Maxed out!

My brother knew I was looking for articles and videos on debts and he gave me a video of Maxed out.

It talks about the culture of credit in America. It will be nice to show you the whole movie but since I can't, I'm posting a video about the movie plus an interview with Maxed Out's James Scurlock and Elizabeth Warren:



I haven't come across a documentary on the credit culture in the Philippines yet. Am still searching for one but we certainly face the same issues on credit cards here except for bankruptcy maybe? I don't think filing for bankruptcy is normal for ordinary Filipinos :)

I know for a fact though how easy it is to get a credit card especially in the urban areas, how easy it could be for some to run away from credit card debts, how terrible and unproductive it could be for people left behind to receive the TONS of demand letters and answer calls and how collectors on bad accounts could be persistent (some bad mouthed) to the point that you want to kill them :))...

Nah.. actually in my case just to the point that I don't want to answer telephone calls anymore (I let the girls in the office do it and just pass to me business calls) since they would ask for people who don't want to talk to them (how much can you cover/lie for these people??? ) or even those that are already resigned (some of them resigned just for the purpose of running away from these hounders and they would not believe us when we say they've resigned!) and dead!

The movie is disturbing. Makes you want to say "to hell with those credit card companies". But credit cards if used wisely could be helpful too.

I try to use mine wisely. Oftentimes, I use it for the basics and make sure that I have money for the things I purchase and just make use of the lead time (time till it gets reflectd on your bill for payment) so I could pay for them just right after payday. No need to bring cash! I could easily avoid the long lines in the grocery to buy stuff for home by NOT going there on paydays, I could enroll my utility and similar bills there so I don't have to issue several checks , I get points, promo gifts and mileage plus I could request for a waiver of the annual dues (hehehe, I learned the trick from an officemate who would tell the card's center to waive or she'll cancel her card. I like to retain my few cards though so I use tamer language or else ask my officemate to make the call for me, it's lots easier since she's a hustler! :)) I do pay all my dues on time though (I've seen how many who opted to pay minimum get into trouble, big trouble!) Of course the temptation to splurge occasionally still happens but they are always within my budget.

For those who have credit cards, citibank has a nice advice on how to use credit wisely. Be sure not to maxed out!!!

How to handle debt collectors

Got this from the inquirer-money:

How to handle a debt collector

INQUIRER.netLast updated 09:00am (Mla time) 07/31/2007

Question: I’m ashamed to admit it but I am deeply in debt and have collectors calling me at home and at the office. I’ve made promises to pay that I know I won’t be able to keep – at least not with all of them. How can I handle this situation better? - Name withheld upon request

Answer: Face the problem head on. Don’t run away. That will worsen the situation. Running away from your creditors will reflect badly on your credit history and may bring about lawsuits, worsening the problem further.

The good news is, there’s a lot you can do about your debt problem now. Here are our tips to handling your debt situation better:

1. Assess how much you owe. List down all your debts including interest. This will give you a detailed picture of your situation. Identify the debt with the highest interest rate and target to pay that off first.

2. Assess how much you can pay. Make a monthly budget of your expenses if you don’t have one, then see how much you can set aside to the payment of your debts. You don’t have to pay off all your debts in one lump sum; that may affect your day-to-day living. Commit instead to set aside an amount regularly for debt reduction.

3. Talk to your creditors or their representatives (usually a collection agency) one by one. Pick up the phone and call them. Tell them of your situation and let them know how much you can pay them monthly for the next several months or years. More often than not, they will listen and allow you to stick to your debt payment plan since at the end, all they want is to get paid.

4. As soon as you get your paycheck, take out the amount of money you have set aside for debt repayment and pay your creditors. If you’re busy, pay online or by phone. Don’t make your busy schedule an excuse. If you do it a day later, you’ll be charged additional interest for the extra day.

5. Stop racking in more debt. Until you get out of your debt hole, avoid making new purchases or assuming any other new debt. Your goal is to be current in all your payments and wipe out all overdue balances.

6. When you get a windfall, say a bonus or 13th month pay, use it to pay off debt. Doing so will accelerate the wiping out of your debts.

7. Think of ways to raise extra money. get a part-time second job such as teaching or tutoring on weekends or bake cakes to order. Or sell off personal stuff you can do away with, such as a treadmill or bike you don’t use or an extra computer. Then use this extra money to pay off debt.

8. Consider taking in a low-interest debt to pay off higher-interest debt. It would be a good idea to take out a salary loan from the SSS or GSIS and use the whole proceeds for the payment of your debts. The loans from SSS or GSIS offer low interest and reasonable monthly amortizations.

9. Lower your spending. Look at how you spend your money every month. You might see some expenses that are not really necessary. Instead of taking a taxi to work, for instance, take the MRT, or carpool with an officemate to save on gas. When giving gifts, opt for homemade gifts instead of store-bought ones. Instead of going to the cinemas to watch a movie, rent a DVD instead. If you cut back on your spending, you will have extra money that can be used to further pay your debt.

10. Commit to be a better consumer from now on. Before buying anything, ask yourself if the item is a need or a want. If it is a want, put it aside first until you can really afford it and you are free from debt. Also, compare prices before buying. Do not hoard even during sale season; buy only what you need.

Understanding basic concepts of debts

I have already made an earlier posts on debt crisis and success and steps to manage debts and I realized that I haven’t even posted on what a debt is. I guess I was assuming that people already know what a debt is and which is probably true, however, I found the following related sites that discuss the basic concept of debts:

http://www.theresourcehub.com/understanding-debt.html

Understanding the basic concepts of debt
Budgeting is an important aspect of living and a person who knows how to budget will go a long way in this commercialized society. Budgeting has a lot to do with keeping the expenses less than the total income of the household. Those who are very good at budgeting can come up with savings even if they have meager incomes.

The problem sets in when a person fails to make an efficient financial plan and his expenses exceed his earnings. When this happens, a person has no choice but to borrow money to make up for his financial deficiencies. Borrowing once or twice because of a mismanaged financial plan is normal but when borrowing becomes a regular thing that can put a person in serious debt problems.

A person who borrows money from another is said to be in debt. The debts of a person can be minimal or can reach up to millions depending on the credit limits of each person. Sometimes, a person who has assets but isn’t liquid can use these assets to get cash. Under this term, the person can be indebted for an amount less or more than his assets.

There are laws that provide that a person can never be forced to render services as payment for his debts. This is called undue servitude and is prohibited by the laws of some countries. However, there are situations when the person who is in debt opts to settle his obligation by rendering his services.

This can happen if a person is so talented in his craft like painting and he opts to pay for his debts by creating a painting of the creditor or the assignee of the creditor. Sometimes, a person can pay his debts gradually or on an installment basis.

When a person dies, the law has provided for a hierarchy of preferences in the payment of such debts. Of course, payment of taxes to the government will always come first. The second priority for debt payments includes funeral expenses of the deceased and the payment for the wages of people.

Debt is really just a simple concept, which provides that a person who borrowed something from another is duty bound to pay that debt. However, the concept of debt becomes more complicated with the introduction of other concepts like mortgage, interest rates and other charges. Interest makes most debts double or even triple in amount. More often, the interest rates due for a certain debt is even higher than the principal amount borrowed.

A person who wants to get credit can do so in the form of a loan. A loan can either be secured to unsecured. A secured loan means the debtor borrowed some money and supported the loan by collateral or a security for the loan. The security or collateral can come in the form of a house and lot, a car or any asset of the debtor. An unsecured loan means otherwise.

Most creditors require a security before granting a loan because it gives them something to hold on to or to forfeit in case the debtor defaults in payment. When the debtor fails to pay the debt within the agreed timeframe then the creditor can foreclose the security or the collateral.
However, having an unsecured loan doesn’t mean that the debtor can renege on his debts. When the debtor fails to pay his loans, the creditor can still run after him by filing a case in court. When this happens, the debtor who has no cash can sell some of his assets to pay for his outstanding loan.

Being in debt is common even for the rich and the famous; the only difference between them and the common people is that their debts can be in the millions since they have more assets to support their loan. Unsecured loans most often have higher interest rates to make up for the lack of security.

Even third world countries are indebted to more developed countries. However, the debts of a country can go on forever because they keep on paying their loan but they also get new credits as their credit ratings go up.

http://www.theresourcehub.com/your-debt-explored.html

How to take charge of your debts
The rising cost of living and dying has made people more reliant on loans and credit. Most people have been indebted to someone at some point in their lives. A debt is an obligation that should be paid and accounted for no matter how meager the amount. Being in debt is normal considering that no one has a monopoly of all the money in the world. People will always have the tendency to accumulate debts no matter how rich. In fact, rich people have more debts than poor people because they have more needs and they have more collateral or security.

Being indebted isn’t something that you should be ashamed of provided you are a responsible debtor. This means the money was used for a very good cause or purpose and the debtor is religious in looking after his responsibility to pay his debts. Even a person who is savvy is financial management can get into debt for one reason or another. However, a person who is good in managing his finances should also be good in managing his debts. Managing debts would include the ability to know how much a person owes and from where he would get the money to pay such debts.

The ability to know the total indebtedness is a must in debt management because the person who is in debt is aware of the total amount he has to produce to pay off his debts. There are people who don’t practice good debt management and they keep borrowing money without being able to monitor how much they already owe individuals or financial institutions.

Debt management means that at the time the loan was made, the borrower knows where he would source the payment for such debt. This makes the debt manageable because it would appear that the person has some source of income and he is just not liquid at the time he borrowed the money.

People who don’t have a steady source of income should be discouraged from borrowing because there is a tendency for their debts to pile up without being paid at all. Unemployed people who resort to borrowing for their essential expenses like food and daily subsistence may borrow from another creditor to pay off a debt that is already due and demandable. The same thing happens to the second and the next loans after which it becomes a vicious cycle.

A person who is indebted to someone should take an inventory of his assets that can be used to pay off his debts. There is no problem if the debtor is looking at a possible income that hasn’t yet been paid. Such unpaid income can be considered an asset that can be used to pay his debts.

Debts are easily made but they are difficult to pay.

Thus, every person should be careful when borrowing money from others. Make sure that you have something to pay for the debt like an incoming income or check, or assets that can be sold to pay off the debt.

Some people get indebted by virtue of loans that have varying interest rates. This means that aside from the principal amount borrowed, the debtors still have to pay for the interest rate. A person who borrowed $100 at ten percent interest rate per month will have to pay the principal plus the interest rate of $10 per month. Some interest rates are based on the actual balance like if the debtor has already paid $20 then the interest rates would only be pegged on the balance of $80. However, there are some interest rates pegged at the original amount borrowed.
While being in debt is prevalent, every person should learn how to manage his debt and how to stay out of debt if possible. One of the major factors why most Americans are indebted today is the misuse of credit cards.

Credit cards are those plastic cards that can be used to pay for almost any purchase even if you don’t have cash. People find it easier to spend when using their cards because they just swipe it and voila; it works like a genie granting their every wish!

However, most people who fail to use their credit cards wisely become indebted and are faced with legal actions for failing to pay their cards when they become due and demandable.

Go ahead, borrow if you must but always take charge of your debts to make sure they don’t lead you to declaring insolvency or bankruptcy.

http://www.theresourcehub.com/debt-counseling.html

Debt Counseling – What It Can Do for You

Statistical reports show that nearly 80% of consumer expenses in the United States are on credit and the most convenient way to shop is to use plastic, or more popularly known as credit cards. Moreover, the average debt is more than $8,000 with a typical interest rate of 18.9%. No wonder so many people are now heavily buried in debt. Along with it came lots of debt relief programs aiming to provide consumers effective ways out of debt.

Among the many debt relief programs available today, debt counseling is one of the most well liked programs, helping more than the average consumers who seek debt consolidations. Debt counseling is one way of teaching consumers how to administer their profits and expenditures. This program will also teach them how to avoid further accumulation of debts.

In essence, debt counseling should have been a preventive measure for accumulating debt, but the problem is that most people use this after they have already mounted lots of debts.With debt counseling, you can learn the different ways on how to avoid debts. The main focus of debt counseling is to educate the consumer regarding their expenses, balances and the credit score.

All of these things will put a great impact on the interest rates as well as the types of loans one can pursue. It is important for every consumer to seek debt counseling before they start charging their expenses.

Here is a list of things that your debt counselor can do for you:

1. Debt counselors can teach you the whole credit card process
One of the greatest problems why many people accumulate debts more than what they can afford to pay is that they aren’t aware of the actual operation of their credit cards.
According to surveys, almost 75% of credit card holders aren’t aware of their balances, not even the amount they are paying off monthly.

How is that? This happens when consumers only try to pay the minimum required balance stated on their credit card bill. They are only prolonging the process and accumulating bigger debts through interest rates.

The point here is that paying the minimum balance on your credit card won’t get you any farther. It may lessen your actual balance but may only aggravate the situation because of the time it will take you to finish everything off.

With debt counseling, you are made aware of your payments and on how you should go about your balances so as not to accumulate more debt.

2. Money management is the ultimate tool that they can teach you
Debt counselors can give you complete details on money management. Here, consumers are taught how to manage their expenses and their credit card bills.

Debt counseling programs will teach you how to be aware of your credit card billing statements every month. In this way, you become conscious of your expenses and your available credit limit. The key is not to exceed your credit limit so as not to accumulate debts.

The problem with most consumers who are heavily buried in debt is that they are not aware of their monthly expenditures, thus, tending to cross over the specified credit limit.
Keep in mind that credit limits will most likely keep you in track. Once you have gone overboard, chances are you will find it hard to pay off your balances.

3. They will teach you how to use cash instead of plastic
Since the emergence of credit cards, consumers tend to neglect the real functions of credit cards. They don’t understand that credit cards aren’t extensions of their profits. Any amount used on credit cards is still payable.

So if you have been charging more than what you can pay in a month, you will definitely accumulate more debt.

Moreover, debt counseling will teach you not to use your credit cards when paying for your basic necessities like gasoline and groceries. These items are so basic that you should have included them in your monthly budget.

By any chance, acquiring them on credit will only entice you to get more than what your budget allows.

Indeed, debt counseling is a very effective way of managing debts. You should realize that debt counseling works better if they are used beforehand and not after the consumers have accumulated debt.

Debt counseling seems to be a big industry in the US, with people also concerned not just with payment of their loans but also with their credit standing.

Credit standing doesn't seem to hold importance to many Filipinos in debt crisis even those with credit card debts. But most would be bothered by the frequent hounding of their creditors! I have seen many run away from their credit card debts by changing offices and residences and people left to receive the collectors' frequent (oftentimes even threatening) calls and mails gets disrupted. Even if you are not a professional debt counselor, it would be a good thing to give advice to people with heavy debts to help them rise above their problems.

The 12-step Get-out-of-debt program

Got this from Zen habits:

The Zen Habits 12-Step Get-Out-of-Debt Program

1. Acknowledge the problem. The first step is admitting you have a problem. The first week, all you have to do is say to yourself, “I have a problem with debt. I got into this because I spend money I don’t have. But I believe that there’s a way out, and I can do this. I can control my spending, make a plan, and slowly get out of debt.” That’s a major step. Now set aside just 30-60 minutes a week to deal with your finances — make it a set day and time, and don’t let yourself miss this appointment.

2. Stop digging. If you’re in a hole, the first step is to stop digging, and that’s what you’re going to do this second week. For 30 days, see if you can stop any non-essential spending. If you have a major problem with credit cards, cut them up. If you’re not so bad with credit cards, at least put them away and don’t buy stuff online for one month. What’s essential? Obviously your bills, housing, auto, gas, groceries … that kind of stuff. Non-essential? Clothing, CDs, DVDs, books, magazines, gadgets … you know what I mean. Just 30 days. After that, you can decide how much to spend on these things.

3. Make small cutbacks. This third week, take a look at things you normally buy and see if you can cut out a few of them, or spend less on them. Groceries? See if you can buy house brands instead of name brands. Coffee? Make it yourself at home instead of buying out. Lunch? Try packing it to work instead of eating out. Add up what your cutbacks will save you this month.

4. Start an emergency fund. This fourth week, set up a savings account, if you don’t have one already, for an emergency fund. Now take the amount you saved in Step 3 (and even in Step 2 if you think you can make them last for awhile) and set up a regular automatic deposit from your checking to this emergency fund savings account for this amount. It’s important that before you start paying off debt, you have at least a small emergency fund. Aim for $1,000 at first, and you can grow that later. The reason: if unexpected expenses come up, and you don’t have an emergency fund, you will skip your debt payments to pay for the unexpected expenses. The emergency fund protects your debt payments.

5. Take inventory. OK, this is a step that we don’t like to take. But take a deep breath. You need to do this. Remember what you said in Step 1? You can do this. This fifth week, set up a simple spreadsheet. In one column, list all of your debts — credit cards, medical bills, auto loan, etc. You can leave out your mortgage, but put everything else. In the second column, put the amounts you owe for each debt. In the third, put the minimum monthly payment, and put the percentage interest in the fourth column. Total up the second and third columns to see your total debt owed and how much you have to pay, at a minimum, towards debt each month.

6. Make a spending plan. We don’t like to do this step either. But it’s not going to be as painful as we think. This sixth week, set up another simple spreadsheet. In one column, list your monthly bills (rent or mortgage, auto payment, utilities, cable, etc.) — everything that is a regular monthly expense. Then list variable expenses (things that change every month) like groceries, gas, eating out, etc. Later you should add irregular expenses (stuff that comes up once in awhile — less than once a month) such as auto and house maintenance, clothing, insurance, etc. But we won’t get into that now, as we want to keep it simple. In the second column, put down the amounts for each. Be sure to put enough for things like gas and groceries, as you don’t want to be short. Be sure to also include your minimum debt payments and your emergency fund deposit. Now, list your income sources and monthly amounts. There. You’ve got a temporary spending plan (you’ll want to add the irregular expenses later). Now, if the expenses are greater than the income, you’ll need to make adjustments until the expenses are equal to or less than the income.

7. Control spending. If you’re into your seventh week of this debt plan, you may find it hard to keep track of your spending and ensure that you’re sticking to your spending plan. Here’s the key: first do the emergency fund deposit. Then do the debt payments. Then do your monthly bills. Then withdraw the variable amounts in cash, and put them into separate envelopes. It’s old-fashioned, but it works, as you don’t have to worry about overspending. When your envelope is empty, you can’t spend anymore. Continue to cut back on non-essential spending as much as you can at this point, so you’re able to stick within your spending plan.

8. Pay bills on time. This may be a problem for a lot of people. It’s important, if you want to get out of debt, to start paying all your bills on time. If you follow the payment plan outlined in Step 7, your bills should be paid before you get to any discretionary spending categories. At this point, you want to focus on getting those bills paid on time, and making it a habit. If you have trouble remembering, try one of these methods: 1) pay bills as soon as they come in — take them to the computer and pay them online, or write out a check and prepare the envelope to be mailed the next day; or 2) set up a reminder in your calendar program to tell you when bills are due.

9. Start a snowball. Now that your finances are relatively under control, you can start a debt snowball. At this point, you should have the beginnings of an emergency fund, you should know how much you owe, you should have a temporary spending plan, you should be paying bills on time and controlling your spending. Now you can focus on paying your debt. Here’s what to do: If you can find at least $100 from your spending plan, use that to start your debt snowball. You may need to cut back on discretionary spending (as you did in Steps 2 and 3). Or, once your emergency fund is at $1,000, you can use the amount you were putting into that account for your debt snowball. If you have trouble finding $100 for a debt snowball, you need to look at what other expenses you can cut back on. OK, once you’ve found at least $100 for your debt snowball (and more would be better), take a look at your debt spreadsheet. First, order the debts from the smallest amount owed to the largest. Now, look at your smallest debt owed — you will start by paying $100 (your debt snowball) plus the minimum monthly payment on that debt each month, until the debt is paid off. When the debt is paid off, you will take the amount you were paying on it (let’s say $50 monthly payment plus the $100 debt snowball for a total of $150) and pay it to your next smallest debt, until it is paid off. Continue to pay off your debts, one at a time, until they are all paid off. Now you have a large sum you can put into growing your emergency fund, and funding your irregular expenses, and finally start investing.

10. Find larger cuts. Once you’ve controlled your finances and started your debt snowball, there are ways to increase the snowball — and hence the speed with which you get out of debt. Look at your larger expenses — are there ways you can eliminate or cut back on them? Can you sell your car for a smaller, used model? Can you find a smaller house or apartment to rent? Can you sell your house and rent a cheaper one? Can you get by with one car? Can you eliminate some services you’ve been using? Whatever cuts you make, apply that amount to your debt snowball — don’t spend it.

11. Grow your income. Another great way to get out of debt faster is to make more money. Look at ways you can make money on the side — or ask for a raise or get a better job. Take 30 minutes to brainstorm. Are there ways you can start a small business online? Sell your valuables on eBay? Start freelancing on the side? Get a part-time job? This only has to be temporary, but the more money you make, the faster you’ll get out of debt. Be sure to apply your new income to your debt snowball.

12. Track your progress. On your debt spreadsheet, be sure to update it every payday (or however often you pay debt) so that you can see your shrinking debt amount. You should be able to calculate how many months you have left before you’re completely out of debt. It may be a long ways off, but it’s within sight!

**Bonus step: Celebrate! It’s important to celebrate, not only when you’re out of debt, but along the way as you eliminate each debt. Have fun! Make this an adventure. It can be amazingly satisfying to stop spending and gain control of your finances instead. Find free entertainment, make it a challenge to be frugal and save money and find cheap used stuff. Pat yourself on the back along the way.

read the complete article here.

The author mentioned that the above is specifically aimed for people that have gone overboard and finds it difficult to pay their debts and not really for people just trying to manage their finances while paying a debt or two, but the latter can find useful tips too.

I know of someone who is in deep debt trouble yet would not openly admit that she is in one. Everytime I give her advice she would just tell me that "babayaran ko rin naman lahat yan, eh!" (I'll pay them all anyway!). She tries to avoid the topic as much as she can and wouldn't share her problem with her family trying to keep the lifestyle they are accustomed to. I know how hard she tries to keep a semblance of sanity in her life but stress do take the toll for she is constantly sick! No matter how much one denies the problem, the body knows and it gets manifested. I wish she would face her problem straight, acknowledge it. It will be a good way to start (that's the first step after all), then she can really work on the solution. This program could be of help to her!

Ten commandments for a debt-free lifestyle

Got this from dey's blog:

The Ten Commandments for a Debt-free Lifestyle

1. A – Administrators. The earth is the Lord's, and all it contains, The world, and those who dwell in it (Psalm 24:1). Since God owns everything, we are only stewards, not owners, so we are to manage money properly and use it wisely. We must pray and ask God's will as to how money is to be spent.

2. B – Budget. Follow the simple rules in budgeting: Make a record of all your expenses. Have a shopping list. Don't buy anything not in the list. Have a budget and stick to it.

3. C – Cut credit cards. To cut the credit card is to cut the source of temptation to overspend, a practical application of Matthew 5:29-30: "And if your right eye makes you stumble, tear it out, and throw it from you; for it is better for you that one of the parts of your body perish, than for your whole body to be thrown into hell. And if your right hand makes you stumble, cut it off, and throw it from you; for it is better for you that one of the parts of your body perish, than for your whole body to go into hell.” Getting rid of the credit card is better than it causing you to sin and destroy your testimony. Loans can muddle up your life that it turns into “lason,” the vernacular for “poison.”

4. D – Debt Pay-off ASAP. Cash basis is best. If availing credit facility is unavoidable, pay the full amount reflected on the statement of account. This practice will pay off in the end. Paying only the minimum amount required may seem light on the pocket, but heavier in the long run due to interests ranging from 3.25% to 6.50%, compounded monthly. Here are don'ts in borrowing: Don't borrow to buy anything that depreciates. Don't borrow except to buy a house (which appreciates in value). Don't borrow to pay debt. Don't borrow at high interest.

5. E – Envelopes of cash. Cash funds must be kept in envelopes distributed as follows: MONTHLY: Rent, food, utility, gasoline, school allowance, recreation and entertainment, etc. YEARLY: tuition, textbooks and school supplies, insurance, Christmas, holidays. CONTINGENCIES: Medical, emergencies. Refrain from juggling funds.

6. F – Family planning. More children means more mouths to feed, more bodies to clothe, more minds to educate. This could drain or put pressure on finances. 1 Timothy 5:8 says: But if anyone does not provide for his own, and especially for those of his household, he has denied the faith, and is worse than an unbeliever. Plan a family of manageable size which you could ably support as well as amply give care and attention to. Why cause children to suffer? Many children out there are malnourished and out of school. And at the rate population is growing, in a few years, there will not be enough food to go around.

7. G – Grateful and not greedy. Contentment and generosity are the signs of gratefulness. Giving generously to God and others may be the way for others to be blessed.

8. H – Hard work, not easy money. Work hard and become a leader; be lazy and never succeed (Proverbs 12:24). Do not gamble. Beware of pyramid schemes. Do not lend at high interest. Aiming for the easy, quick bucks could spell more disaster.

9. I – Invest for the future; Invest in eternity. By simply spending less than what you earn, you can save for future needs, emergencies and retirement. But beyond this life, one can store up treasures in heaven (Matthew 6:20). Live simply that others can simply live. Instead of spending on something that is not a real need, give it away to someone who has a dire need. Be a major stakeholder in church by giving much of your time, talent, energy and money to it.
10. 10-20-70. The suggested income allocation is 10% for tithes, 20% for savings and 70% for spending. This can of course be modified by spending less so that tithes and savings increase.

You can read the full text here.

Debt: it's a spiritual issue

I got this from my email:

Debt: It's a Spiritual issue

My friend David has a simple little ditty about debt that everybody needs to commit to memory: WHEN YOUR OUTGO EXCEEDS YOUR INCOME, YOUR UPKEEP WILL BE YOUR DOWNFALL. It's straightforward, honest, and insightful about the unpleasant life situation of too many people -- probably all of us at one time or another.

The inability to handle money is as much a spiritual problem as one's mishandling of alcohol. It may even be more socially respectable. After all, let somebody mention "living paycheck to paycheck" or confess "being in debt up to my eyeballs" and somebody will likely laugh and say, "Let me tell you the mess I’'m in. You won't believe this . . ." Is fiscal irresponsibility really so trivial?

According to the Nilson Report, Americans are using their credit cards quite freely. The average cardholder's outstanding balance is $4,400 -- up 123 percent in a decade which saw personal income rise a smaller 72 percent. (Since most households have more than one credit card, $4,400 may not be a fair estimate of total family debt on high-interest credit cards!) The United States government recently reported that personal savings have fallen to the lowest monthly level in our history. Meanwhile, more and more state governments are pumping money into TV ads to ask citizens to buy lotto tickets. It's bizarre, don't you think?

Maybe debt is the "respectable addiction" of this generation. Credit card companies mail out an estimated 3.3 billion credit card solicitations per year.

Tension rooted in debt will set you against your mate. It will distract you from your children. It will disrupt your spiritual life and become a barrier between you and God.

The Bible says: "Don't run up debts, except for the huge debt of love you owe each other" (Romans 13:8, The Message).

Sell an asset or create an extra stream of income to pay off the debt you already have. You'll be amazed by just writing down every dime you spend for a few weeks -- and eliminating the foolish and unnecessary impulse buying that drains so many pocketbooks.

Believe it or not, abusing credit is sinful -- just like abusing alcohol.

And it is a spiritual victory to ask and receive God's help in bringing it to an end.

---- The FAX of Life is a free weekly service from Rubel Shelly and the Family of God at Woodmont Hills.

There are a lot of Christians in the Philippines, I wonder if they ever see their debt problem as being a spiritual issue?

Debt Paranoia

I came upon this short film in Youtube (sorry about some of the language)



The guy became paranoid after he can't pay off his huge debt and wouldn't let a man in thinking he was one of those collectors. He couldn't take all the internal voices nagging him that he finally took his life. Too bad since the guy on the door was actually a representative from an estate that would have handed him a huge inheritance.

This is fictional and seems like one of those features in the Tales from the unexpected but I have heard of someone who actually committed suicide due to depression caused by failure in business and HUGE debt.

I think this is rare in the Philippines. What would be more common is someone running away from debt. Just disappearing! It may be hard to disappear in the US and other countries but it seems fairly easy in the Philippines.

Pactical Debt Management from David Sumrall

Found this Practical-debt-management from sonnie's porch:

1. Have a detailed list of your debt
2. Shut down spending. Buy only what is necessary.
3. Study your expenses
   Kill the little foxes that destroys the vineyard
   Songs of Solomon 2:15– “..Catch the little foxes. They destroy the vineyards..”
   Too often, we sacrifice on the big expenses, but what depletes our budget are the “little foxes” or little expenses on regular basis.
   A good example is daily visit to “starbucks”. 2 starbuckses a day is worth P200. Per week is P1,400. Per month is P5,600. Per year is P67,100. Just imagine if the expense here is converted to savings?
4. Increase your income– look at what you have and what you can do, recognize but do not magnify your need.
5. Pay your debts on time. If already in trouble, negotiate with your debtor for payment terms.

http://sesantos.com.ph/2007/03/25/practical-debt-management/

Sonnie got that from one of David Sumrall's teaching in the Cathedral of Praise-Manila.

Sucess story

What better way to start a debt management site by posting a success story!

If you are in debt and feels that there's no way out. There is always a way!
That is, unless you just want to get stuck in your problem or run away from it...
Anyway, here's a video that shows how one woman was able to manage her credit card debt...
Enjoy and learn!!!

Part 1


Part 2

Utang dapat bayaran!

This is a school project on debts and debt management in the Philippines.

I'm not talking about our country's debts (I have enough problems of my own to even think about that) but just debts that affect ordinary Filipinos.

I have been searching for sites on types of loans (mostly informal loans), debts and debt management in the Philippines and can't come up with adequate sites for proper references so I thought I'd create my own. I'll be putting here anything that I think would fall under those terms (maybe even other related sites) and hope to create a good reference site.

But for sure this is NOT going to be a simple reference site (an official debt and debt management site), one would have to filter out the information, coz' knowing myself, I'll be putting my thoughts and experiences on the matter also... and my first thought "UTANG DAPAT BAYARAN!!!"

I wish all the people I know put that in their heads. Oh no, I'm not a money lender who wants my customers to pay, it is just that I've come across so many people that went overboard on debts that led them to lots of trouble and difficulties. I've also encountered a lot of people who run away from their debts (some just disappear) and sometimes the poor guarantor has to shoulder the burden.

Anyway, this is going to be a working site and I hope to get as much materials and insights I can get.