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Understanding the Basics of Debt


Debt has been marketed to us in so many forms since the 1960’s. It is the number one cause of financial struggle in Filipino families as debt management is never taught in school. Even majority of the teachers (no offense), their culture has been revolving around debts. However, when you cannot control your debt, it will control you.

Debt Management: control your debt or debt will control you
Debt Management: control your debt or debt will control you
Our present needs are satisfied by our current income. But when our needs and wants combine exceeding our present source of income, we spend our future income for our present needs and/or wants: this becomes “debt.” The challenge of this situation is that, what if there will no longer be a future income, what will happen to our future needs? Debt can then turn into a disease. It could control your life, diminish your happiness and limit your freedom.


Here are some myths about debt and see if you have the same belief:

1. Myth: If I loan money to a friend or relative, I will be helping them.
Truth: The relationship will be strained or destroyed.
A lot of relationship has been destroyed even within families, friends, co-workers and relatives because of debt. Do you have a relative that when she sees you from afar, will then start to take a detour because she is afraid you will ask her to repay? Did you really help her?

2. Myth: By co-signing a loan, I am helping out a friend or relative.
Truth: The bank requires a cosigner because the person isn‘t likely to repay. 
So, be ready to pay the loan and have your credit damaged because you are on the loan.

3. Myth: The credit card is a substitute for an emergency fund.
Truth: You don't go into debt for emergencies.
How many of you have been offered (and you accepted) to get a credit card for this reason? Did that flat-screen T.V. on a midnight sale suddenly became an emergency?

4. Myth: Debt is a tool and should be used to create prosperity.
Truth: The borrower is slave to the lender.

Bogart D Explorer, "UTANG" (debt) the most common cause of amnesia.
Bogart D Explorer, "UTANG" (debt) the most common cause of amnesia.
Getting out of debt may be one of the hardest things to do and takes a lot of effort and time. But you must fight to do it. You can never be free until you are debt-free.

To avoid getting into debt, the ideal would be: to minimize our wants, save up for our future needs so that in case something happens to our future income, we will not sacrifice our future needs.

For those who are currently struggling with debts, stay updated for our future posts on debt elimination strategies. For more myth-truth about debts attend our Advance Training lectures and classes by signing up and becoming part of our advocacy.

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