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Mar 17, 2015

Tips for Getting Your Family Out of Debt

“Utang sa bumbay… utang sa credit card… utang sa mga kamag anak at kaibigan.” Are you having difficulties with any of these types of debt? We feel you. It’s tough living with debt. Unlike in other countries, Pinoys are generally debt-averse because we don’t want others to know that we are in debt so there’s this “hiya” attached to having debt.

Don’t lose hope, there are ways to get out of debt. But before you embark on the process to get out of debt, you’ll need to first figure out the reason why you’re in debt. Sometimes, being in debt is a symptom of a problem and not THE problem.

See the Big Picture 

Take a look at your recurring expenses. These are your monthly bills like your Meralco bill, your water bill, the cable TV, postpaid mobile phone bill, or your home loan payment. How much are you paying for these every month? You might discover that these cost more than what you take home every month. If that’s the case, it’s time to find ways to cut these expenses.

Do you know which category you spend on the most every month? Is it for food, on household bills, or perhaps on shopping? Download an expense tracking app on your smartphone today and start categorizing your daily expenses. Knowing which categories you spend on the most allows you to get a clearer picture of which area you can easily cut back on.

Rethink how many electronic appliances you really need and cut back on running the aircon at night to save electricity. Can you downgrade to a cheaper postpaid plan? Postpaid plans are always changing and you may be able to save a good amount just by switching to another plan.

Snowball Method to Pay Off Multiple Debts

Are you faced with multiple debts? You could try the snowball method: Start by paying off the debt with the smallest balance. For example, you owe balances amounting to P5,000, P17,000, and P25,000 to various lenders. Pay off the P5,000 debt first, then the P17,000 next, and the P25,000 debt last. You pay the minimum on the bigger debts and put any extra towards paying off the smaller debt. 

There’s a psychological benefit to this method as you systematically get rid of your debt. Each debt that you eliminate is a victory that gets you raring to take on the next step.

Talk to Your Debtors

Whether it’s an unpaid bill or a credit card bill, talk to your debtor and see if they will work with you to bring your debt down or at least negotiate the terms of your debt. Your credit card provider may be able to offer you a lower interest rate if you explain to them your current situation and assure them that you’re working on paying down your debt.

This post is brought to you by:
MoneyMax.ph is the Philippines’ leading financial comparison site where you can save money by comparing financial and car insurance products and services – fast, comprehensive, and free. We aim to give the power of smart purchase decisions back to Filipino consumers by providing everything they need to become financially savvy. 
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  1 comment:

  1. This is good practical advice. I am in debt like most people, but being a single parent is even more challenging.


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