Thursday, May 30, 2013

Get Out And Stay Out Of Debt!

Image source: http://tracemypreps.com/
Want to get out and stay out of debt? 

Until and unless we answer that, we will never live a debt-free life and enjoy what we have worked for.

But, if we still want to buy things we don’t need with money we don’t have to impress people we don’t like, then we don’t have to answer it.

However, if we already reached that tipping point where we realize that we are just trying to survive from paycheck to paycheck with the money barely touching our hands and that we could no longer imagine ourselves living that way for the next five to ten years, then we really have to shout “Yes!” as our answer.

When we let our “Yes” be “Yes,” that’s the first step towards financial freedom, according to wealth and life coach, Chinkee Tan. (He is also the bestselling author of books such as “Till Debt Do Us Part” and “For Richer or For Poorer.” Read: Forewarned is forearmed.
Chinkee Tan (right), his co-host Cristina Lazo (left)
in the Chink Positive TV and radio program and me (middle).
In his finance wellness seminars, Coach Chinkee offers his D-E-B-T acronym to sum up the steps we should take to get out and stay out of debt. 

“D” stands for “Decide to get out.” When we are merely paying for the interest and we are no longer even touching the principal, we are already working for the people we owe money. The Bible tells us that “the borrower is the slave of the lender.” (Proverbs 22:7b, ESV) Whatever we are earning actually belongs to them now. Are you truly tired of your financial setup? Decide now to be free!

“E” stands for “Empty your savings account, liquidate some assets and use the money to pay your debts.” There’s no way to go but pay. We could no longer afford to put off the inevitable. 

Before, my wife and I carried 5 credit cards. With our combined income at that time (she was working in a government financing corporation and I was working in major TV network), we could manage it. But, she got pregnant. It was a difficult pregnancy. She bled seven times, got confined in the high-risk pregnancy unit of St. Luke’s Medical Center seven times and had to bed rest for seven months. As a result, she had to take unpaid sick leaves. Then, to top it all, when she gave birth, it was via C-operation. 

That got us in dire financial straits. Our credit card debts ballooned! Other than the “aggressive” calls from the collectors, we even got “love letters” from their lawyers. 

We decided enough means just like that. Enough. We sold our car. We sacrificed our Christmas bonuses and 13th month pays. We negotiated with the credit card companies. (They graciously waived portions of the interests and the penalties.) It took us a year until finally, as one song goes, our chains were gone. We’ve been set free!
Image source: http://sheconomics.blogspot.com/
“B” stands for “Be faithful in paying your debts even in small amounts.” What our creditors only want is to get back their money. They don’t really want to jail their debtors. It’s too much hassle for them and, worse, they may end up not getting paid at all. (But, if you push your luck, they would have to even if they don’t want to.) So, don’t avoid their phone calls or ignore their demand letters. Sit down with your creditors and negotiate. Tell them what you could only afford to pay. Once you get your debt restructured, be faithful in paying it even in small amounts. Such sincere efforts could convince them to extend you some more breathing spaces.

Lastly, “T” stands for “Totally reverse the process.” Once freed from debt, stay free. Identify the bad spending habits that trapped you in debt in the first place and then deal with the vicious cycle of debt. Learn to budget. Start tithing. Save. Cut your credit cards. If you don’t do it, you might end up in debt again.  
Image source: http://tracemypreps.com/

Decide to get out.

Empty your savings account, 
     liquidate some assets and use the money
     to pay your debts.

Be faithful in paying your debts
     even in small amounts.

Totally reverse the process. 

My take? Let us get out and stay out of debt.