Credit Card Debt Part 1

Maria sent me an email that she had a big problem with all her 8 credit cards and her total credit balance reached P200k. She is only earning Php12k a month before deductions. She is a single mother with a young child. She said she used her credit card for her needs like tuition fee, books medicines. All her salary goes to the payment of her credit cards and she wants to pay off all her balance so she can start saving. She has tried borrowing from lending companies but they refuse to lend her. She wants to resign to start a small business. She is asking what business I can suggest that will surely grow very fast but her problem is that she does not have the capital plus of course, she still has her credit card bills. She said she does not want to ask her parents for help because she wants to be able to do work out her problems on her own.

Maria’s very first step should be to get out of credit card debt immediately. She should plan to pay off the credit cards one by one starting with one with the least amount of debt. This way she can start gaining self-confidence. Maria should save every peso possible to pay off her credit card bill. She should respect each peso because it is the start to credit card freedom. Her next big thing to so is to look for additional income. As she is looking around for other sources of income, let’s focus on savings, concentrating on Needs and completely removing any Wants in Maria’s daily expenses.

I do not know if Maria is already disciplined enough to limit her expenses to Needs but here are a few suggestions.

She must eat only the simplest but nutritious food. No buying of junk food, not even small pieces of candy or softdrinks. She must wake up even earlier to prepare her child’s and her own ‘baon’ for the office. There should be no eating out whatsoever. She must look for the best bargains for food. Of course, she has to pay her rent but she must save on electricity and water usage. If she can move to a place with lower rent, she must do so but she must compute carefully if she will really be saving money considering the moving expense and possible higher transportation expense with the move.

She must stop sending text messages and keep her phone usage only for emergencies. Whenever possible, she must walk instead of paying for transportation. She must not buy new clothes and other items. In fact, she should be very happy to accept ‘hand-me-down’ items for relatives and friends who are better off. All of these are difficult to do but necessary.

Francisco J. Colayco is an entrepreneur, a venture developer and financial advisor. He is the Chairman of the Colayco Foundation for Education and the Author of Four Publications, Three of which are Bestsellers: “Wealth Within Your Reach” (Awarded 2004 National Book of the Year, Business and Economics by The Manila Critics Circle), “Making Your Money Work” (Nominated 2005 National Book of the Year, Business and Economics by The Manila Critics Circle), “Pera Palaguin Workbook? and just off the press, ?Money For Kids.

He is available for talks, seminars, and workshops. Learn more about his advocacy at www.colaycofoundation.com or email info@colaycofoundation.com. The books are available in the Philippines at National Bookstores, PowerBooks, 0917-8537333, 02-6314446 and www.colaycofoundation.com, in Hong Kong at Shop 367 Worldwide Plaza 19, Des Voeux Road, Hong Kong and in Japan at Global Growth Management Inc. (GGM) 9-1, Suite 201, Hirakawa-cho, 1chome, Chiyoda-ku, Tokyo 102-0093, Japan Tel: +81-3-3264-0441 Fax: +81-3-3264-6960 Cell: +81-90-2423-7065 E-mail: ito@ggm.co.jp. In other areas, please contact info@colaycofoundation.com or the publisher of this article.

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