Why you can’t get out of debt—yet

If you’ve ever felt like your debts are multiplying no matter how hard you try to fix things, you’re not alone. Across Singapore, Malaysia, and many parts of Southeast Asia, consumer debt is rising—not just because of inflation, but because of the way people spend, plan, and relate to money.

It’s not just about income. It’s about behavior, expectations, and structure. And often, the reason someone can’t climb out of debt has less to do with numbers—and more to do with the invisible systems shaping their decisions. In this explainer, we’ll examine four of the most common—but overlooked—reasons people remain in debt. More importantly, we’ll unpack how to reset those patterns, including tools available under local policy frameworks like CPF, AKPK, and debt management programs.

You’re tired after work. You’ve had a long week. The sale banner is flashing, and the thought of a new bag or gadget gives you a dopamine hit you didn’t know you needed. So you buy it.

It might feel harmless in the moment—but emotional spending is one of the most widespread, socially normalized reasons people stay in debt. Often described as “retail therapy,” it reflects a deeper behavior loop: using spending as a way to manage emotion rather than based on financial priorities. The danger? These purchases are almost always made on credit. Credit cards, BNPL services like Atome or Grab PayLater, or even payday loans—all of which carry hidden costs that compound over time. And the more this behavior is repeated, the harder it becomes to break.

Singapore context: Many cardholders carry balances month-to-month despite having full-time jobs. The average interest rate? Around 26% annually. That $300 impulsive purchase can quietly become $450 by year’s end if left unpaid.

Malaysia context: In 2024, Bank Negara Malaysia reported that nearly 47% of Gen Z cardholders don’t pay their bills in full each month, a sign that emotional and habitual debt behavior is taking root early.

Framework to Reset: Build a “cool-off calendar” for discretionary purchases. Instead of banning spending, insert a 7-day delay before large non-essential buys. Link it with a visual goal: a debt-reduction tracker or savings goal. Emotional control improves when tradeoffs are visible, not abstract.

In many households, debt is not just an individual burden—it’s a relationship dynamic. One partner might be financially cautious, while the other has a casual attitude toward money. In long-term relationships, this creates chronic misalignment that stalls progress and builds resentment. When you’re trying to reduce debt but your partner keeps spending “just a bit here and there,” it’s more than a habit clash. It’s a structural breakdown in planning. And it’s often compounded by cultural silence—especially in Asian families where financial conversations are seen as taboo or disrespectful.

What’s at stake: If you’re married or have shared liabilities, one person’s debt can drag down the couple’s overall creditworthiness. For instance, if both names are on a housing loan, one person’s poor credit behavior impacts HDB or mortgage eligibility.

Why this persists: Most couples never develop a joint cashflow strategy. They divide bills but not priorities. They split expenses but don’t discuss long-term goals. And without shared goals, individual debt becomes a tolerated background issue—until a crisis forces change.

Joint Budget Strategy: Use a three-account system: yours, mine, and ours. The “ours” account is for joint debt repayments and shared financial goals. Both parties contribute based on income ratio. The clarity creates fairness—and surface-level equality doesn’t hide deeper disparities.

Many debt plans fail not because people don’t want to get out—but because they refuse to cut things that would actually make a difference. It’s easy to cancel a $10 subscription. It’s harder to downsize a car, reduce rent, or say no to a recurring social habit like dining out four times a week. This behavior reflects a psychological truth: we cling to lifestyle anchors that reinforce identity and status, even when they keep us in debt. And it’s particularly common in dual-income households, where both partners feel entitled to a certain “standard of living” based on what they earn—not what they keep.

Singapore context: The average household spends over $1,300/month on food alone—largely from eating out. Yet very few people review this category when planning a debt reduction strategy.

Malaysia context: In Klang Valley, car ownership is seen as essential, even when it results in monthly repayments that exceed 25% of take-home income. This creates an illusion of middle-class comfort—but locks households into fragile financial positions.

The Tradeoff Lens: Every $500 saved monthly through lifestyle reduction accelerates debt repayment timelines by 6–12 months depending on your balance. Frame sacrifices as temporary—use a 90-day “rebuild sprint” with a clear end date. Then reassess.

Debt often has less to do with survival—and more to do with perception. From Instagram holidays to luxury bags on deferred payment plans, social signaling has created a trap where people spend for optics, not value. This dynamic is especially acute in high-density urban societies where comparison is constant. And it’s amplified by credit tools that make expensive purchases look manageable through monthly installments or BNPL options.

Why it matters: The “cost” of trying to keep up isn’t just financial. It delays your own goals, reduces financial flexibility, and increases dependence on future income just to maintain present optics.

In Singapore, studies have shown that many under-40s carry revolving card debt to fund lifestyle categories such as tech, fashion, and travel. In Malaysia, middle-income consumers often borrow from informal lenders for wedding expenses, holiday travel, or festive celebrations—because downgrading would be seen as failure.

Reset Strategy: Use a “Mirror Budget” tool. Every time you’re tempted to spend on something others have, match the amount in a debt repayment or savings category. You’ll quickly learn what you value—and what you’re just trying to perform.

In Singapore

• Debt Consolidation Plan (DCP): Offered by banks under MAS regulation, this lets you combine all unsecured debt into a single plan with a fixed interest rate and tenure.
• Credit Counselling Singapore (CCS): Provides debt advisory, education, and negotiation with lenders. Especially useful for those with multiple unsecured debts.
• CPF Considerations: While CPF cannot be used to repay unsecured personal loans, it plays an indirect role. For instance, choosing to delay CPF housing usage or retirement payouts in order to stabilize cashflow can help reduce reliance on debt.

In Malaysia

• Agensi Kaunseling dan Pengurusan Kredit (AKPK): A central bank agency offering free debt management programs. They help restructure personal debt without requiring a legal bankruptcy declaration.
• Debt Management Program (DMP): AKPK works directly with banks to negotiate lower interest rates and extended payment terms. Available for those earning steady income but overwhelmed by monthly dues.
• CCRIS vs CTOS: Understanding your credit profile under the Central Credit Reference Information System helps identify repayment gaps and avoid further borrowing damage.

Across Southeast Asia, BNPL has exploded. It promises flexibility—but it also creates fragmentation. People forget what they’ve signed up for, and the sum total of repayments can exceed original affordability.

Example: 3 BNPL purchases of S$150 each spread over 3 months may seem manageable. But if your next pay cycle already includes rent, insurance, and utilities, these “small” plans can lead to overdraft or more credit reliance.

Tip: Log every BNPL obligation in your main budget—not as a separate app, but as part of your core cashflow. If you can’t cover it fully with your next pay, don’t click “split into 3.”

The longer you delay debt repayment, the higher the long-term interest burden. A typical credit card balance of S$5,000 with only minimum payments takes over 10 years to clear—and you’ll pay nearly double in interest. But beyond numbers, waiting also erodes confidence. Many people fall into what behavioral economists call “debt fatigue”—the belief that change isn’t possible, so why bother trying?

Mindset Reframe: Don’t aim to be debt-free overnight. Aim to improve your debt-to-income ratio each quarter. Progress is percentage-based, not emotional. And financial planning isn’t about punishment—it’s about regaining optionality.

Debt isn’t just about what you buy. It’s about what you believe, tolerate, and postpone. The good news is that all four of these patterns—emotional spending, partner misalignment, refusal to cut costs, and social comparison—can be reframed. But they require clear action plans, not shame.

Start by mapping your total liabilities and minimum monthly commitments. Then, for each of the four categories above, ask yourself:

• What am I protecting or avoiding?
• What system can I build around it?
• Who needs to be involved to make this change stick?

Because debt recovery isn’t just a number on a statement. It’s a reset of the way you live—and what you’re willing to let go of in order to build something better. Debt is not a verdict. It’s a signal. The sooner you decode it, the sooner you can act.