4 How to Get Out of Debt in 8 Ways


How to Get Out of Debt
Debt can feel incredibly overwhelming to the point that it seems like a no-win dilemma. Debt not only cripple your finances, but it can also strain your personal relations and drown you in anxiety.
 
The issue of debt in the Philippines is somewhat different from Western countries because Filipinos often borrow from friends and family.


Although bank credits and loans are on the rise in the Philippines, close-knit social ties remain to be a strong influence among Filipinos when it comes to borrowing money.
 
Desperate to be debt-free as quickly as possible? Whether it’s money you owe a bank, family, friend or sari-sari store, getting out of debt is definitely possible. Win back your financial freedom with these 8 smart ways to pay off debts.
 
1. Determine the exact amount of your debt
Figuring out how much your debt is the first step to achieving financial health. According to Standard and Poor’s, an international financial services company, 75% of Pinoys lack the necessary understanding of basic financial concepts such as debt. While the low financial literacy among Filipinos is grim news, getting a clear understanding of your debt situation is actually very easy. Write down each of your individual bills and the balance due, as well as the lender’s name. While recording your debt in a notebook is a good option, you can also keep track using online services and computer applications that you can download for free.

 
2. Establish how much money you have
A key to being a responsible debtor is having a plan that incorporates your income, basic expenses, and debt. Earlier, we said that it’s important to list down all your debt. That is the basic requirement of a repayment plan. Now, create a spending plan by writing down your income after tax and all of your basic expenses such as rent, food, and transportation. Deducting your basic expenses from your income will give you a clear idea of how much money you have to pay off your debt.

 
3.  Prioritize your debt by interest rate and deadline
If you’re not careful, interest rates can quickly snowball. Interest is a powerful mechanism that banks and financial institutions employ to squeeze more money out of you. For example, if you have a Php10,000 credit card debt with 3% interest rate per month, you can end up paying Php3,000 more if you do not settle it in 10 months. Interest significantly increases the amount due, so it’s crucial that you’re keen on debt management. For your repayment plan, rank your debt according to interest rate. If you owe a family member or a friend, prioritize based on the deadline and other arrangements that you have discussed with the lender.

 
4. Pay your debt without the hassle
Nothing is more irritating than a debtor who has so many excuses when it’s time to pay up. It’s easier to pay your debt and manage your money if you have an automated personal finance system. Consider making an arrangement with your bank to automatically pay your bills and payments,  and even investment, each month. Tweak it to your specific situation. But what if your lender, say a friend, doesn’t have immediate access to a bank? If you can’t pay personally, consider popular cash-to-cash services for a quick and safe option. A reliable financial system, whether it’s a pera padala service or a bank procedure, can do wonders in alleviating the hassle and stress related to debt.

 
5. Avoid new debt at all costs
You can’t solve your debt problem if you’re creating new debt. Indeed, restraining your financial habits can be difficult. But you must make a stand against new debt. While closing a credit card can hurt your credit score, keeping your balance at zero will not incur any penalty. Consider freezing your credit cards or cutting them up entirely. If you absolutely must keep a credit card, make sure that what you keep is a low-interest card. Leave your credit card at home when you go out shopping and use it only for emergencies.
 
 
6. Sell unnecessary stuff for a profit
Short of money to pay off your debt? Drum up some quick cash by selling some of your belongings. Most of us have stuff that we rarely use and could live without. It makes a lot of financial sense to unload yourself of items to reduce or clear your debt. Take stock of items that you can sell. You can make a decent amount of money by selling old books, clothes, electronics, furniture, and home appliance. A good old-fashioned garage sale is a convenient way to unload your belongings for a profit. You can also consider selling your items on various online marketplaces.

 
7. Get a side hustle to earn more
Is your income not enough to pay off your debt? Earning more money is one of the best options that you have. It sounds easier said than done, but there are actually a couple of ways to boost your income while working a full-time job. Check out sites like Upwork and TaskRabbit to utilize your skills and earn extra money. There are a number of easily available part-time jobs that Filipinos can try. Some examples involve freelance writing, product promotion, online tutorial, and pet sitting. There are even jobs where you get paid by flipping through video ads or sharing your opinion online. 
 
 
8. Earn rebates to pay off debt faster
It can be difficult to pay for basic necessities when in debt. But did you know that you can earn money even when you spend? Earn rebates on a lot of your purchases. For example, grocery receipt scanning apps allow you to earn money just for taking a picture of your receipts. For household necessities, you can earn gift cards when you sign up for various apps like Ebates and Amazon. The money you save by earning rebates can substantially help you pay off debt. 

 
If you dream of having a debt-free life, following the tips in this guide will help you gain financial freedom. While it may seem impossible at first, paying off all your debts is actually doable and fairly easy.
  
Author Bio:
Patricia Evans is an interior designer, Huffington Post UK blogger, and a full time mother. She worked in Marketing before but she quit her job to pursue her true passion: interior decorating. Follow her on twitter

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4 comments :

  1. Glenda NuguidDecember 10, 2017

    A must-read! Thanks for this ^_

    ReplyDelete
  2. Or don't get any debt or loan at all!

    ReplyDelete
  3. Patrick ReyesDecember 13, 2017

    The snowball method is also effective

    ReplyDelete
  4. Those tips are really good. But I would rather go with "how not to get into the debt" - isn't it easier to be rational with your money and stay away from debts?

    ReplyDelete

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