Friday, August 8, 2014

Treat your bad debt as your greatest sworn enemy

We know that debt can be classified as good or bad.

While it is possible to live completely debt-free for most of your life, it is not necessarily the best move you will make.

Good leverage can be a form of investment that will multiply your income and generate greater returns. Bad debt, however, can do exactly the same - the opposite way in fact and it will harm you over the course of time.

There was an article that was posted a couple of days ago about a person named Ken Ilgunas (Article link) of how he managed to save 95% of his income by living in his van and eating some simple food to repay off his student loan debt of $32,000.

A few of the highlights from the article was:

- He managed to repay off his student loan debt of $32,000 within 2.5 years while making less than $10/hour and $18,000/year.

- He mentioned about not being an expert of personal finance but it was clear to him that the more money he could allocate towards savings the earlier he is going to be debt-free.

- Never at once was he deprived of food - he had oatmeal for breakfast, banana and peanut butter sandwich for lunch and spaghetti for dinner.

- He took on jobs that provided him with food and lodgings, so he has technically zero life expenses.

- Think of your debt as your greatest sworn enemy. Think of indebtedness as a life and death situation. He advocates not to put 8% income towards it but rather 100% if possible. Obsess over it. Despise it. Murder it. Kill it. Grand tasks require grand thinking.

In his spare time, he wrote a book called the "Walden on Wheels" which is a day to day experience during his toughest times. 

When you've got past that toughest times, you began to realize how strong you have emerged, how things look much simpler in this world.


  1. Hi B

    Things were simple , just that people made it complicated.

    Nice Article by the way and Happy Birthday Singapore !

    1. Thanks STI.

      Maybe it's the environment we live in that influences our behaviour.

      Just maybe.

      Happy birthday Singapore :)

  2. Reading this article, remind me of I once thought of living in a caravan as I can't afford to buy a flat. But then this might not work as it will be too expensive to buy a vehicle and I am not sure whether the authority will allow that.

    1. Hi anonymous

      This might work in other countries but maybe not singapore. Plus the cost of a van here is not necessarily the cheapest.

  3. Benjamin Franklin said "If you want to know the value of money, borrow some."

    1. Hi Winston

      Good quote.

      He who knows how to use debt is at another level.

  4. He doesn't have CPF. Else, the 2.5% interest on CPF-OA would have made the lower interest rate for housing loans seriously attractive. In addition, owning a van in Singapore to sleep in would have been more costly. Different circumstances, different strokes.

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