5 People Share How They Paid Off Their Debts

Most of us, for whatever reason, have gotten into some pretty bad debt at one point in our lives. You know, the kind that has zero returns and takes us a while to pay off. And it usually comes with piling interests, too.

It can really feel like a never-ending cycle, but it’s one problem that can really teach us how to better manage our finances.

Debt Payment

In an effort to inspire others to see life after debt, eCompareMo asked five people who’ve been through the difficult yet rewarding process of paying it all off. They share stories on how they incurred and repaid debt, and the lessons they’ve applied in managing their finances since.

From getting trapped into the networking scheme to getting out of a family crisis, we can all find something to relate to and learn from their stories.

1. Practice delayed gratification

Carissa, 29, mobile app developer

My friend invited me to attend a seminar in this company I’ve always been interested in. I didn’t know then that this was networking, nor the caveats that go with it.

This was in 2011 and the networking scheme was only starting to gain popularity around that time. I got enticed with the demo because the [whitening product] really works, only it was very expensive. Then I thought I have a lot of titas (aunts) I can sell this product to.

So, I decided to buy the starter kit worth P60,000 for four products, worth P25,000 in retail price. I thought it was a huge discount ‘cause I only bought it for P15,000 each.

I sold all the products in less than a month because all my titas bought them. Other relatives also made for easy customers.

The money problem started when I was pushed by my friend, who’s now the person I report to, to get another set.

I told her I no longer have enough money for capital, but she insisted I’m really good at selling these products and charged the next purchase of the kit to her credit card. The due date came and I realized I couldn’t sell the products anymore ‘cause I ran out of relatives and people within my close circle to sell it to.

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I had no choice but to ask my friend if I could just return the products. She agreed, but only for half the value. The rest, she said, I will have to settle in cash. I had no choice but to pay the P30,000 on six months installment because I only had a really small salary then.

It sure was a tough time for me cause I had to be really frugal and had to sacrifice a lot of things just to pay it off. As for my friend, she paid her credit card debt by asking her mom to pay for it first, then she was able to pay her mom through the installments I gave her. I definitely learned from that experience.

Delayed gratification is very important—even if you want something so bad, you really must set it aside and make paying off your debt a priority. That way you’ll be able to settle it earlier.

Now I’m very careful where I invest my money. As much as possible, and unless it’s for a credit card bill which I pay on time, I don’t wanna be in debt anymore.

2. Always save for emergencies

Grace, 28, Businesswoman

Around the last quarter of 2016, I borrowed P150,000 from my aunt as capital for my cake business.

I bought all the things I needed like two ovens, other equipment, and bags of ingredients. Though there was no interest, I had to pay it off through percentage capital. For instance, I would pay my aunt around 20% to 30% of my monthly income, or around P10,000 to P14,000 every month.

It didn’t take long for me to get more orders when I launched Aldea’s Sweet Treats on Facebook, so that really helped a lot in paying my aunt.

I was supposed to pay it for one year, but there were a lot of unexpected expenses. The two major ones were when my sister was rushed to the hospital, then only after a few months my two-year-old daughter also had to be hospitalized because of dengue.

This caused me to extend the repayment term, so instead of one year, I paid it for it for seven more months. But no, I have no regrets in asking my aunt for capital, because I took that risk and it turned out to be really worth it.

I’m happy that my business is now growing and that I can save up for more equipment.

Yes, I might need to loan money again, but it will be for business and now I know how to handle money better. The main lesson I’ve learned is that I always have to save for emergencies, cause you will never know when you will need some extra cash.

3. Don’t incur more debt

Ellen, 30, HR Officer

Being the breadwinner of the family, I had to support my siblings in college.

Back in 2012, I had only been employed for three years when I had to borrow P25,000 with 3% interest for only one month. I hastily agreed to this set up because my brother, who was graduating then, needed the money to pay for tuition.

(Read:  How To Pay Off Debt Fast And Save Money This Year)

As I was only earning about the same amount I borrowed, it didn’t take long for me to realize I couldn’t pay the amount within 30 days. I also regularly send money to pay for expenses back home, so the one month due became six months, and the interest just piled up.

I can’t remember how much I paid for in total. Maybe it went up to more than P35,000.

I was forced to live on a tight budget. The hardest was when I had to cut down on food costs, too. But I learned I could get through it if I didn’t incur any more debt. Not even to pay for the interests.

I’m proud to have paid for it all on my own. And now I’m better at handling money because I promised myself I don’t want to live with that very tight budget anymore.

I also try to save at least 10% of my income so if I ever need extra cash I won’t need to borrow money from anyone.

4. Look into Credit Card Debt Restructuring

Darla, 38, Operations Manager

I incurred debt with three (3) credit cards, for a total of about P150,000.

I used them normally, only when needed because I was working at a bank then and I know how to manage the billing cycles. But then a family emergency hit in 2002.

Our house got burnt down. We didn’t even get to save any of our stuff, and we had zero savings. No one was harmed during the fire though, and everyone in the family helped contribute to getting our house back together.

I used the credit cards I had so I could help pay for the home renovation like tiles, door locks, toilet, and bath, etc. I was only earning an above entry level salary during that time and, as expected, I was lagging on the monthly credit card bills.

The interest was 2.5% to 3% per month, and the amounts due for every credit card were just getting bigger that I couldn’t keep up anymore. It got to a point where I was already being harassed by the collections agent of one bank because I’d been delinquent for over a year.

I managed all the debts by asking the first bank to restructure my debt. They computed the amount I had to pay, divided it into 12 months, and had me issue a post-dated check.

For the second bank, I had to pay the total amount in full because they offered me zero interest if I settled it in the full amount. I borrowed money from my friend, so I could settle it at once and paid my friend in installments.

I paid for the third credit card through the help of my then boyfriend—now husband, with the same payment set-up. I paid it in full with only about 3% interest in total. And I was able to settle the first credit card after one year, via PDC.

Though I regret incurring that debt, I know it was for a good cause. I did my part in helping build our house back again. Now I know I’ll never let my credit cards be delinquent again because getting called by collections agents is so stressful. What I also learned from this is that you’ll really know your true friends when you are in dire need.

5. Set your priorities straight

Mario, 26, Photographer

I borrowed P10,000 from my lola (grandmother) last year because I needed to get my MacBook fixed. I know it’s only small, but I was still working on a project then and had zero money in my account.

My grandma didn’t want to let me borrow that much money at first so to convince her, I promised her I’ll pay it with 10% interest after three months.

I couldn’t work without my laptop and I had just finished working on a major project. She gave me the money when we reached the 10% interest agreement, but I eventually forgot to pay her. I admit I was spending my money on other stuff instead. Things I’d been splurging on, and also because I’d been going out a lot.

After some months, my lola kept nagging me to pay her back the money I owed her. And because I’ve set this obligation aside, it took me one full year to pay her back the P10,000. I paid it without the promised 10%, but it’s a good thing she didn’t insist on making me pay more because that was also around the time I didn’t have a lot of work going on.

Lesson learned? I should’ve just settled it all as soon as I got paid for that project I was working on. I gave in to a lot of distractions when I got the paycheck that I totally forgot about the 10k. I should’ve focused on that one thing first—paying her back.