions, but think of it as a means to having abundant options and to avoid being trapped in a corner in life.

You might develop a healthier relationship with money with this thought in mind.

I understand that this is a controversial topic, and let me say I recommend that both husband and wife should still maintain their own personal savings account which both have had before getting married. This is a safety net in the event that things do not work out between both of you for whatever reasons in the long term. Another reason is that both parties need to have some level of independence from each other, although there should also be honesty and openness to each other as to how much one has in their own savings accounts.

However, after marriage, it would make good sense to open up an additional joint savings accounts between spouses, for both psychological and practical reasons.

Even in my own marriage, we had actually maintained two separate personal savings accounts for the first 8 years of marriage, and only a year ago did we open up a joint savings account, albeit one with high-interest rates, to which we both pool a portion of our income resources into monthly.

Here are the reasons why I recommend having a joint account with your spouse.

1. A Sense of Commitment and Responsibility to the Unity of Marriage
Marriage is a lifelong commitment between two independent and unique persons, deciding to be together for the rest of their lives, unified into one household. This means even the topic of finances ought to be transparent between both parties. The majority of the resources from both sides typically should be pooled together to the same household fund. This is important especially when children come into the family and are to be taken care of equally by both parents.

Having a joint account in a way makes it literal that both parents are joined in love, partnership, and in their finances. This is crucial to progress both parties and the kids towards being financially secure in the home, and practical as both parents now have the visibility on how much money there is in their savings and both share the responsibility to ensure the household funds are in good levels.

2. Transparency and Honesty In Finances
Being married, honesty, and transparency matter between spouses and this extends even to your finances. Money is an area of importance as it is the basis for many household decision-making processes, and it also leads to feelings of being secure and safe, it makes sense that the status of one’s financial situation should be known to both husband and wife. Alternatively, when times get hard and money is less, the burden can be borne by both parties instead of one person alone, as it can be stressful to maintain a front that things are well to your other half when it really isn’t. It can also mean that if your other half is kept in the dark about the condition of the household finances, he or she may worry unnecessarily about whether there is enough money in your savings to sustain the family.

3. Shared Household Financial Goals
Following up from point number 2, it makes sense that with transparency in finances, both spouses can work better together to achieve a shared financial goal, be it to build up your household emergency fund, saving up for the children’s education fund, or even to pay off the house mortgage and further on to possibly achieve financial freedom. This journey of sitting down and sharing goals, making plans, and achieving each financial goal itself will make both sides grow in love and respect for each other, sharing the same goals and objectives and working together to get there.

After marriage, both individuals should still maintain their own identities but should always be committed to the union. Sure. it can still work if both husband and wife are completely transparent in reporting their personal savings account digits to each other every month, but this requires higher effort to have the same level of transparency as having a joint account. Consider the above points and see if this can work for you and your spouse.

At the end of the day, a ring is a nice shiny outward symbol of the marriage to others around you, but a joint savings account between the both of you is a practical action that signifies the amount of trust and commitment you have towards each other and may potentially increase the unity of your marriage even more.

In the case of my student loan repayment, that year our government offered a 20% discount for those who can pay off their student loan debt in full in one single payment. So I paid it off in full and managed to save approximately RM10,000 with this discount, as my remaining outstanding loan at that time was about RM50,000. If I had to do it over, I would have probably tried to get a scholarship upon applying for university. But alas, financial wisdom came late to me.

But this time, the home loan was a significantly higher amount of money, it took up a large chunk of our monthly commitment, amounting to a monthly repayment of RM1,336 to service the 30-year loan period. 

Our loan was 90% of the property cost which we borrowed from the banks in our early twenties. It was a bungalow unit with 5 bedrooms and 3 baths, purchased in 2009. 

When we listed our large debts from highest to lowest, the house loan took one of the highest positions, as it will for most people. So, paying it off was no easy feat.

My husband and I had already been planning to clear off our home loan in the past few years leading to the final payment. We took steps to cut down on the monthly interest applied on the loan and not only did we never skip a payment, but we also made sure to pay extra every month.

To hasten the repayment, every year, we would take out a small chunk from our mandatory retirement savings plan, known in Malaysia as the Employees Provident Fund (EPF) to pay up to over RM20,000 at a time. The EPF funds were split into two accounts and the money from EPF Account 2 (30% of the retirement savings allocation) was allowed to be withdrawn to be used for specific reasons such as home loan repayment, home purchase, higher education, and payment for medical expenses.

At the same time, whenever we had managed to save more in our personal bank accounts, we will throw in a sum of our savings at the loan. We started to see the light at the end of the tunnel when the principal loan amount was reduced from 6-figures to 5 figures, and then eventually below the RM50,000 mark.

In total it took us 10.5 years to pay it off.

We were 33 and 34 years old respectively when the loan was cleared, and we received our house deed and the redemption letter from the bank.

Now, I know some may debate that we could have used the money for investments instead, or to keep it ‘invested’ in our retirement savings plan instead of taking some of the money out for loan repayment.

Why aggressively pay off our home loan?

I have my reasons, but to sum it up, you may refer below.

Scenario 1: Using The Cash for Other Investments (Opportunity Loss Concept)
To make it worth more to invest it would mean I needed an investment that can guarantee me returns that is equal to the amount of interest I saved by repaying my home loan early. However, to match that amount would mean I needed a high return rate investments portfolio such as stocks, crypto, or high-risk actively managed unit trusts funds and the like. Even so, there is no guarantee of the same returns in either of these.

On the other hand, money saved is guaranteed with the home loan repaid in 10 years versus 30 years. Following the 30-year repayment plan would have meant we would have doubled the payment of our property due to interest accrued over the period.

Scenario 2: Keeping The Money in Our Retirement Savings Plan (EPF)
We looked at the principal amount between the total amount of money owed for our house versus how much we had in our retirement savings. In Malaysia, we had a cushy dividend rate of 4–6.5% historically for our retirement savings plan or EPF. Our home loan interest rate was 4.5%.

Only if the retirement savings in both our accounts equaled to the principal amount owed on our home loan, would it have made sense that we could earn more dividends from EPF versus saving on our home loan interests charged. However, the total home loan amount owed was way larger than our retirement savings, and hence we were losing more money keeping the home loan as is, or just following the monthly repayment schedule (for 30 years).

That being said, we have only withdrawn an allocated portion of our retirement savings from our EPF account 2, which made up 30% of our total contributions and was only taken out once a year. The remaining 70% of our contributions in Account 1 of our retirement savings was intact and untouched, and still accumulating yearly dividend gain.

Anyway, the final reason, and this is important as this was one of the main reasons why we pursued to clear off this loan, is that I wanted peace of mind.

Peace of mind and the certainty of knowing that I do not owe any more money to the bank and that the house was ours.

The house was ours.

I have three young children, and having kids made me think long-term.

If anything, the pandemic has thought us that nothing is really guaranteed, even job security and health. We never want to be in a position where we have to worry that we could lose the house should either of us lose our jobs or fall ill.

Having kids may also be the reason that my risk appetite is more conservative, so unless I have accumulated ‘throw away’ type of money to spare and to play with stocks and the like, I am cautious about what I choose to invest in.

So we proceeded to make that last payment, and we obtained the declaration from the bank that the house was paid in full. 

The day our lawyer gave us the papers and the title deed of the house with our names on it, I felt a load lift off my shoulders and liberated. I recall leaving the lawyer’s office and me and my husband giving each other a high five as soon as we were out the doors, house title deed, and a stack of documents in hand.

After that, the house and the almost 5000 square feet of it felt different, even the grass on our land felt ‘greener’. I always imagined rolling around on the dirt outside my house after we paid our home off, but I decided not to since we had a dog and we had yet to clear his wastes. Anyway, you get my point.

Needless to say, since we paid off our house, the monthly cash flow increased and we were able to divert the cash to our kids’ education funds, clear off our car loan and start other investments.

We also plan to reimburse back and further top up the contributions to our EPF retirement savings that we had earlier withdrawn to make payments to the house loan. We have a separate excel calculation for that on how putting in an RM20,000 a year back to EPF will yield a significant increase in years and can maybe even help us reach the 1.05Mil mark in EPF earlier. That is when the money in our retirement savings will be ‘touchable’ should we choose to. I will write about that in a separate post.

So, I’ll end this with an imaginary ‘clink’ of my glass cup to another and I say cheers to removing debt and gaining a step forward towards financial freedom.

What’s more, we had gotten married 2 years prior and had recently moved to our new home, which was a new build. That meant the house was bare-bones after completion and we had to pay to get it renovated to have even the basic necessities such as lights, fans, air conditioning, grills for the windows and doors, curtains and lastly appliances and furniture. We stopped short of getting monthly subscription fees of Netflix and cable, thankfully. We had enough money then only to furnish the bedroom, dining room and the kitchen.

I was 27 years old then.

And we thought this was normal. Normal, to have so much debt.

But I can tell you it did not feel good at all, whenever I was reminded of how much money we owed every month.

That meant that we could never stop working and that one salary alone was not sufficient to cover the household cost for the two of us. Not that we wanted to stop working, we were still building up our careers that time, but should anything befall either of us or if I had kids earlier on, I did not have the choice of stopping work to do something else or to care for the kids should there be no caregiver we trusted. We needed the money to sustain our commitments and lifestyle.

So that year was the start of our financial journey. My husband and I started to look into our family finances and created a simple excel sheet that included our monthly salaries, all our household commitments and how much we spent every month. We started a very basic budget tracking that showed how much we spent and saved every month. This excel spreadsheet has since then grown and ballooned to cater to the tracking of our debt repayments, career projections, our investments, retirement savings, children education funds and so on.

The first loan to be paid up was my husband’s student loan. Next was mine. Later on we paid up the house loan, and the car. Mind you, this took years but we got there. Along the way, we had 3 children , which amplified my determination to get rid of the household debt. At current, unfortunately we are still not ‘debt free’ as we still have one more commitment of a second property which I foolishly invested in that ultimately did not turn out well and is still yet to be completed at current.

The point for this article, is to talk about the reason we did it, why we pushed to reduce our debt and got our finances in check. We did not go about it as aggressively as some others would, but we made a plan and we reached the goal together. While we were already on this journey, I learned about the term financial independence or FI, back in 2018 after my second child was born. The principals and reasons for the why behind the need to achieve financial independence resonated with me and it matched my own personal goals.

Financial independence means reaching the point of having enough money or income to pay for your own living expenses for the rest of your life without having to be employed.

Acronym for this is FI. There is also the Financial Independence Retire Early movement, or FIRE for short. The difference for FIRE is that after achieving financial independence, you may retire from your main job and not work again. Or you may choose to do different work.

Now why is this so appealing?

The key word here for me is choice.

You have the choice to stop working, or to do other works that may be less profitable but of your preference, because you do not need to work for money.

And when you do not need to work for money, but are working out of interest or motivation for a passion project, it does not really feel like work does it.

As for working mothers, you now have the choice to stay home to be with the children, if that is what you want to do. You do not need to rely on babysitters or extended families. You get to dictate what they do at home and how to bring them up, and not others. You get to have another child, if you and your partner wish to, as you are both financially capable to and physically available to care for your baby yourself at home.

You have the choice to spend more time with family, to take your parents for that vacation you wanted to, and to spend longer holidays with them instead of relying on leave application approvals from your manager. Or, worrying about income from your own business if you took extended leave.

You get to be a part of or even start new projects you never had time for and but are passionate about, be it theater, scuba diving, joining community relief projects or start a small business selling hand painted pottery, or carpentry or photography, for example.

You may finally have time to write that book you always thought of, and not worry about it selling well, because you do not need the extra money and you can stomach the sales rejection and failure.

You worry less about your own and your families financial security, when you have the money in place for emergencies and crisis.

You have flexibility of time, whereby you choose the hours you work and you can be specific about which clients you want to take on for your business.

You even get to bless others with monetary aid, to pay for a struggling friend’s child education fund, medical bill, or gift money to a single mother who is in need at the moment.

Does this sound attractive to you?

To have an end goal of financial independence and to make work an option.

One thing to note, is that most people who worked hard to achieve financial independence, usually will not retire from working when they reach FI, but instead they will find other work that is more appealing to them. They will fill their time with other works and projects of their choice.

Personally for me, my current job still has growth potential and I may not choose to stop working should I reach the point of my own financial independence, but the option of having more time off work or to stop if ever I want to, is appealing enough.

The steps to achieve financial independence takes time and planning, and its best to be realized earlier in your career. There are many articles on how to achieve it, but at least in this article we start with the why. If this path appeals to you, I wish you all the best in your financial independence journey.

Now at first it sounded good, as I usually have a dislike  for credit cards due to the fact that I will be charged interest on the amount of money owed to the bank ( If the amount is not cleared on time within say 28 days period).  So when I heard it was interest free, I stopped my self from saying No, and I informed them that I needed to discuss with my husband first, and will confirm back again later. They person mentioned that this promotion was only valid for the next 3 months or so period, and made arrangements to call me back the next day.

Now just a bit of background, in our household only my husband has an active credit card, and I only had one previously that was used for work reasons as I needed a card back then when I had to travel overseas for business trips. Beyond that, I do not have any other credit cards under my name, and I had intended it to stay that way to keep our expenses in check.

After I ended the call, I went to find my husband who was in the kitchen then, and I told him about the offer from our bank.  I asked him, how much was the interest rate on his current credit card that we use for our monthly payments, as we automated some of our monthly recurring  payments on the card for convenience sake, example our insurances, home Internet, phone bills, car petrol etc.). 

We also have another card that we had after opening a joint savings account ( we selected a high interest rate savings acocunt for this), and we use it  for certain bills and grocery payments monthly to meet the conditions to get our high interest on the savings account payout. So there’s our 2 cards already.

He looked at me for a while and said he could not recall how much was the late payment interest fees charged to us. I was annoyed, as we had done the check on this topic some time back when I had asked this same question. Specifically at the end of last year I had asked to check these 2 things, which were when was the cut off date for monthly credit card payments, and what was the interest rate charged on outstanding bill.

Then I realized why he did not recall how much were the interest rates on these 2 cards.  It’s because we do not think about it often, and why we do not think about it, is because we always always made sure to pay everything off on that credit card on time without delay, every month. It has been a routine we made for many years. Therefore, we do not accrue ANY interest from the bank on these 2 cards.

So I made up my mind there and then, to reply NO the next day when the bank calls me bank. I felt quite foolish for a while when I realized how easily I was persuaded to consider the option of having another credit card. Here’s why I decided to decline the card.

1. Why would I want to buy something up to RM24,000 that I did not have immediate cash on hand for?

What business do I have owing up to RM24,000 on my credit card? If I had the cash for it , I would just pay it with cash and not on credit.  If I did not have the cash for it , I should not even consider purchasing it on the card, because if I did not have the cash, I cannot afford it.   

Money owed is money owed, whether in cash or on unseen credit. If having a credit card makes you want to spend more on things that you usually don’t spend on, then it may be better NOT to have a credit card. Basically, to reduce temptation of buying more than I can afford, I’d stay away from having unnecessary credit cards.

2. Yearly subscription fees charged

Banks charge a yearly fee on having the card, regardless if you use it or not. At this point all I knew from the call was that there were no interest charged on the first RM24,000, but no mention on the yearly credit card subscription fee. There are also banks that do not have yearly subscription fees, you will need to inquire when you review for a credit card from selected banks, this would be a better option if you need to open up a new card.

3. Interest Rates charged on Outstanding amount

Another term for credit card interest rates is finance fee. A quick check online and the standard credit card interest rates in Malaysia are from 15% to 18% per annum. The outstanding amount due need to paid up monthly on time. Say a certain month if you managed to make partial repayments to the credit card bill, the remaining amount of the balance owed will still be charged with a lower interest rate usually at 5% of the total outstanding balance.  Now the details of the credit card offer was not discussed in the call, so there possibly may have some other terms that came along with it. Of course if you pay everything on time, this should not be a concern. But if you forgot to pay on time, then you will be charged.

4. It is similar to a loan

My issue with the credit card is that you are able to use money that is not readily available in your bank account. Say  you only have RM10,000 at the 15th of July, and you need to purchase something at RM15,000. You can, even though your salary has not been transfered in at the 28th of the month. It is literally borrowing money from a bank to make a payment when you do not have the cash, and then you owe the bank X amount of money which you need to pay back to the bank after. If you do not pay back on time , due to any unexpected reasons , then the interest will compound on your outstanding balance. Another thing to consider, is any late payments accumulated will impact on your CCRIS (Central Credit Reference Information System) records and make getting future loan approvals difficult.

Here’s some tips to follow to avoid making bad financial decisions on the whim.

1. Wait a day to think things through before making a decision.

And I mean decisions for things that matter, that have some weight on it ( not on whether to eat chicken or fish tomorrow).  Especially if you are a impulsive person like me, it is best to just take some time and wait 24 hours before making a decision, and in that period of time , talk to your spouse or family and do some research. Ask yourself, why  you would want to make that purchase or open up a credit card, is it necessary?

2. Use your spouse/family as an excuse. 

I have a difficult time saying no to a sales person or promoter, as I do not want to hurt them and I am careful not to be too dismissive , unless they are being aggressive which makes me uncomfortable. They are just doing their job and it is their bread and butter.  So when he called back, I said I had discussed the matter with my husband, and for financial reasons (which can be any reason but of course I did not specify the details ) I did not want to open a new card. It took a while for him to understand what I meant. Then he asked if I wanted to  take up a personal loan . I also said no politely.

Now I do agree , that a credit card has its functions and in our case it is used for the convenience   for payment automation or to use when we did not carry the cash on hand enough to pay for an outing, or to be used for certain online payment transactions. Apart from that we do use some benefits of the cash back and points redemption ( we redeemed a Panasonic blender end of last year when ours broke down, that was nice).  In you need more information on credit card selection and the terms and conditions of owning one, do check it out on RinggitPlus which I found to be very useful.

Final note, if you are owning a credit card, just make sure that you are financially able to have it, and make a point to pay off all amount owed on the credit card bills consistently every month , on time before the cut off. Do make it a habit /routine to clear the bills on the same day every month.  Then, you would not need to worry about interest rates, and you are in a financially safe position to own one.

Point# 2 – Spending money or more accurately, spending lots of money can be for many people a psychological issue. No, not that they have mental issues (unless shopping and spending money becomes an addiction), but we often find instant gratification and joy in purchasing something new, be it via online shopping or even going to low-cost shops like the Dollar Tree store shops (in Malaysia we have the RM2 shops) to buy a whole bunch of items that we do not really need, but because the items were cheap we justified buying them anyway.

Another term that is used is shopping therapy, and although it sounds fun, the implications of it can be pretty dangerous for those who do not have the finances to buffer the high expenses. Retailers love to use this term as it encourages more sales for them, but it is tragic for those who get into hard debt due to overspending. One such example I’ve observed in today’s culture is to take on a loan to finance household furniture and then having to commit to paying monthly installments to the bank. Is furniture a necessity to go into debt for?

Think of it this way, if you do not have enough money to cover the payments for the repair of a potential car breakdown that can cost you up to MYR700, you probably should not commit yourself to pay RM250 every month for a year, on a non-essential item purchase. The bottom line, you need your emergency money saved up before taking on additional financial commitments.

Some electronic goods retailers are even promoting zero interest rate monthly installment as payment terms, to make their items more attractive and accessible for the lower-income groups. But the buyer will then be locked in to pay the monthly payments, which should times get hard, may become a challenge for them to get by after forking out these expenses. In my opinion, avoid taking on loans if possible, unless it is a real necessity.

Back to the main topic, a quick note, the necessary expense of home utilities like electricity, water, internet or car petrol do not fall under the category for a no spend as these are costs to sustain the home, family and basic transportation. Although some people on these challenges do find ways to cut down on these costs by finding alternatives, for example by cycling around instead of taking the car.

For additional resources on the No spend challenge you may check out this TedX talk of a personal account of why and how this person did her no-spend challenge ( My No Spend Year | Michelle McGagh | TEDxManchester). At the very least it is a very entertaining talk to listen to.

The no spend challenge is an exercise to discipline oneself to avoid spending money without thought, on things that are not needed. It is to curb impulse buying. It makes you commit to not purchasing anything during that time period, be it a day, a week, or for a more extreme challenge, it can be a month or year. It makes you look around your home and think that hey, I can make do with what I have here with me, or I can actually go weeks without that cup of Starbucks coffee or J Co donuts. It makes you find things at home that you forgot you had before, or you tend to become more creative to find more activities that are free like taking your kids to the playground or to the park, playing board games at home or watching TV and reading books. It also prevents you from going out to the malls and then getting tempted to purchase more things.

In my opinion, the no spend challenge is a good way for those who want to save up some extra cash fast, by restricting their spending, and to have them be motivated instead with the growth of their savings during that period. Another fun fact, is that most people are really motivated by challenges, and when you word the phrase as ‘No spend challenge’ instead of ‘ No spend days’, the results turn out better as human competitiveness comes out and they try to hit that personal target that they have set for themselves. Refer to this interesting Ted Talk on How to motivate yourself to change your behavior | Tali Sharot | TEDxCambridge.

So, how does my no-spend challenge days looks like? And how do we incorporate the ‘target setting’ method to motivate myself not to spend? I have an expense tracking app on my phone, where I will record our family’s daily purchases for reference on what we spent every month You can see from the below screenshot that we had two no spend days in that particular week, mostly due to home cooking and pandemic lockdown, and if we had more of these days, the equation will lead to lower expenses at the end of the month, and more savings.

Now, what do we do with the extra money saved? You can use it to pay off debt, example by making more payments to your student loan, house loan, or get rid of your credit card loan. Maybe you can use it to finally save up your six months emergency fund. You can put that extra cash into your kids’ education fund, or invest it or put extra money into your 401K retirement savings (In Malaysia we have the Employee Provident Fund) and let it grow over time to buffer up your retirement fund. Another recommendation is that you can gift that money away to charity or help someone in need, or you can take your parents or spouse out for a nice meal and appreciate them. What I mean is, when you can control your spending, you get to decide what you want to do with that money saved up. You have more options, when you have more money. That concept itself, should be appealing enough.

This is just one of the many ways you can try out to get a step nearer to either minimalism or to have more control over yourself and your expenses. It will at least be a step nearer to building your wealth, to live without debt in order to have more choices. Another way to think about it, is that if you are willing to control your diet and exercise and build strength, you should be able to exercise that same control on your expenses.

Before I end this post, take a guess when does the no spend challenge tend to take place in the US? The answer, it falls on Black Friday, when stores are super swamped with people trying to buy and score the best deals, with some who queue for hours outside waiting to get in, a minority group of people are intentionally avoiding the shops. I guess it’s a win-win for both sides of the consumer groups then?

Final note, I want to clarify that am not saying not to spend and to be extremely frugal, but to be intentional with your choices, and subsequently your actions. I would choose to spend on selected categories that I put more emphasis on after evaluating what matters the most to me, and I skimp and save on those that I care less for. I would choose to pay for a family meal, or to take a holiday with the kids or treat our parents ona outing with all expenses paid by us, or to buy a good reliable laptop to work on, or a treadmill to take better care of my health. Maybe even a Roborock vacuum cleaner so that I can spend more time with the kids instead of cleaning the house. I would choose to put my money on the kids’ education fund and on books, and not to forget on nutritious food (some added bonus if I can find cheap good food, that would put a smile on my face).

Thanks for reading and all the best in your financial journey.