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Debt or Utang have destroyed many relationships: family, relatives and even friends. Who does not have "utang"? Utang (Debt) is not a bad thing. Don't get me wrong but there are two (2) kinds of debt : 1) Good debt and 2) Bad debt. Good debt is money owed that can help build your wealth while the latter (Bad debt) refers to a debt that does not give you big financial outcomes.
Here are some of my tips to have a "Utang" free life:
- Live within your means - spend less on your lifestyle than the income you earn. Buy only the things you need not your wants. If you have extra money from your earnings after setting aside funds for savings, paying off your utilities and debts maybe you can give in to your wants. Honestly, when I was younger I experienced this but later on I have realized that I should save more for my future. Like getting an upgrade for my 1 year old mobile phone because a new mobile phone came out. I also allowed friends to ride in my credit card, and when they defaulted I shouldered the payment of the things they bought. Living pay check to pay check is hard, after 4 years of working (before) I don't have any savings. Then the problem with my credit card came, this became an eye opener for me. I cut off my credit card and paid everything and decided a full-financial reset. I opened my first passbook savings account, started saving money every payday.
- Avoid government, company and personal loans for unnecessary expenses - As much as possible avoid applying for SSS (Social Security System), Pag-ibig fund company offered and personal loans for unimportant expenses like buying a new branded bag, for travel, throwing a party for a family member and the like. If you want to buy something or travel somewhere - save for it. In my case now, I still buy things I like or want but I make sure that I have enough funds to afford it. But if you will be going to use the fund to start or grow your business go head. Borrowing money to pay-off debt is a no-no also, because that will only increase your liability. Avoiding debt still goes back to number one - living within your means. In order to avoid debt you should set up an emergency fund - as the saying goes in Tagalog "Kung may isinuksok any madudukot". I have also wrote a blog regarding how to set up an emergency fund you can access it by clicking on this link : Emergency fund: What is it and how to set it up?
- Try to have multiple sources of income - Earning money is limitless especially for those who are hard working. If you have a day job, there are other ways to earn additional income. If you are good in selling - start an online store, if you love cooking or baking you can start selling your goodies. You can also accept art commissions if you are an artist. There are also a lot of full or part time jobs available online. You can also try investing your money to banks, stocks and etc but make sure you have a knowledge about them.
I know that getting out of debt is not easy, but when you become debt free and you have savings and investments you will truly enjoy your financial freedom. Always keep in mind that if you plan to borrow money make sure you have the means to pay them back.
xo,
Chiq♥
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