How would you take the thought that you are stealing money from your future paychecks? Do you think that’s okay because you’ll have a bigger paycheck by then or the thought of it bothers you a lot?

That is what bad debt will do to you if you’re not careful with how you spend.

I will classify bad debt as money borrowed for debts that were spent on non-emergency situations. Some may think that a broken down smartphone or a travel getaway to another country with your friends. A funny definition of a bad debt is “using money you don’t have, to buy things you don’t need, to impress people you don’t like.”

But how will you avoid reckless spending that leads to debt? Here are some ways:

Change the way you see money.

The reason why most people go on a spending  ban and binge spend after a month or so is because they view budgeting not as a lifetime goal but a short-term goal. There are instances when you’d do it for a trip or for an immediate purchase but not as a lifetime habit.

This is just the same as being in a debt cycle. You weren’t born wanting to have debt for unnecessary purchases. This is fostered through time and repeated actions.

Make the most of your age.

Are you below 30 years?  This is the time that it will be beneficial for you to start investing and saving. You have more time to build your savings for retirement.  If you are over 30, don’t fret. There is still time for you to build your funds.

It will be challenging at first because it is not mainstream to live below our means. Achievement will be looked partially through your new gadgets or new car by your peers. Remember that your true friends will not care whether you have the latest models of anything but for your friendship. Avoid giving in to peer pressure.

This is also the best time to begin investing. Do you know that investing only P2,000 a month with an average yield of only 8% p.a. will give you over a million in 20 years? Imagine if you invest more and in diversified investments? You may want to look at pooled equity funds like mutual funds or UITF; or you can start buying select stocks yourself. Remember, study the investment first and never invest in something you don’t comprehend.

Protect your loved ones.

This doesn’t mean that you will stop causing debt, but this can go on until you die. I don’t think you’d want your loved ones to pay for your wrong financial decisions.

Look through your life insurance coverage you have. Can this be used as collateral commitment to your loans so that no one will be bugged by this in the event that you die? Look at every debt you have and assess if this will be stretched until 20 to 30 years. Discuss this with your family members and your co-makers so they will get an idea of this and provide their insights on how you can bring this down.

Don’t borrow money which will not help you make more money.

If you are borrowing money to put up a business, then that’s good debt.  If you are borrowing just to keep up with your neighbors or siblings, then that’s a bad one.

Ask yourself these questions before buying anything with borrowed money:

• Do I really need this?
• Can I find a more affordable option?
• Will this make me more money?

Compare prices before making major purchases.

Compare prices of smartphones with the same specifications so you’ll avoid overspending. Compare flights so you can get the cheapest rate to your destination. Never buy anything if you have not compared 2 to 3 option first so you’ll be sure that you got value for your money. I never buy anything on impulse,  I try to check out all options before making any purchase.

Find other streams of income.

Let’s face it: one definite way to avoid debt is to have multiple sources of income since this can empower you to buy items in cash. Find ways to get other sources of income through online portals like Raket.ph, Kalibrr, and other job boards. Multiple streams of income is a a good idea!

Final Thoughts

You can achieve anything you concentrate and focus on and avoiding bad debt is no exception. Keep in mind that having bad debt robs you of your future income so avoid it as much as you can. Debt can can be good, bad or ugly; wisdom dictates you know which is which.

According from the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) statistics on car ownership, there has been a 27.6% increase in the first quarter of 2016 in terms of car purchases in the country. With down payments as low as P25,000 to P50,000 coupled by historic low interest rates, more Filipinos now have the convenience of owning a car that can help them get around.

Most people think that cars are depreciating assets but if you utilize your car, it can be a big income generator for you. You just have to be creative on finding income opportunities with your car.

Here are some ways to generate income from your car:

Register your car to an online transportation network

This way of monetizing your car is beneficial both for you and for passengers who are looking to have convenience while commuting. There are a lot of online transportation networks like GrabCar, Uber, or Wunder that you can join in order to get commissions based on the volume of serviced passengers.

Just remember to register your vehicle at the online transportation network, attend their orientations, and get the appropriate insurance so you can get the most out of your car insurance. Most insurers will not grant a claim when the insurance used is for a private vehicle.

Be a tour guide

This is an income stream that you can do over the weekend. Just determine the areas you are most familiar with and make itineraries that your customers can choose from.

Choose unique routes in the city which you think get many customers, such as a food trip route or a Pokestop tour. You can advertise your services through your friends and family, Facebook groups, and online forums.

Rent out your car

You can choose to rent out your car to either only people you know or through inquiries you get online. The good thing about this is that you can earn passive income here and also utilize your car if it was just sitting in your garage for the longest time.

What you can do to make sure that your car is safe is get a security deposit or a collateral so that the borrower will not be able to steal your car.

Downgrade your vehicle

This can be done through selling your current car and buying one with a lower fair market value. For some, it can be a last resort because their car is their priced possession. This can also save you money in the long run through cheaper car repairs and maintenance. The premium of your car insurance will also go down once you do this.

Offer carpooling

You can bank on some people to only trust a driver they know. You can offer to drop off your neighbors, their kids, and other people in the area to their schools or workplaces for a fee. Just make sure to compute your expenses so you can price this right.

This is not a common practice for Filipinos since they’ll see this more as a favor you can do for them. Make the benefits of carpooling and your commitment evident so they will agree to your service.

Use your car as a moneymaker

Don’t look at your car just as a depreciating asset. You can also capitalize on it to bring you extra cash by these tips which can surely get in additional income for you in the long run.

I have been receiving a lot of requests to bring back my book bundle promo… so it’s back!

Get a chance to get my 3 best-selling and life-changing personal finance books with a huge discount: No Nonsense Personal Finance, Money Manifesto and Everyday Moneyfesto.

Regular price of my 3 books is P1,700.00 but you can now get those books  at P1,200.00 (as a bundle). I am throwing in free shipping for Metro Manila deliveries; for provincial orders please add P110.00

The promo will only run for 3 days, August 1 to 3, 2016 so hurry and get your copies now.

Here’s how you can order:

1. Deposit to BDO #006440069496 or BPI 0249-1113-09 (John Randell Tiongson)
2. E-mail photo of deposit slip or transfer advise to michael@randelltiongson.com along with your full name, complete address and contact number.
3. Expect your books to arrive in a few days!