Top 6 Ways to Defeat Your Debt
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As majority of the working or middle class Filipinos living on paycheck alone, without having emergency funds in place, falling into debt has become the norm—a situation most Filipino families have to deal with from generation to generation.
Emergency situations such as hospitalization, death, and yearly big expenses like school tuition fees are usually dealt with by borrowing money from relatives, loan sharks, and banks. It doesn’t help that Filipinos, despite their struggling financial situations, love to celebrate and spend money they haven’t rightly earned yet. The presence of Filipinos at malls, accumulated credit card debt, and their colonial mentality, preferring imported branded goods over locally sourced items, are proof of that.
It is no wonder that Filipinos are up to their ears in debt. However, there is still hope. We, at PawnHero, have listed ways to conquer debt and gain financial freedom:
- Stop Accumulating Debt
Filipinos have certain money habits they need to change. For you to get a handle on your current financial situation, you would need to control your spending. You might choose to stick with paying in cash until your debts are cleared, cut back on purchasing unnecessary things, and simplifying your lifestyle. For instance, instead of eating out every lunch, you can opt to bring a home-cooked meal or “baon” to work instead.
- List Down Your Debts
Seeing things in print with the total amount can put things in perspective and allow you to practice the second tip.
- Decide Which Debts Need to Be Paid off First
As a rule, debts with the highest interest rates should be paid off first. These are usually credit card debts, as they have incredibly high interest rates that will cost more money in the long run.
- Use the Snowball Method
If you owe multiple people or companies, you can use the snowball method to tackle debt payments. In this method, you apply the majority of your money allocated for debt payment to one loan (usually with highest amount or interest rate) and minimum payments on the others.
Once the first debt is paid off, focus on the second highest and apply the same method until all debts have been paid. Do not ever take on debt to pay another debt, as this will only transfer your debt to another entity—resulting in dealing with a new interest rate as well.
- Pay Debt and Save Simultaneously
Don’t forget to save. You may want to get rid of credit card debt in the shortest amount of time possible but realize that building up your savings or emergency fund is crucial in helping you fall into debt again in the future.
Have a budget for your emergency fund, regular savings, and retirement to ensure that your emotional needs are still met while also meeting your financial goals. After all, financial security is important for families.
- Increase Your Income
When you stop adding to your debt and reduce your living expenses, it is better to pair it with increasing your income as well. Say for instance, if you pay off a larger amount of debt each month, you’ll be able to decrease the amount of time to clear everything.
Increasing your income is possible by asking for a raise at your job, getting a promotion, finding a new job with a higher pay, getting a sideline job, or selling things you no longer use.
If you have items that are still in mint condition and would sell for more, you can take it to a pawnshop. At PawnHero, items are appraised highly with a low-interest rate.
When you pawn or sell items with us, we at PawnHero know the value of your pre-loved items and assure of reasonable appraisal in a short time. Our process, done in three easy simple steps, is unlike the traditional brick and mortar pawnshop, as you transact with us online—from anywhere you are!
For as low as 2.99% interest rate per month, you are given the opportunity to increase your cash flow to settle debts faster and easily. Experience a one-of-a-kind transaction when you pawn or sell items to us! Pawn or sell your pre-loved items with PawnHero now!
