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.

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2 Comments »

  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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