Buhay Bahay-Bahayan

Ok. So how was your list? Did you make one? It looks nasty, doesn’t it? Don’t worry, I’m sure lots of people have it worse. But if you didn’t make one, I don’t blame you. It takes a lot to face one’s fears. And not everybody can make it. But if you’re like us, who got tired and fed up with all the stress debt brings, well then, I suggest you make the list. It’s the first step. And it’s actually the easiest step.

Now we move on to the second step to getting out of debt: make a plan to get out of debt. Like step one, it’s quite simple too. But this is so much harder. This takes a lot of work. In our case, we started with making a budget.

We first listed necessary items like rent, utilities (water and electricity), a modest allowance (say, Php100 a day), a modest grocery budget, and gas. We also allotted some date money. Sounds extravagant? Not really. You need this to relax, cool down, and somehow enjoy yourself. This need not be a huge amount. This can range from Php100 to Php500 a week. We usually use our date money to buy ice cream, dibidi, and/or eat Shawarma and mango shake at the Good Shepherd Bazaar (Ruins). We wouldn’t have made it if we didn’t have this small reward for ourselves.

We also started calling the banks and asked them if we could settle for an agreement regarding the payment terms of our credit card balance. Almost all banks are willing to negotiate. This is also takes away the worries of having to pay late charges and interests if you are not able to pay on time.

Next, we determined how much is left for debt payments. The list we made of our debts came in handy. Our credit card debts were separated according to payment dues. This made it easier for us on which to focus on every payday. Then, for the payments, we followed Dave Ramsay’s Debt Snowball Plan.

Put all your debts in order from the smallest balance to the largest.

After necessities are paid, pay the minimum payments on all of your debts.

Put any surplus money towards paying off the smallest debt first.

Pay off your smallest debt, get a psychological boost from knowing you’re one step closer to being debt free!

Once the smallest debt is paid off you roll the money you were paying on that debt over to the next smallest debt.

Wash, rinse, and repeat until all your debts are paid off!

Every debt that was cancelled out from our list motivated us to finish off paying all of our debt. It empowered us and made us feel in control.

The plans of the diligent lead to profit. (Proverbs 21:5)

It is also our goal to reduce our expenses. While we were doing this, we were also very careful with our consumption and expenses. For example, we started bringing our own lunch, and we limited our going out. All the extra money we saved went straight to debt payments. The faster we finish paying off one debt, the better.

…the little foxes that spoil the vine… (Song of Solomon 2:15)

Little things also matter. For example, taking a cab when you can take the jeepney, leaving appliances plugged in when not in use, etc. These little things, we should be more careful of. Most of the time, when we talk about cutting expenses, we look at the big things. And here’s the thing: we probably don’t waste money on the big things. When it comes to the big things, we’re really careful. We waste money on the small things, which when added up amounts to a whole lot.

So be on the look out for those little foxes.

That’s it! That’s step two. Step three will follow soon enough. Good luck!

As I previously mentioned, debt is very much a part of our lives. When we’re riding a public utility vehicle like a jeepney, FX, or taxi, we are in debt to the operator/driver until we pay our fare. In the same way, when we are dining out, we are in debt to the restaurant owner until we pay for our food. We can’t really avoid debt. Therefore, we can’t say we’re literally debt free. So let’s change its meaning to something much more appropriate. So here, when we say debt free, it just means that we have our debts/finances under control. OK? Now that we have that cleared, let me pick up where I left off: the first step to getting out of debt (the first of three steps).

The first step to get out of debt is actually quite simple: face your debts. You will never get out of debt by ignoring debt. I know a lot of people who choose to do this, avoiding the debt collectors and ignoring the bank statements/letters, to the point of receiving demand letters from lawyers. I now the feeling, believe me. I’ve been there. Those were some of the very stressful months of my life. I dreaded hearing the office phone ring because it might be the debt collectors asking me again when I’m going to settle my debts. And they called everyday. And it was doubly humiliating because our whole department shares the phone. And we all know how different those calls are from a phone banker asking for somebody to apply for a credit card to a demented debt collector who will stop at nothing to talk to you.

And so, as a part of facing your debts, accept all calls from debt collectors. In fact, I urge you to call all your banks. Ask how much you really owe. If you’re reading this, and you want to get out of debt too, here’s what you need to do: make a list and write down your debts. This is really important. You need to sit down, have a pen and paper ready, and list all the debts you have. And I mean ALL. If you owe your parents some money, list those too. Include the debts from your friends, brother, sister, etc. And don’t exclude anybody. If you owe your uncle Php100,000, put that in the list too, even when he said you can pay him whenever you can. If you owe your friend Php20, put that too. ALL your debts! No matter how small. ALL. This way, you’ll have a proper perspective of how much you really owe. It was quite an eye opener for us. It was horrifying too, because we couldn’t believe that we have accumulated so much debt in so little time. When we added all our debts, it was enough to pay the 10% (or 20%) down payment of a house! A house! That was how much we owe. So as an assignment, for your first step, I want you to make a list: your own debt list. I cannot stress enough how important this step is. Make a list. And keep it to yourself. That’s it for step one.

The second step, which I will post in a few days, will be easier if you have your list. So go and make yours now.

I can do all things thru Christ who strengthens me now.

–Phillipians 4:13

I first read that quote in a teacher’s table when I was in elementary school. I forgot which teacher, and don’t ask why I was there, I was Awesome when I was a kid, upgraded to Greatness now. True story. :oups: Anyway, of all the things I learned (talaga lang ha?) in school, this particular quote stuck and continues to pick me up when things (the way they usually do) aren’t going my way.

Glenda of Oodles of Goodles is giving away tons of goodies for her birthday. Hop on over and join the contest. All you have to do is share a favorite quote.