How to get out of pandemic debt? Financial planner shares tips

Warren De Guzman, ABS-CBN News

Posted at Jan 18 2022 04:01 PM

MANILA - Street-side vendor Beth Castro turned to informal lending with exorbitant interest rates when mobility restrictions torpedoed her business. 

Castro hopes to pay off debt she incurred during previous lockdowns from the increased sales beginning in the last month of 2021. The Alert Level 3 imposed in January, however, crippled her livelihood even more.

“Tumal ho talaga. Minsan meron, minsan wala. Pag Biernes wala na rin ho. Dati umaasa lang kami Biernes, Sabado, Linggo. Ngayon wala sarado simbahan," the vendor who looks forward to church foot traffic for income said. 

(It's really slow, sometimes we have income, sometimes, none at all. Even on Fridays. Before we're looking forward to Friday, Saturday and Sunday. Now, churches are closed)

“Kasi nung lockdown talaga, wala kaming maihuhulog dahil yun nga sinabi ko, ang kinkita namin pangkain lang, pambili lang ng dapat namin bilihin, gamot, yan.” 

(During the lockdown, we can't pay, what we earn is just enough for food, medicine)

Metro Manila was placed under Alert Level 3 when COVID-19 cases surged likely due to the new omicron variant. The restriction stays until Jan. 31. 

Unlike Castro, seafood vendor Marylou Baguio has been able to keep up with the daily interest payments for her loans. 

Despite sales drastically declining with every tightening of restrictions, Baguio said she could use unsold inventory to feed her family. 

But lower sales make debt payment more challenging, she said. 

Eatery owner Technie Balmores, meanwhile, equates hard lockdowns to debt pile up. She fears the surging cases could lead to that. 

“Pag agad mag-lockdown, mag-iipon na naman ako ng utang. 'Yun ang masaklap don. Maghanapbuhay ka, kikita ka, ibabayad mo lang din. Pag may ayuda ibabayad mo lang din. Parang useless lang din," Balmores said.

(If there's a lockdown, I will incur more debt. That's the sad part. You work, get paid and just use that to pay loans. If there's aid, you use that for payment as well. It's useless)

SCALING PANDEMIC DEBT

Cash-strapped Filipinos struggling with finances during the pandemic should plan debt repayment in an organized manner, registered financial planner Aries Baloran said.

Baloran shared the following tips:

• Gain control - write down all loans, amount, minimum payments for credit cards and the interest rate

"Unang una, get organized," Balora said. 

• Pay the debt with the highest interest rates first - interests add more to the debt making it harder to payoff

• Make payments - even if it's just the minimum amount

• Communicate with the lender - show them you're sincere in wanting to pay off debt

“Makipag usap ka doon sa pinagkakautangan. Makipag settle sa kanila ng mabuti, Sabihin mo ito lang ang kaya kong bayaran, and sana you accept ang proposal ko sayo," Baloran said.

(Talk to them. Settle it properly. Tell them the amount you're capable of paying and hope that they accept your proposal)

• Use part of bonuses or extra money to pay off debts

The goal is to eliminate debt quickly so that interest expenses don’t snowball and make life much more difficult down the road.

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