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Friday, 6 March 2009

debt-free — and that, to me, is richness enough

My Middle class prison
Tabitha Wang

MY FRIEND from Singapore just emailed me with the dreaded news: She has been retrenched. She could see it coming but even so, it still came as a shock, she said.

Her situation is not so bad, she admitted, with a rich boyfriend and parents to support her. Even so, she said, it felt weird to have no cash in hand. “What I wouldn’t do to be you now,” she continued. “You never had to worry about money.”

How wrong she was. I know poor because I’ve been there.

Being poor doesn’t just mean living in a rented one-room flat with barely enough money to buy one meal a day. It can also mean owning a private condo and a car and still not being able to afford a meal a day.

Hong Kong’s Financial Secretary John Tsang recently came under fire from white-collar workers because the government’s latest budget didn’t make many provisions for them. He defended the decision by saying they could just re-mortgage their homes or live on savings. But what he failed to realise was that you can come from the middle class and still be poorer than a blue-collar worker.

Poor is not being able to sell your assets because their values have fallen so much that selling them would mean getting into bigger debt. And you can’t remortgage your home because no bank would give a loan to the jobless. So you end up living in a condo where you can’t afford to pay even the management fee and owning a car you can’t drive because you cannot afford the petrol.

Poor is when every bill strikes you like a body blow and you cross the road to avoid being seen by your usual bubble-tea seller because that $2 can buy you a meal.

I faced poverty during the Sars period, when my husband’s firm went bust and we were left with no savings and debt of over $200,000. Thankfully, I was still working, but my pay was just enough to service the monthly debt repayments.

It was a miserable time. With no jobs to be found, my husband plunged into despair.

No one wanted to rent my studio apartment. I wanted to sell it but the price had plunged so much that I would be owing the bank another $50,000 at least if I had done that. Keeping it and servicing the mortgage was, ironically, the cheaper option. We couldn’t afford to move back to it for a few months because we couldn’t raise enough money to hire a van.

The worst was praying my husband wouldn’t fall ill because we had no medical insurance. We couldn’t fork out the thousands needed to pay for his premiums.

When I tell people my story, they think I am exaggerating the difficulties. “Why didn’t you borrow from your family and friends?” they ask. Well, we would have were it not for pride (having been brought up by our parents never to beg) and the fact that we knew they didn’t have that much to spare anyway.

It was a time to find out who our real friends were. Some quietly paid for our dinners and offered help in a roundabout way. One pretended it would be a favour to her if we took a bunch of toiletries off her hands as “they were cluttering up my bathroom”.

But there were those who stopped calling us up for fear we would ask them for money. Some lent us money then chased us for repayment so aggressively I sold my only shares at 10 per cent their value so that we wouldn’t be beholden to them.

As the middle-income noveau poor, we were in limbo — we earned too much to qualify for any assistance but not enough to pay off our debts. But declaring bankruptcy was not an option, not if my husband wanted to start another business again.

We tightened our belts, ate lots of egg, vegetables and rice and somehow made it through the year, until my husband found a job again.

Even now, we still don’t have much to show for our 20 years of working but we are debt-free — and that, to me, is richness enough.


Tabitha Wang still gets annoyed when her husband leaves the light on even though they can now afford to pay the bill.

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From Createwealth8888,

The sooner you get out of debts, the nearer to being wealthy. Think really hard if you think you can leverage to make more money; unless you have Angel above your head.
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