Tuesday, March 22, 2011

7 Effective Ways to Avoid Bankruptcy

Bankruptcy in Malaysia

According to the president of Federation of Malaysian Consumers Associations (Fomca), Datuk N. Marimuthu, half of those declared bankrupt because of credit card debts are below the age of 30. How do you avoid being declared as a bankrupt?

1.  Financial Education: it is essential to start young to learn about personal finance. Getting more information about savings, household budget, net worth, proper use of credit cards, good and bad debt, insurance and estate planning are necessary to be more knowledgeable about managing money.

2.  Budget: The key is to plan your budget and work your budget diligently.  The main objective is to match your expenses including regular savings, housing and hire-purchase loans within your take-home pay. The outcome is to avoid overspending and falling into the debt trap.

3.  Emergency Fund: The beauty of an emergency fund is like a first aid kit. It is to address unexpected happenings such as getting retrenched or incurring expenses due to an accident or an illness.  The money will tide you over the critical period to meet all your normal monthly expenses for a couple of months until the situation is back to normal.

4.  Avoid bad habits and more wants in life: Gambling is the fastest route to be a bankrupt.  Avoid it at all costs. Do not spend more than what you have. Self -discipline and self- control are required to curb the urge to get more wants. If it is beyond your control, you will get into debt and likely to be a bankrupt.

5.  Avoid using credit cards: This is especially true for those young graduates who have just entered the job market. The smart way is to use a debit card to get the feel of using a plastic card. When you use a debit card, the amount that you charge to your card is directly deducted from your bank account. The amount that you can spend on your card is limited by the fund available in your account. There is no way to over spend and get into unmanageable debt.

6.  Pay in cash: Instead of getting a personal loan,   save for the amount to buy big ticket items you need.

7.  Increase your earning power: When you want to spend more just earn more. Learn and equip yourself   with more marketable skills. Utilize your expertise such as writing skills to create part-time earnings. Write articles for newspapers and magazines. Turn your hobby like photography into a source of income as a photographer. Invest wisely and create  passive income streams 

Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.


  1. Another interesting point that may help you avoid bankruptcy is to get a short-term financial assistance from your relatives or close friends. You can take out a 0% interest loan from your friends and repay your bills without filing bankruptcy. You can also negotiate with your creditors to lower the total loan amount. This can help you pay off debt and avoid bankruptcy simultaneously.

  2. Thanks for visiting and your great ideas.


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