Responsive Ad Slot

Latest

Buhay Pinay

Features

People

Sports

Philippine News

Join us at Facebook!

Huge amount of debts

07 March 2016

By Francisco J. Colayco

For those with huge amounts of debts (personal or business), how would you advise them? What is generally the wisest first step when drowning in huge loans/financial obligations?

There are so many people in this unfortunate situation. They write to us, asking for help, and they sound like they believe we can fix their problem quickly.  Huge debts do not happen overnight so the solution cannot also be overnight.  It is a very painful process and takes a lot of patience and determination to get out of debt but you have to start as quickly as possible.

The biggest culprit is credit card debt and the second unfortunate culprit is losing all your money in business. Either reason is so depressing, but never lose hope because you are not the only one with this problem.

The first step is to know where you are. You have to make your Statement of Assets and Liabilities and Net Worth (SALN).  In my books, I call it SAL.  But this is the same as the SALN, which the government requires for all government officials. This was the subject of heavy publicity during the impeachment of Chief Justice Renato Corona.

Assess your assets carefully and objectively.  Do not let your emotions get in the way.  Many start thinking of the asset as their first watch or their first TV etc. Just think of  which assets do you really not need and/or don’t use?  No matter how small, if it has some value, consider how much cash you can generate if you sell it.  Make a plan for selling those assets.  Make sure that you are determined to sell.  Some offer their assets for sale but at the last minute, they change their minds.  Remember non-productive assets are not really assets.  They cannot help you if what you need is cash.

Be careful to set the money aside.  Do not for any reason use the cash to spend on something else. You sold for the purpose of covering your debts.  Make sure you are always on the right track.

Follow the G.O.O.D. (Grow Out Of Debt) using DOLP (Dead On Last Payment) method of David Bach.  It only means that you prioritize your debts. This is especially good for those who have many credit cards.  Identify the card that you can completely pay off quickly and pay it off first.  That way, you reduce your credit cards and it gives you a winning experience and confidence to succeed.


Huge debts because of failed businesses need other kinds of strategies.  
Don't Miss