Frugal Honey

Debt Management

How I Demolished My Credit Card Debt

I’ve talked in passing about paying off my credit card debt a few years back, but now it’s time to get to the nitty-gritty, to spill the details on how I said sayonara to debt once and for all. Let’s talk numbers:

  • Number of credit cards = 3
  • Total amount of debt = Php150,000 more or less
  • Total amount paid = Php200,000 more or less
  • Time it took = 5-6 months

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The Necessity of Taking Out a GSIS Loan

Ok, so there’s really no need to get a GSIS loan, or any loan for that matter, especially if you don’t need it. But more than half a dozen people have prodded me to take out a GSIS loan because if I don’t, someone else will supposedly take one out in my name! How true is that? The fact that more than one person has told me the same thing means that there must be some grain of truth there right? Or maybe it’s just a case of double (or triple) hearsay perpetuated into a truth because it’s been repeated over and over again?

So confusing.

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Lending Money to Friends and Relatives: More Harm than Good

This article from Learnvest brought back a barrage memories of the first and last time I acted as guarantor for my friends.

In my old law firm, one of our clients had an ex-deal with Gold’s Gym and was paid with 1 year membership GCs redeemable at any Gold’s Gym branch. Our client then sold these GCs for Php12,000 each, payable in 12 monthly installments. Of course I pounced on the deal and informed my friends about this fantastic offer from Gold’s Gym. Several friends bought GCs and we agreed that they would pay me Php1,000 monthly for each GC, I would then remit the cash to the client every month.
Sad to say, of the 3 friends who got GCs through me, only 1 religiously paid every month. One always forgot it was that time of the month and the other lost her job and gave back her GC to me, promising to pay me back later.
The forgetful friend eventually did pay me, but only after I demanded the whole amount after he forgot for 2 straight months to remit his payment. The other friend still owes me money and from the looks of it, she has already wiped off that debt from her consciousness, even if she got a new job about 3 years ago.
I’m still friends with these two, but I will never, ever lend them money again or act as a guarantor for them, or for any other person, for that matter. The stress and disappointment are just not worth it. 
For me lending and borrowing money involves so much more than the actual value of the transaction, as it really boils down to respect. Do you as the borrower, respect the lender enough to make good on your word? Or will you just disregard the loan, reasoning that the lender has more than enough to not notice that she’s out a few thousands of pesos?
I know money problems can’t be avoided, but what you can control is how you will honor your word to someone you are indebted to.

How to pay your PAG-IBIG mortgage online

I’m on my fourth or fifth year into my 30 year PAG-IBIG mortgage. The first three years, our unit was a dormitory for some students in the nearby college and my mom played landlady, paying the mortgage from the rental income.

 When I took over the mortgage, I was honestly too lazy to go all the way to the PAG-IBIG Makati office to tender PDCs for the next year and lining up monthly to remit my mortgage payment was also a no-no, besides, my PAG-IBIG statement of account always arrived late, if it even arrived at all. Some googling action revealed that yes, I can actually pay my PAG-IBIG mortgage online! Huzzah!

 Here’s how to do it.

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Staggered Credit Card Payments

Aside from crowning myself as the Queen of Rakets, another thing that helped me wipe off my massive credit card bills was staggering my credit card payments through online banking.

It’s really simple, I just take note of two things in my credit card statement: (1) the Payment Due Date; and (2) the Statement Date. By looking at my credit card statement, I can approximate my due date will fall on the 7th and the billing statement will issue on the 17th of every month.

It’s imperative to pay at least the minimum before or on the payment due date in order to avoid nasty penalties. I find that because I use Metrobank Direct, payments made for my Metrobank credit card are credited in real time. But with other issuing banks, like my RCBC credit card, I have to give an allowance of 3-4 business days from the listed payment due date, in order to account for the transfer of funds from one bank to another.

Anyway, so you have to pay at least the minimum on or before the due date, and for this statement, I have already paid Php5,000.00, bringing down my outstanding balance to Php12,792.65.

Now from the time the payment becomes due to the time the next billing statement is issued (a period of about 9-10 days), your account is in some sort of limbo because the 3.5% monthly interest only gets tacked on with the next billing statement.  So take advantage of this by continuing with online payments in order to avoid that ridiculously high monthly interest rate.  I haven’t confirmed it, but I have a strong feeling that you can’t pay your overdue credit card bill over the counter, even if you have already paid the minimum and just want to make additional payments. And even if you can, it’s so much more convenient to do it online.

So from the Php5,000 I’ve already paid, depending on how much cash I can cough up, I can pay an extra Php5,000 or wipe out my balance entirely, between June 7 to June 17.

While staggering your credit card payments online won’t guarantee that you’ll have enough cash to pay off your entire balance, at least it gives you an additional week or so to come up with cash to pay off as much as you can without incurring penalties. And that, is priceless.

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