Debt is one of the biggest termites in our financial foundation! But before we go deeper into that, debt is neutral, it is not all bad. There are 2 types of debt, simply a bad debt and a good debt.
Good debt is a type of debt when it will be used for business and in return, profit! You gain more money because you borrowed money to do business.
A bad debt is completely the opposite, you borrow money, use it for something that will not earn you money and in return, you are unable to pay it because you do not have enough money to pay for it.
This is what we should get rid of, bad debt! Now we can talk about a lot of types of debt but I want to focus on credit card debt.
Credit card debt in the Philippines can turn into a nightmare! Compared to the US and Canada, interest on credit cards may go as high as 19% a year, In the Philippines, it may go as high as 42% a year!
Many drown in debt here in the Philippines and when that happens, collection agents starts calling and harasses the debtor, these collection agencies go as far as sending you an "attorneys" letter and scarring you that you will get sued if you do not pay this and that and it goes on until the debt is paid.
Talk about inconvenience! I personally know someone who had so much debt, 6 digits, all from credit cards and if someone get this kind of problem, most of them would just give up but not this person, this person paid all the debt and right now, this person is out of debt and is in the green, this person have investments and it is growing! Right now, she is one of the speakers in Wealth Academy for debt management. How did she do it?
Number 1, one must be determined to pay off debt! Discipline is a must when paying off debt, cutting expenses and making extra sacrifices to make more money and pay off debt. This is the first step and most important step, with it, nothing would happen.
It is also recommended by financial experts to pay of your debt first before investing, the reason for this is because, usually, debt interest in higher than the growth of investments. It's a case of steady interest (debt) vs. fluctuating gains (investment).
If you have investments and bad debt and the same time, a good call would be to withdraw your investments and pay off the debt! That way you get rid of termites and build you financial foundation right!
Remember, control your debt or debt will control you!
Truly there are a lot of ways to get rid of debt, if you want to get more information about this, we have a dedicated series in Wealth Academy on how to get rid of debt!
On my next articles, I may divulge into detail on how to get rid of debt. Keep an eye for that.
You can get more details here about Wealth Academy:
https://www.facebook.com/WealthAcademyProgramCebu
If you are in Cebu, you can catch Wealth Academy in 2nd floor, JY Square, Lahug. Every Wednesday and Saturday, 6:30PM.
If you are in Manila, you can catch this at 3rd Floor King's Court 1 Building, Pasong Tamo cor Dela Rosa St. Makati. Every Wednesday and Saturday, 6:30PM.
Cheers!
Picture is not mine, it belongs to http://boilingfrog.ca/wp-content/uploads/2013/01/180.jpg.
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