Thursday, October 22, 2015

How Do I Get Out Of My Debts?

Are You Buried in Debts?

Me utang ka ba? Or Marami ka bang pinagkautangan? Or Masyado nang malaki ang utang mo? You have bills to pay, left and right, loans to pay, credit card debts ... You are deeply buried in debts that you are having sleepless nights wondering "How can I get out of my debts?"

If you asked yourself that question, hindi ka nag-iisa. I, too have asked that question. Now I am in the process of getting myself out of my debts; and that's what I wanted to share with you. "How am I getting out of my debts?"

You may be thinking, the only way to get out of you debts is by having more money.,. bigger salary, a business, winning the lotto, or bingo... 

Is winning the lotto the answer? NO!  Statistics says, the probability of winning the Lotto Jackpot is as high as hitting by a lightning TWICE.

How about bigger salary? Going into business?  No! Not if you don't change the way you handle your money!

My Financial Situation

I have at least 500,000.00 Debts!


Yan ang totoo! I have at least PHP 500, 000.00 debt. The 600+ sq. meter property that I have hindi namin napaki-usapan ang lending company.
inherited from my parents were mortgaged to finance a business that failed. (This is another story, in which lessons could be learned).  It could have ballooned to more than 1 Million already, kung

Believe That We Can Do It!

Believe that you can get out of your debts!
Before I share to you the steps I am taking to get myself out of my debt, kailangan muna nating maniwala na kaya nating bayaran ang lahat ng mga utang natin, at kailangan nating baguhin ang ating pag-iisip pag dating sa pera! 

We need to believe that we can get out of our debts.  We need to believe that all the resources we need to pay off our debts is all around us! Also, we need to change the way we think about money, more importantly, we much make some drastic changes in our lifestyle in order to start paying off our debts. 

If we want to pay off our debts, we first need to get rid of our ways and thinking that got us into debts in the first place. That's what I did, I changed the way I think about money! I changed the way I spend my money! More importantly, I made significant changes in my lifestyle! Some of you, however, may need to make drastic changes in your lifestyle!  Kailangan nyong baguhin ang lifestyle nyo!

So, ready na ba kayong baguhin ang mga sarili nyo? Here it goes.

The Steps I'm Taking To Get Out of Debts.


"A journey of a thousand miles starts with a single step!"

- Lao  Tzu


1.  First and foremost STOP BORROWING MONEY! Yes! You need to STOP BORROWING MONEY!  Wag mo nang dagdagan ang utang mo!
For now this is what you should do:
  •  Leave your credit card at home. Hide it in your closet or drawer. (Good thing I don't have a credit card)
  • Don't pawn your jewelry and/or appliance
  • Don't go to a lending company and  Wag  kang umutang sa bumbay!
You might now be thinking at least one of the following:
  •  Where will I get money to buy groceries and my baby's milk and diapers?
  • We need  to send money to our eldest. He needs to pay his tuition fee for his mid-term exams! Don't tell me he has to stop! He's already graduating his Engineering course after 7 1/2 years!
  • But I'm two months overdue already for 41 inch LED TV! 

The first two may be a valid reason to borrow money, and the third, I'd rather return the TV. It simly means, I cannot afford that TV in the first place. My point is, unless it is a medical emergency, STOP BORROWING MONEY!  For the first two (and similar) reasons, there is always an alternative aside from borrowing money.

2. Know where your money is going.  Alam nyo ba kung saan pumupunta sahod nyo?
This is very important. Know where your money goes. If every month or days after your pay day, you always exclaim "Ha? Wala na akong pera?!?!"  Then, this means you don't know where you have been spending your money to.

Make A List of Your Expenses

You have a number of ways to do this.
  1. Use a notebook that you can bring everyday;
  2. If you have a computer, use a spreadsheet where you can record your daily expenses;
  3. Or you can use a mobile app to do this.
Whatever method you use, it is best if you record as much details as you can.

I admit, I failed many times in making the list of my expenses. I bought a small notebook which I put in my back pocket, I no longer know where the notebook is.  I used an App on my phone... I felt it wasn't user friendly enough at the time.  Until I started using the Google App Expense Tracker. Now I diligently list down my daily expenses.

3. Study Your List - After making your list, of expenses, determine which ones can you live without, or live with less. For sure you can find some..

From the list then you can ...

4. Simplify your Lifestyle - In his book "Simplify and Create Abundance " - Bo Sanchez outlined that we can create abundance by simplifying our life first.  Meaning, if you learn how to live a simple life, you will have the right reasons to earn more money. If you have the right reasons to earn more money, then you can earn more money without sacrificing your soul. 

You can start simplifying your life by eliminating from your expense list the things you can live without. e.g.:

  • soft-drinks - if you are drinking one eight oz. bottle a day, you are spending P300.00 a month
  • cigarette  - If you smoke a pack per day - you spend PHP 1,200.00
  • Gourmet coffee - that's about P1,500.00 a month. (More if you go to Starbucks everyday)
Dito pa lang sa tatlong ito, PHP 3,000.00 na agad ang ma-save nyo.


Personally, I have cut down my consumption of soft-drinks to just about 3 bottles a week. Coffee, I seldom drink gourmet coffee anymore. 

I don't smoke, and hardly drink anymore. 

I have cut down my expenses on food also by cutting the number of times I eat on restaurants, including fast food ones. 

These are just examples of how I cut down my expenses by simplifying my lifestyle. If you study your list carefully, you might even find a way to cut down your electricity and water bills. Our goal is we cut down our monthly expenses lower than what we receive monthly.

If we put this in one sentence "Live below your means"

I will make a post on how to save a lot on little things after this.

5. Which loan / debt should I pay first?  Hopefully, after the previous step, you have cut down your expenses a little bit. Actually, if you stick on your needs, you will save a lot, and you now have a little extra money for your needs and/or to pay for your debt. 

But before that, let's first check if which debt we can eliminate first. Ang una-unang kandidato natin dito ay ang mga appliances na binili natin ng INSTALLMENT!  At kung minsan bumili lang tayo ng mas bago at mas malaki dahil bumili rin ng bago ang kapit-bahay nating da!lawang taon nang nag tatrabaho bilang DH sa Hongkong.

(Sori pag tinamaan ko kayo... ibig sabihin totoo ang sinabi ko).

So, do you have on your list a brand new 32" LED TV that you bough in installment? How much are you paying for it monthly? 

Personally, I don't my own TV. I watch ABS-CBN's IWanttv online. If I want to watch international TV shows, there's TV.com, or Youtube. So I don't have to pay for a monthly installment and I don't have to pay monthly service fee for a  CableTV.

 The latest appliance that I have bought is washing a machine, para makagawa pa ako at ng asawa ko ng ibang gawaing habang naglalaba. With the washing machine, I could create a blog while washing my clothes. 

So, what do you do with the TV you bought in installment? I hate to say this, but the truth is, you could not afford it in the first place. Return it and buy a small cheap one if you can't do without TV. Instead of paying let's say 1,000.00 a month. Don't fret, this is only temporary. When you have learned how to manage your finances effectively, you will be able to enjoy these luxuries sooner than you think. And you will be able to PAY IT IN CASH!

If you do this, check your list again and compute how much left do you need to pay for your debts? I believe, it lowered significantly, right?

Next: Determine which loan has the highest interest rate!

Loans with high interest are the biggest killers of your budget! Determine which loans has the highest interest and make a plan to pay them out first.  

Get Out The Debt Trap
I know, it sounds like  "death trap", but that's the sad truth about debts. It's like a trap. One you have fallen in it, it seems almost impossible to get out. Almost but it is definitely NOT IMPOSSIBLE to  get out.

The problem is, once you have debts already, your salary seems never enough. Because, after paying your monthly dues for the loan, what is left is not enough for your needs. You end up borrowing more money, because that is the EASIEST way to get the money you need. But borrowing more money is just like you are digging your whole  deeper and deeper!

In order to get out of your debt, what you need to do is INCREASE your income! Work harder! Spend your free time on activities that you will earn more money! 

Since, you already have a list of monthly expenses, plus the monthly dues for your debts, make it your target income! Work longer hours, or start a small buy and sell business. Use your skills to earn more.  

Even if the monthly dues for your loan is more than your monthly salary... that means you have to earn more than twice your current salary, there is still a way. I hope it doesn't come to this, sell some stuff! Jewelries, old clothes, junks, etc... any thing that could help you cut down your debts.

The important thing is, STOP BORROWING more money!!!

Increase Your Financial Literacy!

To help you manage your finances more effectively, increase your financial literacy. Invest on books and time that will teach you about handling your finance. Talk to people who knows how to manage their finances effectively.

May get your self out of the debt trap and make your dreams come true!