EDUCATION MUST START FROM THE YOUNG AGE

I even hear it from radio, the advertisement from AKPK to ask those in debts & facing financial problem to see them for solution.

This is good to lend a hand on those in debts problem, find a workable solution for them.

But this is not the best approach, because there are already trapped by the 'DEBTS', they are in sickness already.

The best approach is to educate the financial planning skill from the young age. Just start the financial education from school level ( primary or secondary school).

A lot of social problems can be avoided if they have some 'FQ'!


THE STAR NEWS
1,600 turn to Bank Negara’s AKPK unit every month

By RASHVINJEET S. BEDI

KUALA LUMPUR: Every month, more than 1,600 individuals turn to the Credit Counselling and Debt Management Agency (AKPK) to help them overcome their financial difficulties.

The number seeking help monthly has tripled since the agency was set up 18 months.

Of the number that receives counselling, more than 25%, or 430 individuals, sign up for the Debt Management Programme, through which AKPK helps them renegotiate their loan repayment schemes with financial institutions.

AKPK chief executive Mohamed Akwal Sultan believes that more people are finding themselves in financial trouble because of poor financial knowledge.

“The sample size is small and may not be a true reflection of the nation’s problem. It is likely to be a much bigger problem,” said Akwal, adding that more people were seeking AKPK’s expertise.

AKPK is a wholly-owned subsidiary of Bank Negara that provides financial counselling and debt-management services to individuals at no cost.

Last year, 6,837 individuals sought help from the agency. This number almost tripled to 20,853 individuals up to October this year.

“Many people come to us when they are no longer able to manage their debts,” said Akwal.

Most of those who approach AKPK come from the Klang Valley and are in their 30s and 40s.

“At this age, the cost of living goes up generally because people have commitments such as family and housing payments,” said Akwal.

Other reasons contribute to their financial problems, the main causes being loss of control over the use of credit cards and poor financial planning (see chart).

As of September this year, the total household debts stood at RM351bil, with the ratio of non-performing-loans at 7%.

A non-performing loan (NPL) one that is in default or close to being in default. Many loans become non-performing after being in default for three months, although this can depend on the contract terms.

“At a single digit, the debt in Malaysia is still manageable,” said Akwal.

“The statistics show that our household indebtedness to the banking sector in Malaysia remains within prudent levels at 52.1% of the GDP,” he added.

Credit card debts alone stood at RM21.6bil, with non-payment of credit card loans amounting to RM591mil, or at an NPL ratio of 2.7%.

“If you look at (the NPL for) credit cards alone, the percentage is small. It’s not a big problem,” said Akwal.

It is for this reason that Akwal would like to promote the use of credit cards if given the opportunity.

“The credit card is like a kitchen knife. It has many uses but if you are not careful, you can cut yourself,” he said.

DR AZAM, 28, had it all: two flashy cars, a beautiful home and a flourishing career. He wore expensive clothes and lived extravagantly on credit.

He renovated his mother’s home and decorated it with expensive Italian furniture. He took a loan for the renovation and bought another house.

Without realising it, Dr Azam owed creditors RM400,000 in housing loans, hire-purchase loans and credit card debts.

Stuck, he approached the AKPK for help. Being single and with his mother being the only dependant, Dr Azam was advised to sell his house. He moved in with his mother and sold one of his cars.

In the end, Dr Azam was able to save 45% of his monthly loan payment.

BEFORE the economic crisis of 1997, Allen was a sales manager earning a five-figure monthly salary, living a comfortable life. However, the economic downturn forced his employers to shut down operations in Malaysia.

At 43, it was hard for him to find a new job. To complicate matters, his wife has a medical condition.

Allen turned to loans and credit cards to fund his lifestyle. Soon enough, creditors began hunting him and threatening bankruptcy.

Suicidal, Allen turned to odd jobs, making less than RM1,000 a month. He skipped meals to ensure his wife had something to eat.

His wife changed his mind about suicide and suggested that he seek the help of AKPK.

Allen had RM200,000 in his EPF, although he could only withdraw the money at 55.

With a debt of RM130,000, AKPK advised him to consider bankruptcy as an option, so that he would be able to settle all his debts when he turns 55.