Tips To Manage Your Debts and Loans

Updated: January 21, 2019

Debts and loans can be a good friend, who provides financial leverage and helps you in times of need. But it can also be an evil enemy, who cripples your budget and brings financial stress.

More often than not, it’s how we manage our debts and loans that determines which of the two will come into our life. And below are some tips that can help make sure that borrowing money doesn’t become a nightmare.

But before we go into that, let me first thank Security Bank Philippines for helping me write this article.

Congratulations to them for winning the Best Bank in the Philippines 2018 award from Global Finance, an esteemed financial magazine based in New York.

Furthermore, Security Bank was also named as Best Bank of the Year for 2018 by The Banker, which is another distinguished, international banking and finance magazine, belonging to the Financial Times Ltd.

This prestigious award, given by an institution that has been reputed for its global banking information since 1926, is known as the Oscars of the banking industry. It also stands as the world’s longest running international banking title.

With that said, I am truly honored to be working with Security Bank in today’s article. And watch out for more collaborative content with them in the coming weeks.

Now back to the topic. So how do you properly manage your debts and loans? Here are five valuable tips.

1. Borrow for the right reasons.

When you borrow money to buy an asset that has increases in value over time or has the potential to make you money, then that’s a good debt. Examples are home loans to buy a property, or loans to use for business growth.

When the money is used to buy something that decreases in value or makes you lose money, then that’s bad debt. A common example is an unnecessary credit card expense that you don’t pay off immediately.

Go into debt for a good reason, and minimize or avoid bad debts.

2. Borrow only what you need.

If you need P200,000 to start a business, then borrow only that amount, even if you’re eligible for a loan with a higher amount. This is a common mistake I’ve seen people do, which you should certainly avoid.

Remember that the bigger the amount you borrow, then the more interests fees you pay, the larger your monthly payments are, and the longer you most likely have to pay.

3. Know how much you can afford to pay.

Check your budget and see how much you can actually afford to pay every month. Never assume you’ll have more money in the future, and just work within your current income.

Once you know how much, be sure to choose the best payment terms that fits your budget. Doing this helps make sure that you’ll have money for paying your monthly dues.

4. Choose the right loan facility.

Do you know why it’s called 5-6? That’s because you pay P6 for every P5 that you borrow. This translates to a whopping 20% interest rate!

Banks and most financial institutions can definitely offer much lower rates. And when it comes to borrowing money, getting the lowest interest rate should be your priority.

But what if it’s hard for you to get approved for a personal loan? Then I recommend getting SALAD. Yes, SALAD!

Launched in 2017, Security Bank’s Salary Advance (SALAD) loan facility provides safe, convenient and affordable installments to individuals who do not usually qualify for regular loan products.

This loan facility was designed precisely for Filipinos who fall victim to aggressive loan sharks and informal lenders that often put them in even more debt with high interest rates and risky conditions.

The loan, which supplies affordable credit access to its applicants, holds a remarkable approval time of 10 minutes. To add to its convenience, it can be conducted through text messaging. After that, the loan will be transferred to the borrower’s payroll account, which can then be accessed through any ATM.

Now, for entrepreneurs who are looking for fast credit to finance urgent expenses, such as office equipment repairs or a large incoming product order, there’s the SME Business Express Loan by Security Bank.

This is an unsecured, fast, and convenient business loan that is customized to the growing needs of businesses. Its features include minimal documentary requirements, a safety net, fast approval, and the auto-crediting of funds.

Approval for the SME Business Express Loan can come as fast as 5 days!

5. Monitor your cashflow, especially your spending.

After getting the money, keeping track of your spending should now be your priority. Be sure that you’re not splurging your borrowed cash on unnecessary or unplanned purchases.

And to keep your credit records clean, make sure that you always pay on time!

You can set an alarm on your phone or computer to remind you of your due dates. You can also schedule automatic payments within your bank account, especially if your days are busy.

Entrepreneurs who have access to Security Bank’s online platform, Digibanker, should check out the Corporate Utility ePayment (UEP) system to manage bills and check payments.

On the other hand, there’s also Instapay that can help you settle payments with an instant transfer of funds between accounts of participating, BSP-supervised banks. This is a feature within Security Bank’s Mobile Banking App.

Final Thoughts

You can always live life without ever going into debt or applying for a loan. This is the slow and steady way to build your wealth.

However, if you know how to properly use and leverage your finances with debts and loans, then building your wealth can accelerate and grow at exponential rates.

As always, there’s no better choice. At the end of the day, you should always choose the option which makes the most sense to you.

To end, I’d like to again extend my gratitude to Security Bank Corporation for their help in this article. I’m looking forward to helping more Filipinos become fiscally responsible and financially literate through this content partnership.

And with that, I’d like to know…

How are you managing your debts and loans? What are your experiences and the lessons you learned? I’d love to hear your thoughts, so please share them in the comments section.

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  1. Hi Sir Fitz, your articles are very helpful. I am currently drowning in debt from loan sharks because I admit I mismanaged my finances and being a breadwinner I have am the only one in the family who provides for our needs especially when the pandemic happens when I don’t have a salary . But I’m focus on my goal to get out of debt and I will really do my best to get out of this mess. Thank you very much for your articles it helps me to calm down and focus on re-building myself again, I promised myself that I will never resort to debts.

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