The truth is, AVOID DEBT.  If you can, don’t borrow money.

However, if upon reading this, you have already accumulated a debt…read on.

I once had this huge debt of 70K (on my credit cards) – I was making 24K per month, most of which went to rent (5.5K), food (5K), phone (1k) gas (4K), parking (2.5K), laundry (1K), weekend fund (2K) and the debt.  I hardly had money for clothes or shoes — even for home stuff.  I was clearly deep in my knees in debt.  Every month, I had to pay a minimum balance of 3K — that was pretty much was was left of my salary.

I had to do something to help myself!  What were the steps I took?

1. Kept my job! If you’re in debt and you don’t have a job– GET ONE.  You need a source of income!

2. Analyzed my budget.  I asked myself these questions.

- What are the things I can do without?
- What lifestyle changes must I make to lessen my expenditures?

3. Came up with answers.

- “I can do without a car for a while.” I just used public transport. And instead of spending 220 pesos per day on transportation including parking fees, I ended up spending just 100!
- I had to wake up earlier and walk a bit more but it was worth it! I slashed my transportation expenses by more than half which gave me a savings of 120 pesos per day which translated into 2.4K per month.  

- I also slashed by food allowance by 30%. I decided to bring home-cooked meals to work instead of buying at work which just cleaned up the daily allowance I gave myself.

- I made my cellphone bill go down too by 200-300 pesos per month by minimizing calls and texts.

4. Looked for other sources of income. No, I didn’t gamble but I did a lot of things (refer to my post on Adding To Your Income).

5. While all this paying off the debt was happening, I actually was able to save a miniscule 200 pesos per month.

6. I also put all the bonus money I received from work into paying the debt.

7. I even called the bank to ask for a special installment plan…and yes, they gave me one.

With all these things– I was able to clean up my entire debt in 8 months. 40K from all the payments I made, and the rest was from the bonus money I got from work.

It was a lot of work but there is no feeling greater than that sigh of relief from being DEBT FREE.