getting out of debt: step one

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 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 not be favorable if you wouldn’t do this. So go and make your list.