Stay away from bad debts !
Are you one who likes to shop using your credit card but never pays the full amount you spent at the end of the month?
Do you regularly borrow from shark loans, 5-6 and the like just so you can sustain your lifestyle?
Robert Kiyosaki, in his book Rich Dad, Poor Dad, explains that good debt is when you buy something that puts money into your pocket while bad debt is when you buy something that takes money away from your pocket.
Good debt is when I loan from PAGIBIG or the bank to pay a condominium unit which I can rent out to other people who will pay me on a monthly basis. Bad debt is when I loan money to buy an expensive car which I rarely use and regularly spend money on for maintenance.
Four years ago, I had to pay a loan which my mother incurred from a shark loan. From P3000, we paid a minimum of P30000 in less than a year. The same thing happened a few months ago, a loan of P8000 ballooned to P38000. Such is the power of compounded interest which many people take for granted and others take advantage of. And such situation is one that I will never want to be in again!
So what can you do if you are buried in debts?
Take time to list down all your bad debts. Make it your goal to be free from these debts. Set a date!
Stop spending on consumer goods when you cannot afford them. Stick to the necessities. If you have a credit card with you and you are not disciplined enough to use it only when necessary, keep it out of reach.
If you have loan from banks and other lending institutions, you may also try negotiating with them to lower the interest rates or to extend the deadline.
Live simply! Evaluate your lifestyle. Do not live beyond your means. Do not spend what you do not own! Do not be a slave to the lender! (Proverbs 22:7)
Turn your back from bad debts!
And always remember to “Keep your life free from the love of money and be content with what you have, because God has said, ‘Never will I leave you; never will I forsake you.’” (Hebrews 13:5)
Marj Baynosa is a chemical engineer and educator, who loves reading and writing in her spare time, especially on finance, faith, and other seemingly mundane things.