By Lorry V. Gabule
Here are some tips
to avoid getting head over heels in debt (according to Emina Abasolo, deputy
director of Ramon Aboitiz Foundation Inc. (RAFI) Micro-finance):
Understand your
current situation. For one to understand the perils of debts, he/she must take
into consideration his/her financial situation and keep track of his spending
habits.
Don’t get caught up
in a lifestyle you can’t afford. People buy expensive things such as gadgets,
sometimes as status symbol and source of pride and self-worth. They (items)
become tangible acquisition of assets.
Live below your
means. Not only that it disciplines you, it also provides flexibility and
security. This way likewise helps keep expenses lower than your earnings so you
have an extra amount for eventualities.
Be prudent when
having a credit card account. Fully understand first what is involved when
having an account, particularly on the interest rates that may impact on the
monthly budget. It is best to look for one that fits your situation and
capability to pay.
Keep track of your
expenses. Evaluate cash flow by identifying expenses and comparing them with
income and monitoring spending habits for a month or two by keeping a log on
expenses and receipts. This would give a clearer and bigger picture on how you
spend.
Financial planning
and saving is very important. Your savings will lead you to live a life that
you want without falling into debt traps. You can then free up money for
emergency funds.
Adopt a
debt-servicing plan. This method aims to wipe out credits and guides the debtor
to be fully free from unpaid loans.
Do not engage in
multi-borrowing. This is one thing to be avoided if you’re in a business. One
should have a strong entrepreneurial management.
“While you cannot
be imprisoned because of debt, your reputation would be destroyed and your name
would be associated with debt left unpaid,” Abasolo stressed.
No one really wants
to be mired in debt especially when common borrowing mistakes are avoidable.
(RAFI/PIA-10 LDN)
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