Please help! I am deep in debt with my credit card from last Christmas’ spending spree. I know I should pay everything in full, as the experts usually suggest. But I owe the credit card company nearly P70,000 now (accumulated also from before Christmas), and my salary of P20,000 a month can’t possibly pay for it. How can I save the situation?

Yes, it is right to pay everything in full immediately.  Credit card debt is the most expensive debt of all.  If you do not pay the entire amount immediately, the worst is still to come in terms of interest and penalties.  You can check our Mr. Colayco’s book “Making Money Work for You” to understand the method of how credit card interest and penalties are computed.

– You are wrong though that your salary cannot pay for your debt.  Perhaps, not immediately but with the right strategy, you can do it.

– Cut up your credit card immediately.  Under no circumstances should you use it especially when you still have a balance to pay.  Any purchase that you make today will be included in the basis for computing the interest and penalties.

– Talk personally to the representative of the Credit Card company to negotiate for the immediate stop of the penalties and the lowering of the interest rates.  Understand all the options you have from them.

– Pay for any purchase only in cash henceforth.  “No cash, no purchase” should be your new motto.

– Make a list of all your assets and liabilities, no matter how insignificant you feel they are.  Perhaps, you will find some things that you can sell.  Believe me, every peso to pay off your credit card debt will count.

– Make a very strict budget of your “Needs” to understand exactly how much of your salary you can use to pay for it.  You cannot even consider any “Wants.”

– Look for a relative or a friend who will lend you the money to pay for it.  You can even pay your relative or friend a high interest rate of say, 18% and it will be still be lower than what the credit card company or a financing company will charge you for a personal loan.

Remember that you got into this debt because of the wrong attitude about money management.  You have to understand yourself more fully on this matter.  Each person is different and if you need a financial coach particularly on this matter, write info@colaycofoundation.com.  You may also check our website for our seminar schedules.  Visit www.colaycofoundation.com.