Debt (utang, as we Filipinos say), according to anthropologist David Graeber, in his Debt: The First 5000 Years, came into concept alongside human history even earlier than the introduction of money, which itself was preceded by barter system.
It is an amount of money borrowed usually used as a means of making a purchase unaffordable under normal circumstances, and under an agreement of payback at a later time, usually with an interest (read investopedia.com article). It can be represented by a loan note, mortgage, bond, and other forms containing specific repayment terms and conditions.
As per recent survey conducted by Manulife Investor Sentiment Index (MISI), we, Filipinos, outperform other Asians in monitoring personal savings and expenses, hence a sign of good financial discipline. However, Filipino investors, in particular, contribute to the recorded high level of personal debt (excluding mortgages), one of the highest in the region.
As it happens, reliance on debt to get by among many Filipino investors is found a threat to long-term financial security. It is an expert advice though that we employ a more comprehensive financial management, not just focusing on savings.
Debt Culture Among Filipinos
In most Filipino households, discussions on finances remain culturally restricted. Seldom that young professionals share about their salary or actual savings. Worst, some of them even get into debt should they need to shell out a sum beyond what they have in their savings, just for the sake of pleasing the family or of not making such an impression of a pathetic low-income earner.
Getting into Debt to Pay Off Another. Sounds silly, but really many among us get into additional debt to pay off, or at least pay down, an existing one. Imprudent practice maybe, it has become an extremely short-term strategy though among debtors which translates to a resolution of immediate issues with creditors.
Some say, we must take priority paying off bad debts first. Well, that’s true, but getting into another simply repeats the vicious cycle of financial indebtedness. What if another financial trouble comes along our pay-down period? To avoid worst case scenarios, our getting into debt should come with a concrete payoff plan (as emergency spending should come with a fund). Period!
Taking Debt, to a Lesser Extent, a Liability. Debt is not really a serious liability (since the creditor gets the actual burden), as the common mentality among many Filipinos goes. Many would always say that money can be earned anyway, hence debt can be paid (even without concrete a payoff plan). Anyway, creditors can’t help but be patient and just come back whenever payment becomes available, if ever that’s the case. In other words, many do not pay it on time.
It is with this mindset that people get into debt just because of the opportunity, not of a necessity. When an opportunity knocks, the door opens right away. For instance, when a close friend or a relative gets a dispensable fortune, it is somebody’s fortune as well getting a slice of it through debt. Usually, the borrowed sum dissolves through time, or as it goes ‘thank you na lang.’
Mismanaging Household Finances. What prevents many household managers from making a realistic budget is the thought that it’s futile and impractical as there is no active cash flow. Technically, nobody is exempted from doing a little math, may the figures be small or big.
In the absence of a realistic household budget or even a simple tracker, unforeseen expenses (even foreseen ones actually) such as those related to school projects of children, meal preparations, and others are usually settled through petty debts with relatives in the compound or at the neighborhood sundry stores.
Your Debt Payoff Plan
 Create a Debt Tracker. It is imperative to have a concrete payoff plan derived from your debt tracker (all accumulated debts from petty to bigger ones) and a trimmed budget. In fact, a tracker detailing all your debt, interest rates, and required monthly minimum payment helps you realize whether you still have the capacity based on your income to settle them all at a target payoff period, or you should initiate negotiation for payment extensions or whatsoever with your creditors. Without this, you may forget petty debts or mismanage the paydown.
 Personalize Your Debt Payoff Plan. Proven an effective debt pruning strategy, you should manage paying down first those that bear high interest rates or those with lowest balances (for simplification). You should also make on-time payments so to avoid late-payment fees and penalties. Of course, there is no perfect payoff plan, and what works for you may not work for me. That’s another fact!
 Trim Your Budget and Live Within Means. Examine your budget and lifestyle, and find opportunities to cut down on your discretionary budget. Perhaps you can make a little sacrifice packing a lunch to work and making lesser trips to the mall (read more about managing finances). While paying down, do not ever get into another unless it’s really a must. You can also make use of your spare time earning a passive income.
 Change Your Habits. You might be in debt because of your bad habits. You might be due to your recent hospitalization caused by your unhealthy lifestyle – smoking, sleeping late at night, too much alcohol consumption, and gambling. Your socialization with friends and colleagues might have been costing you much. Go change these habits before they totally get you trapped!
Money can’t buy happiness, but it can pay off your debt that comes with some degree of stress, anxiety, and even worse, depression. Hence, debt is an obstacle that negatively impacts financial decisions. So, go get yourself out of utang!
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