Perpetually Overspending even with a High Income

The impulse to overspend with credit cards can happen to anyone. I am no angel and do splurge on holidays (that were over my budget). We all know, and I hope everyone knows, charging more to your credit card than you can pay off when your bills arrive can lead to huge interest charges (plus late fee charges etc.).

I remember reading an article 2 years back in the local papers regarding Singaporeans overspending and being in debts. In the same article, it mentioned that the Monetary Authority of Singapore estimated that 3 per cent of unsecured credit borrowers' debt exceeded their annual income. The paper also estimated 43,000 people had debts of more than a year's salary.

43,000 might seem a small number in a country with 5 million people. And you wonder how did these people reach that state? So it came as a shock to me when I had peers who were heavily in debt. These friends earned pretty well, probably had a higher income than me. Their stories will probably resonate with many people. Let's just named them as Mr. Alan, and Ms. Betty and Couple Charlie and Cathy.

Mr. Alan, the Gambler



Alan was always known as the Gambler in the group. It was a must to have him during Chinese New Year. As long as there a chance to gamble, Alan will be there. As we all grew older, we started to earn a higher income, so did his gambling bets. He started betting heavily on soccer matches and visited the casinos regularly. An addiction to Blackjack, Baccarat, and soccer betting had Alan maxing his credit cards' limits. Eventually, he started paying the minimum sum for each card (God knows how many cards he had) and his parents found out about his awful spiral of debt. I really hope he has learned his lesson. But no! It just got worse. Lies, after lies, to cover the many reasons to borrow money.




Ms. Betty, the Shopaholic


Betty is a very attractive girl and has many followers in her Instagram account. She is always the one to inform my partner about great deals online and talking about the latest designer bags etc. It is not a surprise to see her latest Instagram post on her latest designer bag, or her holidays in Europe, or the fine dining restaurants she visited. She is not a show-off. She earns well and she spends to reward herself. But she felt into the trap of overspending and chalking up massive credit card debts. I just felt that she was living a lifestyle not justified by her income.


Couple Charlie and Cathy, living the high life


I was really shocked to hear about Charlie and Cathy. After all, I thought they were really high income earners. I was not very close to Charlie and Cathy and the perception of them "doing very well in life" was formed by their updates of Facebook. Charlie was driving a expensive European car. They bought a relatively good condominium. They dressed well. They wore expensive watches (not one, I can't even recall seeing how many different brands and models) and accessories. Everything seems perfectly fine. But just like Betty, they were extending their limits in their credit card. Indulging themselves in things they could not afford anymore. Their life was based on future credit. How I wish I was earning Charlie's income? I guess the temptation to spend more when you earn more will always be there.

Spend "the right way"

We do want a better lifestyle and probably very much influence by the media. A lot of overspending might also be due to peer pressure. Whatever the reasons, it is not wrong to feel that you deserve to indulge yourself. We have all worked hard. But if we reach a stage that we can only afford to pay the minimum sum of our credit card bill or we choose to do so (for whatever reasons), please seek help. Do not get caught in spiral of credit card debts.

Conclusion

Spend within your means. How do you retire when you are in debt? If you are a working adult, with no savings... Speechless! If you think controlling your credit card spending is tough, request for a lower credit limit. The impulse to overspend with credit cards can happen to anyone, even people with high income.