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MJ Gonzales │ ExecutiveChronicles.com
Why one of the common tips to achieve financial freedom is to pay off your debt immediately? It remains a strong recommendation even if you can still save money, invest and fund your retirement without settling the money you borrow. The sad truth is the passive approach to debt may soon hunt and cause a great deal to those who doesn’t pay.
Besides of the law and punishments that cover debt, being debt-ridden triggers stressful living. Imagine that some of them receive summons from the banks, change address to avoid the collectors and gossips, don’t get loan approval because of bad credit history and so on so forth. Somewhat, those who owe money are prisoners of their own frustration that they can’t move on.
“The rich rule over the poor, and the borrower is servant to the lender.” – Proverbs 22:7
If you are already in debt, don’t worry you can liberate yourself from your lenders with the right mindset and action. Admitting and willingness to pay off your loans or credit card debts are the initial steps to achieve your goal. Who knows? Instead of debt, you’re saving and investing with no bad relationship with anyone.
Another thing to consider is the math between the savings and debt. In the Philippines, the annual bank interest rate is around 1.13 to 1.50 % only, while the monthly credit card interest rate is around 1.99% to 3.50%. So whether in period and interest, debt accumulates faster.

“People get into trouble with debt and finance when they start letting emotions vote on their outcome,” ‘From Credit Repair to Credit Millionaire’ author Donna Fox shared on book bankrate.com. “So they feel better if they have a cushion in their savings account, even though for most people it’s not the financial savvy thing to do.”
Since credit card debt is possibly the most notorious type of debt, here are simple reminders:
- Pay more than the minimum balance. It is also ideal to do the ‘snowball effect’ or paying the total balances of those smaller ones that you can settle right away.
- Identify which one needed to pay immediately. Prioritize those that have high interest rates.
- Combine your debts that may let you pay lesser rate and avail promos of your credit card company.
“Make use of promotional offers like transfer-all-your-credit-card-balances-to-us-pay-a-lower-interest promo. Moving from an original sky high 18% per month to 5% is worth it. But, take care and examine the offer closely for hidden charges. Always read the fine print,“ the Moneymax.ph’s note about this.
- Avoid bad credit history by stopping yourself to borrow money again. To do this, better to learn how to budget, earn extra cash, and save. As much as possible, borrow only if you direly need it.
“You then have the free and clear (credit) card available as a cushion in case something goes wrong,” Fox added on her interview with Bankrate.com