It’s very easy to accumulate debts but it’s hard to eliminate them.
I am learning a lot about borrowing money and debt accumulation from my interaction with small entrepreneurs. I am beginning to understand the way they manage their businesses and finances. They are all hardworking but they also play hard. Most of them.
A group of market vendors are allegedly hooked on slot machines. Several times a week, right after they close their market stalls, they take the free shuttle to the casino and gamble till they’ve lost their day’s earnings. Tomorrow is another day. They wake up before sunrise, sell meat, fish, vegetables, brooms. Then they wash their hands, powder their noses, take the shuttle and do it all over again. That’s not all, they borrow money on a regular basis. From the Indian financier, who probably has no clue that his clients are gamblers. Because he knows these ladies have permanent market stalls, he lent them 100,000 each with daily installment of P1,200 for 100 days. Oh yes, the vendors could easily pay that. Then they borrow again, and gamble again. Sayang yung pera.
When someone gets sick or needs tuition, they resort to borrowing. They think they don’t have money. They do, they just waste them.
I came across a news article that says the young adults in this generation have the propensity to be heavily in debt. Maybe because of lifestyle. The lure of commercialism. The tempting travel packages, zero down condos, etc. Para masabing naka-condo kahit kasing laki lang ng banyo.
It’s very easy to accumulate debts. Take it from me. I experienced that when I was a young adult. When I had my first credit card, I went shopping for pants, blouse, belt. Then an acquaintance asked me if she too could go shopping for some office wear. Shopping naman sya, charged to my credit card. When the bill came, it was 5,000. Five thousand lang? Thirty five years ago, hindi “lang” ang 5,000. That was quite substantial. P700 lang tour package to HK at that time.
Having accumulated P5,000 credit card debt was not the problem. The problem was she didn’t have money to pay for her share. Laking problema ko. Sa kakukulit ko, she raised fifty pesos, then twenty pesos, then she disappeared.
I cancelled that card and never attempted to have one.
Seven years later, one day when my brother came home from the US, he gave me an American Express envelope. He got me a green Amex credit card. Wow, I was so excited… to use it. The thought that I could go shopping and only pay $7 a month minimum made me so happy.
In the US, when you have one single card, other companies would tempt you by offering no payment for 6 months, transfer balances, higher credit card limit, silver, gold, platinum, titanium. The most tempting are the black bank checks with $5,000 $10,000 and in some cases $20,000 credit card limit. Wow, shopping galore.
My daughter was two. I shopped for $20 toys, $35 comforter, $60 this, $2 lipstick, $4 blush-on, $3 mascara, $18.99 cologne, $120 dinner plates, before I knew it, I have accumulated $5,000 credit card balance. Easy lang. I only had to pay minimum. Let’s go shopping again. $25 sandals, $120 bed covers from Macy’s, shoes, crystal vase, $10 shoes for my little girl, bili non, bili nito. Hala, when I totaled my credit card bills. Wahhh. That was 28 years ago. I didn’t buy one single expensive item. Those were little stuff, and before I knew it, the amount ballooned. When Edmund found out how much my credit card bills were, he was alarmed. Who wouldn’t be?
I learned my painful lessons.
A. Credit card rule, do not let others ride on your card. Kahit girlfriend mo or boyfriend mo. Wala pala syang pera, magpahinog sya.
B. Don’t pay minimum balance. The interests would accumulate and you’ll never be able to pay the principal off. Every month, pay the whole amount in full if you can. If you don’t have the whole amount, pay as much as you can.
C. Don’t charge something you can’t afford to pay one time. If you can’t afford to pay it when your credit card bill comes, that means you cannot afford to make that purchase. Period. Pahinog ka rin.
D. Shopping could be therapeutic. According to OMB reader Joey, pampahaba ng buhay. But if your money is scarce, control shopping for unnecessary things. If you’re coming from some financial difficulty, cancel your credit cards, leave one for emergency only. Use cash instead.
E. DO NOT GUARANTEE OTHER PEOPLE’S LOANS or DEBTS. Even if they have more money than you, even if they are your relatives. Even if they are your dear friends. Even if you’ve been promised to get a cut. Even if you are business partners. Even if you love them.
F. Do not be greedy.
G. Do not be stupid. Try your best.
Hi Ms. Annie, nakakalungkot at baon ang mundo sa utang na hindi na mababayaran. American credit card debt is reaching a trillion dollars. And their federal debt is 18 trillion dollars already. That is more than their gdp. This happened because they always kick the can down the road and stretch debt ceilings. Anyhow, the little ordinary people’s debt is just a reflection of a much bigger picture. If people think this situation will be better, well I really hope so. So much in my mind now but some thoughts will just frighten people and fear is useless.
Hi Annie, what if it were your son/ daughter who js in debt? Would lesson E still apply?
Dear Justin,
E still applies.
Exceptions:
1. Student loan (education)
2. First House (shelter)
3. First car (basic transportation)
I don’t have money to guarantee their own debts.