Conquering Debt - It’s All Relative

The Irish Dy Tioco-Flor, a teacher, and her husband florian, an engineer, dream of becoming a successful entrepreneurs someday. but they know that to get a business loan, they have to contend with the bank’s interest rates. Luckily, they have relatives will The Flors’ first foray into entrepreneurship was a passenger jeepney they bought in 1996 to ply the Cavite City route. to pay for the vehicle, Florian borrowed US$5,000 (then about P175,000) from his sister.

Irish remebers setting aside a sizable portion of Florian’s monthly salary to pay the loan. Her salary was what they used for household expenses. It took them several months to settle this debt. With that out of the way, the couple set their sights on a commercial lot for future business ventures. they found one near a high school construction project, and negotiated a good price for the property. Offered a 10 percent discount if they paid in cash, the FlorS’ borrowed US$17,000 (then about P765,000) from Irish’s father.

The loan was 40 percent of the property’s price. It took the couple seven months to pay the money back. Irish says that on their own, they add a loan interest to their payments as a measure of “goodwill”. “but it doesn’t come close to the amount you pay when you’re servicing your debt with banks.” she says. “A huge portion of what you pay goes only to interest.”An how should you treat a loan from your relatives? It is all a matter of trust. If relatives trust you with their hard-earned money, the Flors say you should preserve their confidence by using the money for its intended purpose, and by returning it at the time you promised you would.

reference: thegoodhousekeeping

Read also related post here.