If you earned RM50,000 a month, would you expect to have a debt problem?
When I talk about debt, people sometimes assume I am talking about someone with a low income. A doctor, CEO or senior professional earning a good salary should be fine, right?
Let me share the story I used in my original DSR article.
A doctor went to AKPK for help. His income was around RM50,000 a month, but his credit-card, personal-loan and housing-loan repayments had reached RM80,000 a month.
RM50,000 coming in. RM80,000 in debt repayments going out.
That is a gap of RM30,000 before we even talk about his other living costs.
How did the commitments become so large
In the story, the doctor explained that he had bought two properties side by side. One was for his family to live in; the other was an investment.
His friends had told him he could make money from property.
He also loved cars and had bought a Mercedes and a BMW. His friends had two cars too.
You can see how each decision might have felt reasonable at the time. He had a good income. He was buying property. He could afford a lifestyle that reflected his career.
But when the repayments were put together, the total was more than he earned.
Can you see why the income alone was not enough? We needed to look at what he had committed himself to every month.
A high income gives you more room to commit
That is one reason I keep talking about this with professionals and business owners.
As your income grows, you may have more borrowing capacity. You buy the property, change the car, add an instalment plan or support a business. Each repayment can look manageable by itself.
The question is what they look like together.
This brings us to Debt Service Ratio, or DSR. It compares the monthly repayments being assessed with the income used in that assessment.
For the personal review I teach, the formula is:
DSR = total monthly debt repayments ÷ net monthly income × 100%
For a salaried person, work from the salary after statutory deductions such as EPF, SOCSO, EIS and PCB. A lender’s assessment can use its own income treatment and commitment calculations, so check the actual assessment rather than assume every bank uses an identical method.
Suppose your net income is RM10,000 and RM6,000 goes towards repayments. That gives a DSR of 60%.
You have RM4,000 left. The next question is whether RM4,000 can cover the rest of your household needs.
Bank eligibility and your household cash flow need separate attention
In my earlier article, I used examples of bank lending guidelines to explain why someone with a higher income might be able to take on larger repayments. Those were examples at the time, rather than a universal borrowing limit.
An approval does not remove your responsibility to check the whole month.
What about your children’s costs? Your parents? Insurance, food and property maintenance? What if some of the income depends on a bonus, business performance or a tenant paying rent?
This is why I bring the discussion back to ICE JAR. I want you to see the investments, commitments and expenses together, so a large salary does not hide a recurring shortfall.
Let me bring you back to James
James was the business owner I shared earlier: a family depending on him, multiple debts and a deficit of around RM18,000 a month.
If you have not read his background, start with James’s story and the IBR explanation. It helps explain why I was looking for ways to reduce his instalment pressure.
When people see a deficit like his, a common assumption is, “His DSR already koyak. Surely there are no options left.”
But have we actually checked the assessment, or are we guessing?
In the original James discussion, I contrasted an assumed figure of 113% with the 58% figure discussed for the lending assessment. His company borrowing and Creditor A did not appear in the CCRIS record shown in that case. The figures being discussed were therefore not based on the same view of his obligations.
James’s case · Two different views of the obligations
Why we checked the assessment
The company borrowing and Creditor A were not in the CCRIS record shown in the original case. The two percentages used different views of the obligations.
Recreated from the figures in my 2021 article. These are historical case figures, not current bank approval limits. Include every obligation in your cash flow and disclose required information accurately.
The lesson was to examine what was actually being assessed before deciding that an option was impossible.
It was not a reason to leave debts out of an application. All required information must be disclosed accurately, and obligations outside CCRIS still need to appear in your personal cash flow. A lender may also ask about them.
We still had to answer the more important practical question: if a different arrangement was possible, would it improve James’s overall position after its costs and repayments?
Three things I would want to see from you
First, your actual income. If you run a business, separate the business’s sales from the income available for your household. If your income varies, let me see the weaker months too.
Second, the debts and repayments. Use my Debt Management Template and eCCRIS guide to start organising the information. Add any private or other obligations that are not shown in the report.
Third, the full cash flow through ICE JAR. I want to see what happens after repayments, everyday costs and the investments you are still supporting.
DSR helps us understand the debt-to-income picture. IBR helps us look at the pressure from individual debts. ICE JAR helps us see where the whole income is going.
Put them together and we can have a much more useful conversation than “I earn a lot, so I should be okay” or “I am in deficit, so nothing can be done.”
Do you know what your commitments add up to
Have you been judging affordability one loan at a time?
Take a look at the whole month. If your income looks good but your cash flow tells a different story, come through Money X-Ray. Let’s understand the pressure and assess which direction makes sense for you.
The doctor’s story was shared in my earlier article; James is a pseudonym used for my client case. These historical stories and assessment figures do not represent a universal bank rule or guarantee anyone the same outcome.
P.S. AKPK offers financial counselling and a debt-management programme. My work begins with your full financial picture, using ICE JAR, your debt list and your assets to understand why you are under pressure. Money X-Ray helps us assess education, coaching or DCS4U support, including suitable options outside enrolment in AKPK’s debt-management programme. We need to assess your situation first; a high salary alone does not establish eligibility or suitability.
From my original articles
Adapted from my December 2021 DSR article. The James comparison uses the same 113% and 58% figures discussed in that case, with a recreated visual.