The Day I Cut My Credit Card (How to get out of financial debt)

Utang (Filipino term for debt) is perceived as an unbreakable chain which tangled not only Filipino youth but a significant part of the population into a contemporary form of financial slavery and caused financial freedom and a debt-free life such elusive concepts. As an aftermath, “How to get out of debt” floods engines in the hope for ultimate answers. Today, various types of loans continue lure the public into spending money they don’t have yet. Ranking top as the famous name in debt industry is credit card debt.

Credit card gives a person the power to spend what he does not have at the moment for goods and services due at future date. The holder uses the mighty plastic to address a NEED or a WANT. Need like medical expenses pop out and cannot be just disregarded.  Wants are popularly known culprits for credit card debts. Shopping, travel, vacation, luxury meals, gadgets, party and tons of non-survival stuff steal away tomorrow’s budget for today’s temporal bliss.

“Swipe na yan” “use your card” are common triggers that tempts the holder to the irreversible act. This is followed with a feeling of guilt and regret after receiving the billing. Stressful scenes like bills piling up one after another, credit collector calling up, and large sum of surcharges, penalties and interest bombarding on those notices are among the debtor has to suffer due to outstanding obligation.

The whole financial whirlwind started with a need (or a want), then a mindset, followed by a dysfunctional habit and eventually an overwhelming feeling of helplessness. To cope with the doom of debt, one must hack the root cause of the problem and reverse the cycle.

FILL THE NEED POSITIVELY (NOT DESTRUCTIVELY)

“We buy things we don't need with money we don't have to impress people we don't like.”

― Dave Ramsey, The Total Money Makeover: A Proven Plan for Financial Fitness

People consume because they have a need and this very need can sometimes become destructive. Basic need for self-satisfaction, need to feel good, need to belong and so on push people to seek for instant relief from material indulgences. This should be acceptable only when people are spending money they already have (preferably extra cash) or within their means but in most cases, they use their card and incur debt to satisfy cravings.

The disastrous swipe moment can be avoided by filling the need with inexpensive ways like appreciating one’s blessings, spending quality time family and friends where belongingness is overflowing or even spending less with productive activities like nature exploration, sight-seeing on top hill, visiting museums, cultural heritages or an inexpensive cup with a good friend.

TAKE RESPONSIBILITY, REBOOT MINDSET

It is your debt, your responsibility. A number of people shun the idea of accountability and resort to blame game. Some even came up with the idea that no one goes to jail because of debt to justify their actions. This mentality will never resolve the problem and will only push you deeper into debt.

Majority of the people who fell into the pit of their obligations felt helpless and just run away. The thought of an enormous amount of debt and helplessness consume them and take away their power to solve the growing concern. As written by Stephen Covey, thoughts can eventually shape our destiny.

“Sow a thought, reap an action; sow an action, reap a habit; sow a habit, reap a character; sow a character, reap a destiny.” ― Stephen R. Covey, The 7 Habits of Highly Effective People

The solution should begin in your head, with your thoughts, not somewhere else:

• Acknowledge the problem (I have a serious debt problem)
• Take responsibility (This is my responsibility)
• Develop the mindset and willpower to payoff the debts (I will and I can pay all my debts)

BREAK THE HABIT

Indeed, bad habits are hard to break but can be broken. The dysfunctional habit of debt accumulation and non-payment started with the mindset. After shifting perspective, it is vital to reassess one’s spending habits and repayment patterns in order to break the bad ones.

Simple as it may sounds, most people develop the proper perspective and the will to cut debt but stay with their bad habits. Thoughts must be place into actions and the only way to get out of debt is TO PAY IT.

SKILLFUL EXECUTION AND CONSISTENCY

I heard the words “skillful execution” from a friend some time ago and thought to relate this with the financial goal of debt extinguishment. All the perspective shifts and habit redirections will eventually falter without skillful execution and consistency. Skillful execution is carrying (executing) out the financial plan in a clever, adept manner to meet the desired outputs. Consistency is keeping the habits until the realization of a debt-free state is achieved. Some lack these and immediately quit after some setbacks on their first few attempts. If one quits and stop on trying then nothing will be achieved.

With the aggressive media campaigns attracting the public on what is cool and considered status quo along with advancement in technology and ease access to financial facilities, anyone can easily get into debt. Based on the latest media released by Bangko Sentral ng Pilipinas last February 17, 2015, consumer debt totalled PhP849,642 (in millions) as of September 2014 of which PhP156,541 accounts for credit card loans.

Getting out of credit card debts takes more than the utilization of psychological and emotional faculties. It requires a sort of paradigm shift, unbreakable willpower, and undying commitment to the whole financial rehabilitation journey. The road to financial freedom could sometimes be painful as you depart from deeply rooted habits but definitely a liberating state when you reach the end.

Debt is just a four letter world you too can conquer. It took me some time to learn about it to the extent of cutting my card. And though I am still learning, I believe you and I with the right financial knowledge and willingness to take on the challenge will soon realize the state of financial freedom. Believe in yourself. You can do it!

Photo credits: http://www.thejournal.ie/ (piggybank), zisez.wap.co.nl (last picture)