HK Business News

Habits that Help You Get out of Debt

Here are some useful tips if you are stuck in debt.

1. Pay your bills last
Most of my readers may disagree, but I always pay my bills at the last minute or even after the expiration date (as long as they don’t charge me a fine for that). Why do I do so? By paying your bills last, you can have a time decay to invest that amount of money that you owe to your credit card company, or any other expenses such as water and electricity. Building such a habit is important because you can generate more money to invest, and at the same time, it improves your cash management skills because you must remember to pay those bills when time comes. This may sound contradictory to the title of this article but it works!

2. Generate good debts. Kill bad debts
Debts are not necessarily a bad thing. A lot of my viewers ask me how debts can be good. Simple, good debts are the ones that generate more money than expenses. For example, you apply for a mortage of an apartment and that costs you HK$20,000 a month. But you lease it to someone else for HK$25,000. That debt generates a profit of HK$5,000 each month. I have debts too but I only target the good ones.

Bad debts on the other hand, are the ones that generate more expenses than profit. They are the tuition loans, your house mortage (if you live there) and insurance plans.

3. Track your expenditures
You don’t need to be a CPA, but everyone needs to know at least the basics of a balance sheet. The reason why so many people become broke is because they never keep track on their money.

4. Don’t save for the future but do invest your money
A lot of us have heard from our parents, relatives and close friends that we need to save for the future. Have you ever put some money every month in something called ‘savings account’ so that you can accumulate money for any future needs? I don’t do that. Why? Because the interest that my bank pays is too little when compared to investments. I don’t go for savings accounts neither time deposits. I go for stocks, options and other kinds of high risk investments.

5. Pay yourself first
This is related to item No.1. When you owe money you should pay last but when you are to receive money, you should get paid first. Whenever I do business, I ask for prepayment. Sometimes, when the amount is too large, I cannot ask for prepayment of the whole amount so at least 50% of the total. Getting money before hand helps you to understand how to handle larger amounts of money.

About the author

Alan Chiu Tsang

Alan is a freelancer photographer and author for
He graduated from Hong Kong university in 2005.