Marami sa atin ang nagtatanong or napapaisip kung ok lang ba umutang? Meron ba talagang good debt? 

As someone who’s experienced financial crises in the past, I know how it feels to be in the rock bottom. My husband and I have many business ideas and plans, but we are lacking one thing – the fuel or fund to make our plans into reality, to execute our business plan.

We know that after living a frugal life, tipid na tipid na kami nun, another solution during financial crises is to look for additional income. So one of the ways we thought of that time is to explore a new business venture.

After attending seminars and reading books about finance, I’ve learned many things about debts. Many financial experts advised us not to get into debt, which I highly agree with. Sino ba ang gusto ng utang? I’m sure none of us would want to be in debt.

But I got curious noong may nabasa ako that not all debts are bad. But, is there really such a thing as good debt? 

How do we know if it’s a good debt? 

Good or healthy debt is something na may future long term value then, it is more likely considered as a good debt. Like for example a laptop, it can be a tool for someone to have an extra job online or to sell something over the internet or investment like home, real estate, or additional fund to upgrade your skill that will, later on, result in a higher salary.

How do we know if it’s a bad debt?

Kadalasan ang bad debt is when it’s for instant gratification lang. Mostly just to support our wants and not our major needs like new clothes, a new gadget that we will not be using for work, unplanned travel, eating out expenses or anything that has no long term value. The generation today is easily trapped by this kind of debt, for the sake of “showing off” online. We tend to spend more than what we truly make. As Dave Ramsey said, “We spend money we don’t have, to impress people we didn’t like”.

By knowing the difference between the two, we can easily decide if tama ba na choice na humiram tayo ng pang-additional fund or mag-antay na muna dahil hindi naman urgent need ang pag gagamitan natin.

How can we know if it’s really time to borrow? Kelan ba ok na talaga umutang? Sharing with you some tips and things to consider if you are planning to get a loan: 

• Have a clear reason why you need an extra fund 

Don’t borrow money just for the sake of having extra money in your wallet. 

I grew up witnessing my grandmother borrowing money from 5-6 when I asked her why (I was 7 years old that time) she answered me that “she doesn’t want to see her wallet empty”. Marami sa atin ang ganun di ba? We borrow para lang may sense of security na may onhand but before borrowing or getting a loan, it is important to know our reason or why’s. Never decide based on emotion only, always evaluate the facts and reality.

Sadly, in most cases today, many people are into loans due to job loss, business restructuring, venturing into new opportunities, and sadly, due to medical emergencies. Something we might have avoided if we have saved for the rainy season.

• Make sure you have a payment plan

Don’t borrow something without carefully planning on how you will settle it. Create a plan on how much you need (Check how much loan you can only afford to payback) then create your repayment plan on how you will settle the debt. If you are planning to use it for your business expansion, make sure you have a concrete business plan. Always have an intention to pay. 

Always have a desire to pay the money that we borrow. Hindi iyon free. We need to be strategic in paying our debts. Don’t borrow beyond your capacity to pay. 

Huwag natin sirain ang pangalan natin dahil sa debt or money.

A good name is to be chosen rather than great riches, and favor is better than silver or gold. Proverbs 22:11 

• Don’t be afraid to ask and compare rates

Madami sa ating kababayan ang nahihiya mag inquire sa banko. When we first started our small garment business before, many companies offered us loans so we could buy more machines and expand our business. Even friends who are working in the bank see our business’ potential, they are convincing me to expand it through business loans or personal loans in our country. Honestly, I felt intimidated. I felt I was not qualified  and only big companies can be approved for a loan. I thought a start-up business like mine can’t be approved. 

Pero ngayon, na-gulat ako na possible pala to anyone kasi may option din na with collateral or non-collateral loan. Many of my friends told me how helpful personal loans are in expanding their small businesses. I’ve even read success stories online, it’s either they have a business investor or they got a loan to expand their current start-up business. Basta nga naman yung nahiram mo alam mong it will generate more ways for you to earn and not for show na successful ka. It should be carefully planned. 

So don’t hesitate to ask, inquire, and compare personal loans online. Check the best options and the good thing now is we can access information in one click online. 

• If you are married, always decide with your spouse’s approval

Kung may nakikita akong mali sa pagkuha ng personal loan ay kapag nag decide ang isa sa mag-asawa without consulting their spouse first. It is important to discuss financial decisions like this regardless of the amount of loan that you are planning to make. 

The good thing about letting your partner know that you’ll be getting a personal loan for your business or family, your spouse can also be part of the solution, like cost-cutting in other areas, helping you manage the business well and encouraging you to hit your goals. Plus the fact that it shows you respect your partner’s decision and voice as well. 

As the saying goes, “money is a good servant, but a bad master”. In the question of whether loans are good or bad, it will depend on how we view it and how we take responsibility for the actions we take.  

In trying times like this, for people who are adjusting and facing financial struggles, the first thing we need to do is lift our situation to God and believe that good things are still ahead of us. Stand up, get back up, find a solution, and never lose hope.