managing debts

I caught up with a friend this morning, and among the topics of our conversation was getting out of debt. It seems that he too would want to be freed from the shackles of paying the high interest rates that his loans and credit cards have enslaved him. We talked about getting our Christmas bonuses and what to do with it. We both have the same thing on our minds, paying debts. How appropriate was it that while doing my Morning Coffee I came across this post by Salve Duplito in the Inquirer entitled “Should you borrow to pay off debt?” Read it here.

At the end of the article, she lists some tips on how to manage debts. Here are some that I find interesting.

Prioritize. Writing down all your debt may be a scary thing, but you need to get a grip on how much you really owe. (Don’t forget the loan your mother or father extended to you.)

Several months ago, my wife and I did this. And the results are quite shocking. Everything was listed, to every single centavo, to every person we owed, whether it’s 50 pesos or 50,000 pesos. This helped us gain perspective on how much we really owe and thus make a financial plan.

Avoid new debt. Just remember that if you can’t pay in full, then you can’t afford to swipe.

Very true. If you can’t pay for it, you can’t have it. As you all know, we have terminated all of our credit cards and only pay in cash. We also make sure that whatever big purchase we have is something we totally need.

Save, save, save.

This is something we are diligently doing. We’re trying to save as much as we can.

Of course, not because we’re doing all this crunching we are missing out.  We do enjoy a sale here and there. We also set aside some date money so we could relax, go out, watch a movie, and/or eat somewhere fancy. It’s just a matter of balancing everything and trying to live healthy lives. And while I haven’t gotten my own LCD HDTV just yet, I’m pretty optimistic that someday soon I’ll get hands on that beauty, and maybe more.