7 things You Need to Do in Dealing with Excessive Debt


Most of you have read my previous articles about personal finance. Now that you know the danger of being in chronic debt, the next question is how to get out of debt. Are there simple yet practical ways how to get out of it? Many people have suffered from financial distress and don’t know how to manage or get rid of debt. Here are the practical steps:

  1. Face the problem and commit to get out of debt

It is important to first acknowledge the problem before you find a solution. If you expect to get out of debt yet your spending habit hasn’t changed, the problem won’t be resolved. You need to face the reality and make a commitment to get rid of debt.

  1. Decide a time frame to achieve your financial goal

Once you figure out the total debt in your record, write a deadline when you’ll be financially free. Setting a time frame is like a compass to guide you in your journey which is necessary in achieving your financial freedom. If it takes two years or a few months to settle your debts, don’t be discouraged. The most important is you’re focusing on coming financial freedom.

  1. Negotiate with your creditors

I understand how stressful it is to receive a phone call from a loan company reminding you to pay your loan or to receive a text message from your friend almost everyday. These are the examples of possible consequences when you are in debt.

However, you need to learn your lesson and think of possible ways how to approach these people. Possible issues you need to negotiate with creditors are the late fees, penalties, the loan to be extended or restructured, and allowing you to skip one or more payments with no penalty, and other related debt concerns.

Never forget to pray and be genuine or sincere as you try to negotiate with your creditors to lower the interest rates. Just be honest with them and tell your current financial standing.

  1. Decrease your spending

Many people would suggest living within your means. But if you find yourself in excessive debt, it is always more practical to live below your means.

Decrease your spending means to eliminate unnecessary expenses. Learn to redefine wants versus needs and live with it. If you’re spending more than what you’re actually earning, it’s time to cut back stuffs that you can live without: movies, extra dress, and dinner out. When it comes to money matters, Filipino proverbial reminded us to, “Matutong mamaluktot habang maigsi ang kumot.”

  1. Increase your income by seeking additional sources

To get out of debt, it is always wise to rethink of your cash flow and see how you can make extra income aside from regular employment. One way to increase your income is to use your talent or skills.

Use your free time and start by looking areas in your life where you can convert your skills into extra source of income. Having a part-time job would help you to earn an extra-money especially when your budget is tight. When you find ways how to increase your income, it will expedite the process of repaying your loans.

  1. Discover new ways of recreation

If your pleasure is shopping at the mall every weekend, or visiting night market with your friends, think of replacing these habits where you won’t be tempted to spend much money. It’s worth to reexamine your lifestyle if you really wanted to get out of debt.

The key to escape from financial bondage is to live with a simple life. Learn to find new habits and pleasures that you don’t have to spend more money. Picnic at the park, biking, walking in village, and roller skating with kids are the few examples of activities that would give simple joys.

  1. Seek financial help or advise

You’re seeing the doctor when you are sick. They definitely give you prescriptions to get you well. However, this simple illustration may also apply when you are in debt. The only difference is that your wallet is sick and you’re seeking help from financial advisor instead of a physician.

I strongly recommend that you join the Truly Rich Club as they help Filipinos to spread financial literacy.

Proverbs 22:7 “The rich rules over the poor, and the borrower is the slave of the lender.”

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Jun Amparo

Jun Amparo

JUN AMPARO is the author of two inspirational books about personal finance and marriage.  He is nominated as Huwarang OFW 2019 organized by The 700 Club Asia and is pursuing his doctoral study in education. Presently, he is working as a university counselor and lecturer at Asia-Pacific International University in Thailand.