Debt Management: Its Importance

"Debt can be the most addictive thing in the universe, and it can kill you. You get used to living high off the hog. It was intoxicating."    --Harvey Weinstein

Being buried in debt is both an overwhelming and painstaking experience in one's life. But don't worry, there's always a better way out. And once you'll be able to get out from it, do make a resolution that you will never get into it again.

You might be buried in credit card debts because of overspending. Or because you've had bad business decisions in the past that lead you to loan sharks. 

In managing your debt, there are two things you must do:

1. Consolidate Debt

Debt Consolidation is a form of debt refinancing that entails taking out one loan to pay off many others. Not all our loan are interest-bearing. Sometimes we borrow money from families and friends and they never charge us for interest. In debt consolidation, we give priority to the loans which are interest-bearing and those which has higher interest rates. Instead of having loans from different sources, you have to find banks or lending institutions that would be able to give you a secured loan which has much lower interest rates than your existing loans combined. The lower the interest rates the better. It means you will save a lot of money that only usually goes to interest.

According to Debt.org, a debt consolidation service can lower your interest rates, lower your monthly payments, protect your credit score and can help you get out of debt faster.

Debt consolidation is not a debt solution. It merely combines all your debt into one single, more manageable loan. If your current monthly repayments seems smaller in figure, check if it is due to a longer loan term, for which you may be paying higher interest rates.

 2. Eliminate Debt

Being in debt can be a stressful experience. Regardless of your circumstance is, if you signed for a loan, you are obligated to pay it back even if you have an unexpected event in life like losing a job, accident, calamities or having a new child.

According to Clark Howard, here are the Five (5) steps to get rid of your debt:

1. Make a conscious decision to stop borrowing money
2. Establish a starter Emergency Fund
3. Create a realistic budget and stick to it
4. Organize your debt
5. Throw any excess cash at your debt

It is very important that you always remind yourself of your freedom day (the day you want to be 100% debt free) because it will help you establish your ground to start all over again---from someone who is buried in a deep-neck debt into a person who is debt-free!

Reprogramming Your Money Blueprint

(Part 2 of 4)

Are you programmed to fail?

 Or are you programmed to succeed?

Of course, your answer would highly depend on your "programming" or influences. Remember, your "programming" can be classified as verbal programming, modeling and specific incident.

T. Harv Eker in his book "Secrets of the Millionaires Mind" enumerates programming as:

1. Verbal programming-"What did you hear when you are young?"

2. Modeling - "What did you see when you are young?"

3. Specific incident - "What did you experience when you are young?"

Let's say that your brain is the CPU of your personal computer. Human brains, like yours are also programmable same as your personal computer. Whether you think you are programmed to fail or to succeed depends on the program that is being installed in your CPU while you are young.

In my previous blog, I discussed the first key element to change your Verbal Programming: Awareness

The second key element: UNDERSTANDING.

T. Harv Eker says, "By understanding where your "way of thinking" originates, you can recognize that it has to come from outside of you."

I mentioned what was my verbal programming in my previous blog Preludeto Financial Freedom: Know Your Money Blueprint. Now that I am already AWARE, the next thing to do is to UNDERSTAND how this verbal programming has affected me. Now it's time for you to understand your own verbal programming too. Get back to your list of verbal programming and I will help you to understand them.

I was introduced to responsibilities at the age of 10.But prior to that stage, I would say, my family used to live a comfortable life. Because that time my father works in a factory, my mom works as a dressmaker while my eldest brother works as a family driver. In short, we have more than enough for everything. But when my father got sick because of Tuberculosis, we have to leave the city life and have to transfer to the province, not only to follow the doctor's advice for my father's health but also due to financial difficulties. To make it worst, my eldest brother went astray because of drugs. My father's immediate successor has gone A.W.O.L! Believe me, living in the city without money is a horrible nightmare.

More drama of my life unfolds when we transferred to the province. When my father's health condition improves, mom has to leave for work as household helper in the nearby town for us to survive. My sister stopped studying and got to work as well. I do almost literally all the household chores for me and for my dad: cooking, washing, cleaning, and even going to the market. Honestly, I earned my Home Economics degree unknowingly. I did it in the name of love and mission. 

Since "I am the one" programmed to elevate my family from poverty, I can't afford to be a failure. True enough, I was an honor student and became instant celebrity in our place. My neighbors also contributed to my verbal programming. For them, I am the "most responsible" son in the whole wide world...and that words become flesh and my reality. When my sister settled down, my programming continues--I'm still "the one". 

To prove my claim, for those who doesn't know me personally, I have something to confess—I just married last January, this year. Why? For sure, you can answer that question now.

By UNDERSTANDING, I was able to answer the million-dollar questions in my mind. Everything made sense to me now...

   I stayed single for so long because my mission that I am "programmed" to accomplish is not yet a reality.  

   I stayed single for so long because until now my family is not yet financially-free.

   I stayed single for so long because getting married is a hindrance to my mission. And to fail in my mission is not an option.

"Your thoughts originate from the "files of information" you have in the storage cabinet of your mind. So where does this information comes from? It comes from your past programming. That's right, your past conditioning determines every thought that bubbles up in your mind. That's why it's referred to as the conditioned mind," T. Harv Eker explains.

So, I'm done with the understanding of my own verbal programming, how about yours?

Let me remind you. You cannot proceed to the third key element to change your verbal programming unless you fully understand how your programming affects your life.

On my next blogs, I'll show you how to make DISASSOCIATION and how to RECONDITION your programming.

P.S. You can also apply the first two key elements in other aspect of your life. You'll be amazed.

Want To Achieve Financial Freedom? Get Mentors!

Why financial freedom?

After almost 14 years of  working locally (1994 to 2008) , there's one thing I can say: I'm still in the rat race! Being in the rat race means many things:

Your salary isn't enough to sustain your means of living.

You live from paycheck to paycheck. 

You work hard till night but no overtime pay. And even bring your work at home.

You act like a robot because you do the same things again and again.  

You have to follow your company's mission: No work, no pay! 

You earn but still buried in debt.

You act like a prisoner. You have the exact time to eat and take your break. There are many rules to follow.

So on...blah...blah...blah.

And yet there are many times that you've got to borrow money from your office mates and friends because there's an emergency needs to be paid. And the sad thing is---you can lose your job anytime for whatever reasons. Recession is one of them.

Believe me: being an employee is only a short term solution for a long term problem! Wait! I didn't say that having a job is bad, what I'm saying is your objective should be focused on creating passive income streams so that you'll get out of the rat race. Don't wait till you retire. 

By the way, you might ask me what does passive income means. Passive income means that your money works for you. It means you earn even if you are sleeping or while you're sun-bathing in one of your favorite beaches. You'll get out of the rat race when your passive income becomes equal or greater than your monthly expenses. Your paycheck is called active income because you've got to work for it. If you got sick, you earn nothing. If you are earning passive income, you can pay financial debts, you can buy your dreams and most of all---you become FREE! 

What should you do to earn passive income?

Look for money-making ideas. These money-making ideas are everywhere waiting for you to discover. Think abundance and for sure you will see them!

Look for mentors. Your mentor should be someone who doesn't just "know" about finances but someone who is actually financially-free! He walk the talk and who is actually doing the right thing and is successful in doing the real thing.

Let me introduce to you my mentor...introducing Bo Sanchez.

Don't worry, I'll introduce you to him through his latest article about The Secret of Retiring Rich: Money Cost Averaging. You can become his student too.

I got something to tell you. When you found mentors in every aspect of your life whether it is financial, spiritual, or relational --you'll never get lost. As of now, I'm on my way in getting out of the rat race. I'm grateful to say that Bo Sanchez leads me wherever I am right now. It is true that when the student is ready, the teacher arrives.

On my next blog, I'll introduce you to my other mentors. 

For the meantime, take action. Be coach-able and apply what you learn on the process and start your journey towards financial freedom.

How To Start Your Financial Life In Order

Maybe some of us are actually in the brink of financial bankruptcy but so afraid to admit. A sick person can only seek a doctor's advice when he accepts that he is really sick. The same goes with your financial health. If your pride is bigger than the universe then don't expect miracle to happen in your finances. 

More than five years ago when I first sat down and discovered how financially sick I was. No assets, only liabilities. With the dreams I have in mind, there's no possibility at all to achieve them unless I should do something. So I decided to left my country and work abroad. The realization came when I did the following:

1. List down all your Assets and Liabilities

       Write down all your debts whether interest bearing or non-interest bearing. Money or things that you owe are called liabilities. When I said debts or loan, it means every money that you owe even to family members. Once you have the total amount, ask these questions?

        a. With your current income, how long it will take for you to pay them? If it will take you a lifetime, then what are you waiting for? Do something about it NOW!

         b. If you're going to pay your debts at this very moment, do you have investments or properties to sell like house and lot, cars, equipment, etc.? These are called assets. In my case, I don't have assets to declare, only liabilities.

This is the most important step: know first your financial health. This will be your guiding map and by this map, you will realize how far or near you are to your financial goals.

Let's go to the next step.

       

2. List down all your dreams

Listing alone your debts will either drain your energy or push you beyond your comfort zone. I believe in balance that's why I recommend for you to list down also all your dreams. The Law of Clarity says it should be specific. If you're dreaming of having a car, you should know the color, the model, the cost and the exact date you want to achieve it. It goes with the rest of your dreams.

With your dreams on one hand, and your financial health on the other hand, I'm sure you will have a balance perspective of your financial journey.

After five years of working abroad, it dawn on me that I'm really racing against time. I need to maximize my earning potentials, have a multiple source of income to fast track my financial journey. I must say that I already won the half of my financial battle and looking forward of achieving my financial freedom in two to three  years from now.