Is There Life After Debt?


Always remember that we must not do anything that leads us anywhere close to debt ever again for any nonessential reason.

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DEBT kills our personal finance.

Credit-card debt is one of the most common causes of debt among the middle-income earners. A lot of people made wrong use of credit card. They thought it is an extension of their wallet. A credit card is a good financial tool. In fact, it can come in handy when we have emergencies. Abused, this instrument has become a curse, than a blessing, to the credit-card holder.

I have a wealthy businessman friend who was into the garments business in Divisoria. His business has been going smooth ever since he opened it. His style of doing business has always been based on trust. When he buys or sells, he does not use documents, like sales invoice. For him, verbal contract is good enough. He buys items on credit, and he sells to his regular wholesale clients on terms.

One day, one of his clients came and told him that he has been swindled and is now bankrupt. This client owns him a big amount and has little chance of paying him back. My friend has no choice but to maintain his credibility and pay his suppliers. With cash running out, he has to take advantage of his credibility and ask for loans from his network. As of now, he is still continuing his business in order for him to pay back his creditors. Business is not as good as before, but it can still help him survive. He has to start all over again and build his wealth.

It is obvious that debt is the silent killer of our personal finance. If debt is not eliminated, the same debt will wipe out our future wealth, because the money that is supposed to be used to build your future fund will be used to pay off your debts.

Is there still life after debt? Unlike death, where your memories, your experiences, your personality all seem to disappear. With your last breath, you cease to exist. In debt, there is still life for a person. There is always hope for him to recover.

1. Increase cash flow. Try to look for other means to increase your income so that you can have the money to pay off your debt. Increasing cash flow can be done via decreasing unwanted expenses or boosting income by doing extra activity during free time. Joining a legit MLM company is one way of creating extra income.

2. Eliminate debt. As much as possible, pay off current debt and avoid debt as if it is a plague. When you are in debt, you do not have the capability to start saving and investing. Most of the time, debt interest is a lot higher than investment return. It makes perfect sense to pay off debt so that you can free up money that can be used to buy assets.

3. Get insurance. Protect yourself from life’s risks by buying life insurance. Also, it pays to get insurance for your business, as well to cover against the unwanted risk that may happen. A good idea to avoid business risk is to require a bond from either supplier or client in every transaction. That way, you avoid absorbing the risk from other people and, at the same time, you have a strong financial base that can withstand life’s typhoon.

4. Invest. Always remember to separate your business from your personal finance. I have a business partner who earns good from the projects awarded to us. When I asked him if he was able to accumulate personal savings and investments for the past two years, the answer is no. I taught him the basics and now, every time we have a project, he makes sure he adds to his funds and he reports it to me for accountability. Now he already has mutual- fund investment.

Unlike death, when our life ends, there is no more to look forward to on this earthly life. We do not know what to expect in the next life. But in this case, we all have life after debt. As long as we are living, we can find ways on how not to be in debt. A rock- solid plan will prove to be a strong antidote to any financial problem. One of the main reasons people are deep in debt is because they do not have financial plans. Their financial plan is always based on borrowing money when emergency strikes. Always remember that we must not do anything that leads us anywhere close to debt ever again for any nonessential reason.

Edmund-Lao-rfpEdmund Lao is a Registered Financial Planner of RFP Philippines. A sales engineer by profession, he is an advocate of financial planning.





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