First Step to Frugalavish Lifestyle – Clear Debts

If you have not read my introductory post here,  I created this blog to share my journey of living a frugalavish lifestyle. As we only live once, we should gain as much experiences by traveling and trying out different food etc. However, most of the experiences require money but we should always be prepared for rainy days and for the future as well. Therefore, to find the balance I created the term frugalavish. Frugalavish means being frugal in certain aspects of life to save up and spend for experiences.

Most of us read that we should let our money work hard for us, but first we need to have money to start off. As we all have different amount in the savings account, we shall use this post to target to save at least RM500 in 3 months time with no credit card debts and personal loans.

Settle credit card debts and personal loans

credit card debts

Before we delve into the topic on savings, let us focus on 2 high interest debts. This is because the interest from savings or from investments might be much lower than the interest gathered from these debts.

Credit card debts

If you currently have credit card debts, the utmost priority is to clear them off. This is because credit card has the highest interest among all legal borrowings. A quick look at CompareHero shows that credit card has average 15% interest rate but it can go up to 18% depending on your payment history.

As credit card balance is based on compounding interest, the small numbers can snowball quickly. For example, you have RM1,000 credit card balance and you pay only RM50 each month with 15% interest rate. You will need 24 months to pay off in full and incurred RM157 in interest based on this calculator. If the next month you spend an additional RM1,000 and you pay only the minimum amount, the interest will start to snowball. This is because the interest charged will be based on the remaining amount last month + interest from last month + amount this month.

Therefore, use your credit cards wisely and pay in full amount each month.

Personal loans

Next up the list is personal loans. Based on this list, the interest rate ranges from 3.27% – 12%. Although the interest rates is lower, we should avoid using it unless there is utmost need for it. This is because due to the lower interest rate, people rake up the loans for unnecessary items. For personal loans and car loans, the interest rate used is mostly flat interest rate. It means that no matter how much we have paid the loan, the interest rate will always be the same % calculated on the initial loan taken. For example, if we take RM10k loan with 5% interest, even if we have paid up RM9k, the remaining amount will still be based on 5% on RM10k.

Below are 2 main ideas to settle the credit card debts and personal loans and gather the first RM500 in savings.

1) Cut spending

person counting money

To do this, record and track your expenses so that you know where the money goes. There are a lot of apps out there that help you to do this. Here are some sites that recommend the 5 best apps for budgeting: SAYS, RinggitPlus, Loanstreet, and CompareHero. As most of the apps are quite formal and plain, I personally shortlisted the 2 freemium apps below with high ratings:

  1. Monny – easy to use with nice colors. You can backup to Google and export as Excel. Besides that, you can also pull the data as pie chart, top 10, and trend with occasional ads for free users. You can download via Play Store or App Store
  2. Spendee – simple to use with nice overview and pie chart in dashboard. You can even link to bank accounts and eWallets for easier tracking. However, I’m not comfortable with putting in bank details to the app. Besides that, you need to sign-up an account via email, FB, or Google. You can download via Play Store or App Store.

Once you determined your spending patterns, you can cut those that are non-essential. For example, you do not need the latest phone or trendiest clothes. Make your own meal if possible and if not, go for basic meal that fills your tummy and no Starbucks, bubble milk tea, nor cafe and restaurants. No premium media entertainment that require monthly payments. Do you need that expensive data plan? If not, switch to cheaper plans. No traveling or Cuti-Cuti Malaysia in the meantime while we build a strong foundation for a frugalavish lifestyle.

2) Increase income

a lady in yellow holding a camera

Cutting on spending is not a permanent plan so we need to increase our income as well. If you have what it takes, ask for a raise or promotion. Otherwise, discuss with your boss your desired salary and what is required to achieve it. Then, have constant review sessions with your boss to see if you are on track. However, if there is a better offer, you can consider to jump ship (leaving the company). Job hopping can help to increase your salary but do it with care as doing too often in a short period of time can make your resume look bad.

Besides the main source of income, in your free time or weekends, find ways to create additional income stream. Driving Grab, work as promoter, or make money from your passions. For example, if you are good at photography, you can enlist your services at Lowyat forum or Kaodim. If you are serious enough, you can even create website to showcase your works. If it is earning more than your day job, you can even do it full-time.

One man’s trash is another man’s treasure. You can also sell things that you no longer need at ebay, Lelong, carousell, mudah, and Lowyat forum. Do some research on the items that you are selling so you know what is the current market price. Besides that, take a look on the competitors that are selling the same products. Then, adjust your price accordingly. Posting clear, good-looking photos of the items and write a compelling copy would certainly help you to sell the products as well.


In short, clearing credit card debts and personal loan is the most important and urgent short term goal. These 2 debts have the highest interest rates as they do not have collateral like house and car loan. By cutting your spending and increase your income, the money saved and earned can be used to repay the debts.

Once the debts are out of the picture, the next immediate goal is to increase your savings. As a start, our goal is to save up RM500 within 3 months by cutting spending and increase income.

Feel free to share your experiences to clear debts and started saving in the comments section below.

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