Getting Out of DEBT

If there is any school that would grant us PhD in Debt Management, I think we would qualify and even get a Suma Cum Laude for it. Thus, I assure you, we know what we are talking about when we say getting out of the Debt Trap can be done.

You see, both me and my wife Fely are earning good with salary of 6 figures . However, we were really not keen in managing our finances prior to our IMG enlightenment. Thus, our debts and loans from our many credit cards and different loaning facility runs to more than 7 figures.

Now, do I get your attention?

This problem of living on borrowed money or debts affects so many millions of lives or perhaps billions world wide. In the latest blog I read about Philippines Credit Card debts, it runs more than 120Billions of Pesos. I am sure you who is reading this blog right now has some contributions to this enormous debt plaguing our society.

Mind you, this is not isolated to the poor sector of society. This engulfs even those in the higher income bracket of our country. My relatives abroad are not spared from this. I am sure you do hear the same stories from your relatives abroad.

Loans and Debts makes people do things that lead them to more problems. Some even resort to taking their own lives to escape the grip of debt... passing their problems to those they leave behind.

However, solution to this perennial issue just require a plan.

The first step is to STOP BORROWING. You need to define a firm start date of when you will put an end to borrowing. The best start date is NOW!

Second step is to list all the existing loans you have and line it up with the amounts and interest the loans has. For example:

1. Citibank 100K 3.5%/month
2. Housing Loan 600K 1%/month
3. Coop Loan 150K 0.75%/month

Then, define when you will pay off these loans prioritizing payments to the one which has the greatest interest.

You may even resort to transferring all your loans to the one that gives you the least interest payments.

Do not fall into the trap of loans re-structuring to lengthen payments as this means you are prolonging your loans and enabling the loaning institution to continue to charge you with more interest.

Plan to pay more than what the required minimum payment is.

Pay off whatever extra money you have from your emergency funds. Bonus and 13th month pay must be allocated for your debt payments.

When your cash in-flow increase, make sure you use it to plug into the high interest paying debts.

As you do this plan, make sure you keep yourself in the company of people with the same desire and discipline.

Following these simple steps, we were freed from the bondage of debts and are now debt free! I'm sure you can do the same.

For more detailed Debt Management Plans, you may consult with us in our office in Dasma or can send us emails.

Would appreciate your response to this blog.

God bless.

Will tackle the exciting world of INVESTING next blog....