The Second Step - Manage Debt

"An excerpt from my Blueprint to Financial Success"

In the illustration thereof, it would be best to manage our debt first before deciding to jump into investment. Otherwise, we will be in big trouble and might be very difficult for us to recover. We have to remember that compound interest is our worst enemy when it comes to unmanaged debt.

How to manage debt then?

• Do a monitoring on your credit. It will make you aware how much minimum you really need to pay to constantly reduce your debt.
• Consolidate it, avoid borrowing money from one person/banks to another.
• Make sure to pay debt timely (we don’t want unnecessary late charges)
• If possible, eliminate it.

Two Types of Debts:

• Bad Debts 
• Good Debts

Sample of Bad Debts and Good Debts:
Say for instance were qualified and get a personal loan maybe from a bank, SSS or GSIS, PAG-IBIG, etc

• Bad Debt, if we used the loan amount to buy consumable or depreciative things which actually not needed or only for the purpose of gaining attention or in short to show off. 
• Good Debt, if we invest the loan amount to which it will possibly earn more. Just remember to manage it though, meaning we have to make sure that we regularly pay the loan amount sufficient enough to constantly reduce it.  

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