Malaysians in pursuit of the good life: A study of the nature of household debt by ethnic groups in Bandar Baru Bangi, Selangor

Since the advent of Reagonomics in the United States the world has learned the art of luxury living financed by consumption debts, which, when not managed properly may incur future hardship for the debtor. This study examined the differences in the nature of debt, the purpose of debt, debt percentage to monthly income, difficulties in fulfilling basic needs and ways to overcome the burden of debt incurred by the three major races in Malaysia. A total of 141 respondents around Bandar Baru Bangi, Selangor were randomly sampled comprising Malays (60%), Chinese (28%) and Indians (12%). The findings revealed that there were some differences in the debt-driven lifestyle practiced by the three major races in Malaysia. The study also found that the main purposes for Malays being in debt were for purchasing a vehicle, personal loans, housing and credit cards. For the Chinese, their primary purposes were purchasing a vehicle, housing and credit cards, while for Indians loans were obtained to purchase a vehicle and housing. Interestingly, the study also found that the majority of Malay Muslims obtained loans from conventional as compared to Islamic banking products. The overall percentage for debt-driven living for all three races was 62.4 percent. This serves as an early warning that living the luxury lifestyle requires the knowledge in how to manage finances to avoid prolonged debt burden.