How to Create Good Debts...

There are Good DEBTS . Debts are not created equal so to speak. For example, if I placed the 50 thousand on an investment that earns you more than the interest payments I make on the 50 thousand pesos I owe, then, this is "good debt". My coach told me that “Top Priorities in debt management are the bad debts. You can leave the good debts pay for itself.” Classification of our debts into good and bad debts therefore was the first thing Fely and I did in our own debt management. 

Second thing we did was to prioritize payments for bad debt that has high interest rates. Then, we created a definitive elimination plan defining the amount to allocate for each bad debt to eliminate it on a particular timetable.

Debt consolidation is also a way we expedited payments of our bad debts. This means that all our existing debts were moved to a single loan on the creditor with the least amount of interest charges and longest payment terms. One particular example is a 500,000 Loan that we moved from the credit cards which charges us 3.5% to a bank loan that only had a 7% annual interest charges. So this is another strategy of using Good Debts to eliminate the Bad Debts.

Will share about what other ways can we get out of the debt trap. For now, it should be clear that we must take serious effort in managing bad debts before we even embark on investing for the long term. 

You need to humble yourself and find a coach. We can be your coach. IMG Financial Coaches had been my mentors. Now I mentor many others. That is a great privilege and benefit of being an IMG Member.

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