April 8, 2008

Dealing with Debt

Posted in debt, obstacles at 10:40 am by kimsan23

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.



  1. Ross said,

    Ahhh… I’m not alone in the world! Congratulations in being debt-free. I’m hoping that I’ll soon be out of debt as well. Except that I’m still 95k down from credit cards and 2.5k down from a debt to my sister. Now I’ve been trying desperately to keep my expenses to a minimum, it’s just very hard. I’ve also tried to add more income through freelance writing and poker play but they really can’t make up for everything.

    I like your blog and I hope you get that first million soon.

  2. kimsan23 said,

    Thanks a lot Ross! I hope I have helped you out a bit in dealing with your financial issues.

    Do visit again, I will have more updates.

    If you have any questions, you can post them here.

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