Understanding Frugal Living In Order To Avoid The Pinjol Trap

Ease of online loans or borrowing often triggers a consumptive lifestyle, and is currently fortified with calls for frugal living. (Between)

JAKARTA- Online loans or borrowing are no longer foreign in society. In today's era, borrowing has even created a new problem that is quite complicated. The ease of the disbursement process to the high limit given by the loan makes many people darken their eyes.

Recently, the community was shocked by the news that a student from the University of Indonesia (UI) who died in his own senior hands. The victim's body with the initials MNZ (19) was found lying under the bed. After an examination, the victim was killed by his senior, AAB (23), at a boarding house in Kukusan, Beji, Depok, on August 4.

The motive for the murder by AAB against his juniors is enough to make many people shake their foreheads. AAB is known to have suffered losses in crypto investment and was entangled in debt. From the loan, AAB is known to have a debt of Rp. 15 million.

"The total loss is IDR 80 million. This perpetrator plays crypto, plays here and there, then goes to pinjol," said Depok Police Deputy Chief of Criminal Investigation Unit AKP Nirwan.

Crypto trading has been widely discussed among global traders, including Indonesia in the past few years. According to the Commodity Futures View Supervisory Agency (CoFTRA) of the Ministry of Trade, crypto assets are commodities that can be traded on futures exchanges. Although Bank Indonesia prohibits crypto assets from being used as currency or means of payment, crypto assets can generally be used as an investment tool and can be traded.

Simply put, crypto is one of the high-risk investments such as stocks. This way of investing can optimize high yields, but with a fairly high risk. The crypto market in Indonesia has increased in recent years. According to CoFTRA data, users of crypto assets are 11.2 million people by the end of 2021. This figure increased 48.7 percent compared to the end of November which was recorded at 16.55 million people.

Interestingly, the number of crypto asset users is dominated by millennials between 18-30 years. The six provinces in Indonesia with the highest crypto interest are Bali, DKI Jakarta, Banten, Yogyakarta, Riau Islands, and West Java.

Learning to invest from an early age is a positive thing. However, there are several conditions that must be considered before investing, let alone investing with a high type of risk. According to Surabaya economics expert Arin Setyowati, we must first understand investment. Before entering the investment world, people must learn the intricacies of investment intensely in order to reduce the risk of fraud.

"This is done as an effort to increase financial literacy and investment so as to minimize the risk of fraud. In the world of investment, there are many terms that need to be explored in depth," said Arin.

Meanwhile, certain financial plannerAnnnisa Steviani wisely invests money at an early age to increase net worth in the future. This invested money will help towards financial goals. Annisa said potential investors must start paying attention and find the right way to manage finances. It must be realized that the way to manage each person's finances is different according to the personality, needs, and lifestyle.

If there is one of these financial literacy that is skip, [then] the risk is quite high. For example, participating in investment even though you do not understand the diversification of assets [or] the investment does not use cold money. In the end, when the savings [funds] in investment products are high risk, the money runs out [and] all the assets are exhausted," explained Annisa Steviani.

In addition, Annisa also said that one must set goals and consider risk profiles carefully, potential investors will find it easier to choose investment products that suit their needs.

As previously stated, the perpetrators of AAB were in debt of up to Rp. 15 million. AAB is clearly not the only person who has dark eyes due to being hit by a pinjol. Not a few people took a reckless action because they could not pay the loan. A husband and wife in Banyuwangi, East Java, committed suicide allegedly because they were in a loan.

When the news of the murder of UI students was motivated by the pinjol literature, the UIN Raden Mas Said Surakarta campus was in the spotlight because the Student Council (Dema) collaborated with the application and allegedly asked new students to register for a marketplace and loan.

The trend of borrowing has indeed mushroomed in recent years and the numbers have increased since the COVID-19 pandemic. The economic pressure faced during the pandemic has made many people maximize this service to survive.

Online loans that were originally used to help local Micro, Small and Medium Enterprises (MSMEs). Reported by the Bank Indonesia page, loan transactions can be carried out remotely by making payments that can be made in seconds.

An easy and fast process has indeed tempted many people to take advantage of loans. Based on data from the Financial Services Authority (OJK) in April 2023, there were around 17 million online loan recipients (pinjol) throughout Indonesia, with a principal loan or debt that was still running (outstanding loan) of IDR 50.5 trillion.

The high interest in lending is directly proportional to the proliferation of illegal loans that are not registered illegally. The Investment Alert Task Force (SWI) again found 85 illegal loan platforms per February 2023. So since 2018, 4,567 unofficial loans have been closed. OJK itself continues to urge the public not to be trapped in illegal loans.

Every day, lending services do not only help meet the needs of life when they are in trouble. On the one hand, the loan actually encourages people to have a new lifestyle that is more consumptive. Plus the low level of financial literacy in the Indonesian people, loan debtors end up stuck with debt bondage being too big to not being able to pay installments.

Loans are not smoothly dominated by individual category debtors reaching Rp3.34 trillion. Ironically, from this figure, the Millennial generation and Gen Z turned out to be the debtor or the most borrower.

According to the OJK, the reason people are often entangled in unofficial loans is because they pay other debts, aka digging holes, cover holes. On the other hand, there are also people who borrow illegal loans to fulfill their lifestyle.

In the midst of a series of terrible news about failing to pay the loan in order to fulfill the lifestyle, the discussion about frugal living has resurfaced. This lifestyle is considered to bring many benefits.

Reported by Wealth Simple, frugal living means being aware of spending and focusing on financial priorities. Meanwhile, according to the India Times, marginal living is a matter of limiting waste. However, frugal living is different from stingy. One example of applying frugal living is choosing to buy high quality goods even though it is a little more expensive than cheap goods. The goal is so that the purchased goods are not damaged quickly.

The study of the concept of frugal living is growing, not only connecting lifestyles with long-term personal financial goals, but also about the sustainability of all human life in the future.

Jhon White, a professor of education philosophy in his writings The Fragal Life, and Why We Should Educate for It explained that February Living must be adopted by future generations. The Covid-19 pandemic and climate change must be a momentum to declare February living and teach it to today's generations.

The Ministry of Finance even encourages the State Civil Apparatus (ASN) to participate in the celebration of living. "In accordance with ASN, there is no need to be ashamed to start good. As a public servant, every movement and lifestyle of ASN is in the public spotlight," he was quoted as saying on the official website of the Ministry of Finance.

Some of the practical steps that can be taken in implementing frugal living include having clear and reasonable financial goals, always analyzing the needs vs wishes before spending money, avoiding consumptive debt, and feeling comfortable not to be influenced by trends.