I Kissed Credit Cards Goodbye!

Back over two years ago, I attended a seminar provided by a speaker who is a managing director of one of the leading banks in the Philippines.  I could no longer vividly remember what his topic was all about, but I do remember that he mentioned about the next “booming” industry for Philippine banks:  which is consumer loans.  House amortization and car mortgages would go less as compared to previous years, BUT there will be an increasing demand for customer loans.  How?  Through the issuance of credit cards!

Weighing the Opportunity Cost

Debt management or getting out of debt is one of the firsts to do’s in making one’s personal finance better.  For the last couple of months, I have heard of friends who are down with debt and are troubled on how they can make both ends meet.  As they say, never pay a debt with another debt, otherwise you will just end up yourself circling around in just the same roller-coaster ride.

Increase your cash flows
Increasing our cash flows is a first step to pay off debts.  How? There are a number of simple ways, like getting into sideline business (ie: prepaid e-load cards), part-time jobs, the likes.

Your additional cash flows can be used either to:

1. Put money in your savings account or emergency fund;
2. Put into long-term savings, equity investments, mutual funds or retirement fund;
3. Put up business or real estate investments;
4. Pay-off debts

Building trust by paying your debts
Let me focus on the bullet #4, which is to pay-off debts.  Most of the time, people tend to “forget” the debts that they owe to other person when they have enough cash on hand –which will really create a bad impression because this means that you are not trustworthy enough to give the money back to the one who lends you during those time you need it most.

Trust, in every relationship, (yes even in debtor-lender relationship) plays an important role.  You may have money now, but there comes a point that when you’re in the brink of needing extra cash again, nobody will lend you because you were not faithful enough to pay it then.  Do you think you will be able to borrow money again? I doubt it.