Debt management: How to be very demure, very mindful even when in debt

Debts can be tricky to talk about.

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Besides the stigma surrounding any conversation about money, discussing borrowing can be hard to broach, if not taboo. With that said, debts or loans are not something to be embarrassed about. Did you know? Nagbibigay oportunidad ang pagkuha ng mga loan sa pag-abot ng milestones sa buhay. Kasama na rito ang pagmamay-ari ng kotse, pagtatapos ng pag-aaral, at pagtatayo ng sariling business. However, as the saying goes, with great power (in this case, the power of money), comes great responsibility.

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Similar to engaging in any major decisions, before jumping into getting a loan, you have to be aware and informed about the financial consequences being in debt may have. The question is: paano nga ba maging confident sa pagkuha ng loan? Considering this, paano naman makasisigurado na hindi ka malulugmok sa financial ruin? Well, it is all about debt management!

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Before we get into it all, it is best to understand what debt management is and why it is crucial, especially for Filipinos.

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See how I manage my debt? Very cutesy!

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In a 2021 study, Bangko Sentral ng Pilipinas (BSP) revealed that up to 47.1% of Filipinos have experienced borrowing money or are currently in debt. Relatively, a 2021 research spearheaded by fintech company Backbase and conducted by Forrester Consulting noted that about 70% of Filipinos experienced stress due to their financial challenges. This includes getting anxious over being unable to pay their debts, worrying about where to find money to pay their debts, or being in debt in general. Furthermore, Filipinos obtain their debt from several channels including taking out personal loans through banks, mortgages, and using their credit cards, to name a few.

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Factoring all this, debt may become a scary experience if one jumps into it uninformed. Other times, there is simply no other option left, at ang pagkuha na lang ng loan ang natitirang solusyon. The thing is, ang debt o loans ay hindi dapat tingnan bilang isang nakatatakot na bagay. Loans can become a stepping stone in moving forward with one’s life. Kailangan lamang maging matalino sa mga desisyon na gagawin at pipiliin.

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How exactly do we be mindful and smart, you ask? Debt management is the key to all these questions.

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With debt management, one can slowly achieve financial freedom by being responsible for their limits, actively reducing debt burdens, and minimizing interest costs.

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How do we start with debt management? By taking the initiative to set your goal to ensure that all of them are eliminated, you are already moving towards your financial freedom. Even the smallest steps can become a starting point for tackling bigger objectives.

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List it all down

• Collect information: Start by gathering details on all your current and upcoming debts or loans. Count in credit card balances, personal loans, and mortgages, among others, into this mix.
• Factor in important details: Note important information, such as payment due dates, loan amounts, interest rates, and minimum payments.
• Organize your debts: Create a clear list or spreadsheet to categorize and prioritize your debts. This will help you see which debts are the priority and which ones can be addressed later on.

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Create a budget

• Assess your capacity: List all sources of income and monthly expenses. This will give you a better look into your financial situation.
• Allocate income: Designate a portion of your income specifically for debt repayment. Ensure this budget still allows for necessary living expenses and savings.
• Adjust spending: Review your expenses to identify areas where you can cut back. For instance, you might be able to skip ordering out this month or getting your haircut. This should free up some more wiggle room for you to work with.

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Choose a repayment strategy

• Evaluate your options: Decide whether you want to pay off your debts with the high interest rates first or go down the small interest rates first route. Choose whichever is best for you and your current situation.

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Stick to your plan

• Monitor your progress: Regularly check your budget and where you are in your repayment plan. Make sure you are meeting your goals and staying within your set budget.
• Committed and complete: Stick to your repayment plan. Discipline is key to successful debt management.
• Adjust when necessary: Be flexible and adjust your plan if unexpected expenses arise or if you experience changes in income.

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With all that said, debts and loans can also become a hassle if you are supposed to be paying them monthly. With everyday life one hardworking Filipino is supposed to fulfill, there could be days where you forget and skip the day you are supposed to pay your debts.

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You do not have to worry about this any longer, dahil sagot ka ng eTap! With kiosks available everywhere, pati na rin sa inyong suking tindahan, pharmacies, at groceries, paying off your loans is as easy as starting with one tap.

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Bayaran ang iyong loans and start your savings with eTap today.

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Written by Aira Matsushita (Copywriter)

Thumbnail by Mark Joshua Puig (Multimedia Designer)