What I Did to Save Money and Settle my Credit Card Debt

In one of my older posts, I talked about how I settled my credit card debt with HSBC. The article How to Get a Bank Clearance for your Credit Card, is where I outlined the actions that I did in contacting HSBC and negotiated on paying my 6-year old debt. Yes, six (6) years! I stopped paying my credit card in 2010, and only had the courage to call my bank in 2016.

The truth is, I always had the intention to contact them but I didn’t know when and how. The fear in my mind is making up all these possibilities like the need to hire a lawyer and appearing in-front of a judge in court. All these kept me away from debt collectors, and I managed to evade them for years.

Thankfully, I made the right decision to not entertain the debt collectors! I never thought that I could resolve everything with just one call, and a trip to the HSBC office in Taguig later. It was absolutely hassle-free! No debt collector from whatever law firm they claim to be working for, is involved!

So, what did I do to save enough money and be confident enough to call my bank? This is where the difficult part of the story comes in.

After I stopped paying my credit card in 2010, I started thinking about being more responsible financially. However, I never really saved money prior to that so I didn’t know where or how to start. Moreover, I was partying the entire time in 2010 and 2011.

Needless to say, when I left my job in 2012, my bank account was empty and I shamelessly relied on the help of my siblings for three months until I got another job.

Two months into my new job, my boss in the US invited me over for a training and meet and greet. My company prepared all the paperworks and when it was time for me to appear in the US Embassy for the dreaded Visa interview, HR asked me to bring a copy of my bank account statement.

Imagine how embarrassing it was to tell them that I didn’t have a property, no car, and no bank account other than payroll.

That’s when my journey at saving money started. I promised to myself that I will start saving from that time on. And I kid you not, it was never easy then, and still not very easy now. In fact, it was not until a year later when I opened a bank account. Here’s a timeline of how I was saving money prior to calling HSBC in 2016:

2012

I landed a new job and decided to save money and settle my then two-year old debt. At around this time, I also started earning extra cash from my sideline as a wedding photographer. However, I was still recovering financially from being jobless for three months, so I actually barely saved anything that year.

2013

I opened a new savings account with BDO. I chose BDO because I was aiming to qualify for the BDO Reward’s card, a move that I did not regret doing later. This has inspired me to save even more.

Related Article:
Why the BDO Rewards Card is Better Than the SM Advantage Card

My weekends are still devoted to my photography gigs. I was earning around P2,000-P3,000 per assignment (equivalent to roughly P10,000 a month). It pays the bills, literally.

2014

Both my day job and sideline are doing fine. My photography group raised our wedding packages pricing so I was now getting a share of P3,000-P4,000 for every shoot; our weekends are fully booked!

However, I was not seeing any improvement on my savings account. It is still stuck to its maintaining balance, and that prompted me to review how I am saving.

This is when I realized that the 50-30-20 rule doesn’t work for me. This rule basically wants us to put:

50% of our salary to paying our necessities such as housing, rent, and other bills,
30% go to our wants, this is basically the amount we can spend, and
20% to savings.

I was not wired to save and I am guilty of the many reasons why most of us Pinoys are having a hard time saving money. This is my subject in this article:
7 Reasons Why Saving Money is Hard for Most Pinoys

So, what was my solution? I modified the rule so it would fit my personal financial situation:

50% – rent and bills
40% – for spending
10% – saving

As mentioned above, I was not used to saving. I was raised with a “loan mentality” so saving money is not in my nature. But by saving only a small amount every payday, I was putting this “saving mentality” into my system at a very slow pace. A pacing that my financial spirit could absorb and handle.

The good news is, it is working!

Ironically, this was when the calls from debt collectors started coming in, again.

2015

I travelled to the US in March of this year. It was my first time outside the country so it got me really excited. Although everything was paid for by my company, personal spending was unavoidable.

In May of the same year, I bought a MacBook which I thought was a good investment for my photography needs. I paid 50% in cash, and the other half through a friend’s credit card for a six-month installment plan. For the next six months, I was paying her around P6,000. That was a new aha! moment for me.

I thought, if I am able to save 10% of my salary and pay my friend P6,000 every month, I should now be able to save that same amount moving forward! I could now do the 50-30-20 rule!

And so I did. I started saving more.

By the end of 2015, I paid the reservation fee for a condo unit. A move that almost lead me into depression the following year.

2016

One of the usual pitfalls for first-time money savers is: getting too excited of how much they’ve already saved.

After paying the reservation fee for a condo unit the previous year, my agent quickly prepared all the paperworks and before I knew it, I was already allotting a big chunk of my budget for the downpayment (at a 12-month installment). Unfortunately, I also decided to let go of my sideline that year. In short, I brought in a liability but removed an asset.

On the other hand, I was already starting to believe that acquiring a property that year is a huge mistake (and a financial advisor would tell me that for sure, if I consulted one). For months, I was getting rejection after rejection from banks who wouldn’t approve my home loan applications. At some point, I considered giving up on the over P200K downpayment that my siblings and I already paid. I thought, perhaps, the condo is not for me or not for us.

But as what they say, God works in mysterious ways. It turns out that it was both a blessing and a blessing in disguise. Because this made me finally decide to contact HSBC to pay my six-year old credit card debt and get a bank clearance. Luckily, I was able to negotiate and brought the amount down from P120K to P35K!

What was initially a harrowing experience turned out to be joyful in the end. 2016 was the most financially challenging point of my life. It has taught me so many lessons that in the middle of 2017, I finally decided to document everything through this blog, with hopes that what I am sharing will be helpful to someone who’s going through the same phase.

Yes, always remember that this is just a phase. If your credit card debt is giving you nightmares, you will get through it for as long as you have a genuine intention to settle it when you can.

For six years, I was hiding from credit card debt collectors. My LinkedIn and JobStreet profiles were set to private because I was afraid they could find me there. I would get anxious if I get a call from unknown numbers, and worse, when debt collectors found my new employer and reached my office extension number.

I did not ask for miracles that my debt will suddenly disappear, although I did pray for some divine intervention. And because paying my debt has always been in my intentions, the universe conspired to find ways to lead me and push me towards fulfilling that. It gave me the right opportunities (disguised as difficulties), and the right people (very patient agents, friends and siblings) to help me.

The paths were not inviting at all, they were scary, unclear and rough. I was extremely hesitant and fearful at first, but when I decided to follow and go through the many obstacles, I surprisingly emerged unscratched in the end.

So if you are reading this because you’ve been receiving threats from debt collectors, start saving up money and call your bank after. If you already have the money, I highly recommend that you settle your debt with your bank directly.

If you are having a hard time saving money, perhaps you could relate to my personal financial struggles as well. I’ve been working for over ten years now, but I only recently took saving money and being frugal seriously. The lessons that I learned along the way played a very important role in my story of finally settling my credit card debt.

I am documenting my progress in my personal finance articles where I also share my tips on how to adapt a “saving mentality” for us who are not wired to save. To learn more, you may browse my posts by clicking on this image:

I wish you all the best!

7 Things you Need to Know Before Getting your First Credit Card




Have you been wanting to get a credit card? Have you tried applying for one but got rejected? Here are some credit card facts that may help you decide or gauge if whether or not you are ready to own one.

These are all based on experiences and not a professional advice. I am sharing them because I myself did not know these when I got my first credit card ten years ago.

I would have maintained a very clean credit record if I did. At that time, I have just started working and I didn’t know anyone (who owns a card) whom I could ask for advice. So here we go.

1. Credit card is like a loan.

A bank will lend you the money, and you will need to pay them back. Which means that ideally, you should not be using the card in buying stuff that you can not afford to buy in cash. Credit cards are helpful, and in fact could help you save money in many ways if you know how to use them smart.

2. Credit cards will not make you rich.

Instead, it could lead you to spending way beyond your means and accumulate debt. On the other hand, a credit card can become a useful tool when you know how to use it wisely as mentioned above. Items that you can buy via installment plans at zero interest is a common example; you won’t need to shell out a huge amount at once but rather pay it in months. You can also take advantage of various promos, get discounts, earn points, and the like.

3. Never look at the required “minimum payment”. Instead, check your total amount due and pay that amount in full.

The minimum payment is calculated at ONLY 1% to 3% of your total outstanding charges. Paying only the minimum is like adding up interests to your debt. Most people who ran away from their credit cards and got “black listed” have started from doing this practice. Again, always look at the TOTAL amount due and pay that full amount on time.

4. Late monthly payments are reported to credit bureaus.

Which is why you need to know that owning a credit card requires you to be very disciplined and responsible. Going back to number one, if you cannot buy an item in cash, avoid buying it with a credit card.

5. What happens if you stop paying altogether?

You can never run away from your credit card debt. Aside from not being able to qualify for another credit card, you may not get approved of any form of bank loans in the future. Your record will be sold to credit card debt collectors who will in turn harass you in forcing you to pay. These collectors are unprofessional, rude, and ruthless, you don’t want to deal with them.

6. If you are new to the work force, aim to save money first before getting a credit card.

I recommend having at least Php50,000 in your bank account, or more than thrice your monthly salary. Why, you ask? Because the credit limit that banks will give you will be based on your income and is often more than twice your monthly salary. Just in case you get to max your card out (spending up to the maximum limit), you have at least a fund available to pay your balance. This way, you won’t be relying on your salary to pay your debt. This could make you live from paycheck to paycheck, and you don’t want that to happen to you.

7. It is not scary to own a credit card.

It is only scary if you don’t know how to spend wisely. If you splurge on things you could hardly afford and if you have debts or loans, do not get a credit card. If you have no savings, do not get a credit card. However, if you know that you are responsible and you can control your spending, there is no reason for you to be scared. Again, if you are smart and wise, you can make your credit card work for your advantage.

Are you ready and responsible enough to own a credit card? You can try applying for one from Security Bank. Start by clicking on this referral link: https://www.securitybank.com/m?10124001601.

I wish you the best of luck! Let us know if you get approved. Most importantly, remember these advices when you start using your card.


 

Get Help From The Credit Card Association of the Philippines – CCAP

Photo Credit: CCAP

Still wondering how to settle your credit card debt with your bank or banks? If you have more than one credit card and you want to consolidate your payments, you may need the help of the Credit Card Association of the Philippines (CCAP). Watch the video below for more information:

IDRPAre you financially distressed and buried in credit card debt due to the factors beyond your control? We’re here to help! The Credit Card Association of the Philippines, Bangko Sentral ng Pilipinas, and participating banks launched the Interbank Debt Relief Program. Watch this video to learn more about the program.

Posted by Credit Card Association of the Philippines – CCAP on Tuesday, 7 June 2016

Basically, this Debt Relief Program allows credit card users to sustain paying the account and prevent further delinquency. “To enroll in the program, CCAP will review the debtor’s financial capacity. The repayment period is up to 10 years for “severe cases indebtedness” with a low rate of 1.5 percent per month or lower depending on the profile of the customer, debt to income ratio and completion of documents required for the program.  The participating banks may also have the option to disapprove application for customers who misused and abused the credit facility granted by the banks, said CCAP.

Based on a statement, CCAP said that as part of the guidelines of the program, all existing credit cards of the customer will have to be blocked or cancelled upon enrolment of the accounts to the program.

Rebates and rewards earned will also be forfeited. “Additionally, customers cannot apply for new credit facility with the participating banks while the accounts under the IDRP are not yet fully settled.” – Source: http://www.ccap.net.ph/?p=632

CCAP presently includes as members Asia United Bank, Bank of Commerce, Bank of the Philippine Islands, Citibank, China Banking Corp., Eastwest Banking Corp., Equicom Savings Bank, HSBC, Maybank, Metrobank Card Corp., Philippine National Bank, RCBC Bankard, SB Cards Corp., Standard Chartered Bank, and Union Bank of the Philippines.

What is the first step? Call your bank and ask them about IDRP!

To learn more, you may visit the CCAP at their Facebook page and website:
Facebook Page: https://web.facebook.com/CreditCardAssocPH/
Website: http://www.ccap.net.ph

Related Post: How I Settled My Credit Card Debt

How Credit Card Debt Collectors Find Your New Contact Information

I use to frequent online forums for topics concerning unpaid credit credit card debts. I was having the same dilemma back then, and because this is not commonly being discussed face to face, I understand why a lot of us resort to online message boards to talk about it.

What I observed from reading everyone else’s stories is that, a lot of people are surprised at how these debt collectors found them when they already changed their numbers, and have moved to different locations. The answers are simple, and they’re mostly in the internet.

1. Social Media.

It is very easy to find someone on social media. Just type in a old friend or acquaintance’s name on Facebook’s search bar and there’s a high chance that you will find them. You can even use phone numbers to look them up. If they used that number to create their account, their profile will appear on the search results.

It may not be as easy to do this on Twitter or Instagram where most users prefer a handle or nickname.

2. Google.

Try googling your name, and your social media profiles, old and new, active or not, are likely to be shown. If you passed a board or licensure exam, you will see your name on various lists published by the PRC, some blogs, and other major publications.

Try searching for your old numbers and anything that was posted online that has your number on it can also be found.

3. Work Records

So you changed jobs, or even moved overseas. But debt collectors were able to track you and even calling you via IDD. They may have seen your new job title or location which you posted in your Facebook or LinkedIn profiles.

You may choose to turn your Facebook’s privacy settings to maximum, but doing so with LinkedIn defeats the purpose (of having a LinkedIn profile).

4. Bank Records

If you recently applied for a salary loan, personal loan, car loan, or home loan, and was lucky enough to get approved, you must be aware that your credit record is accessible to all banks. As this is a new transaction, it surely has your new contact details. Your credit card issuer may have passed these information to the credit card debt collectors.

It is difficult to keep your privacy in this digital age. You’ll be surprised to discover that your personal information is everywhere. While most of these can be hidden (at least from debt collectors), your credit record and contact details that go with it are being shared by all banks.

Therefore, I will keep recommending that you settle your debt with your bank like what I did. CLICK HERE to find out how I got cleared from HSBC. Trust me, it is liberating!

Getting a Secured Credit Card from Security Bank



Four months after settling my six-year-old credit card balance with HSBC, I applied for a credit card at Security Bank via a friend’s referral. I went ahead for two reasons:

  1. To check if getting a clearance from HSBC could clear my bad credit card history.
  2. Just to try my luck.

I was not approved and I am not surprised. I understand that it has only been four months since I got the clearance from HSBC so the chance of getting cleared from the “system” at that point is very slim. I proceeded with my next option which is to get a secured credit card.

Related Post:
How to Get a Bank Clearance for your Credit Card

I have been hearing about this option before and BPI seems to be the most popular provider. However, I never saw any information about this on their website so I was hesitant to apply. I do have a prepaid card with them which was very useful for online transactions. I used it for about 6 years.

In February this year, I submitted my application for a secured credit card to Security Bank. They call this product “Fast Track Program”.

In summary, you will need to open a savings account with a minimum deposit amount of Php15,000. Your credit limit will be 80% of the total holdout amount. So if your holdout amount is Php15,000, your credit limit will be Php12,000.
You can deposit more money to your account, but you cannot use or withdraw the holdout amount for at least one year. Should you need to withdraw the holdout amount, your credit card will be cancelled and any outstanding balance will of course be deducted. This is basically a test of how “qualified” you are to get a regular credit card. If you cannot manage your finances with a secured credit card, you probably couldn’t do so with a regular credit card. To make it even more secure, I voluntarily opt to not receive an ATM card for my savings account.

It feels like a second chance in owning a credit card. I use it for the basics – groceries, Uber/Grab, and lately, on a three-month installment plan. I follow the most important rule: if I can’t buy or pay it in cash, I won’t use the card. And above all, I make sure that I pay the total balance on time.To apply for a secured credit card from Security Bank, go to https://www.securitybank.com/.

The approval is 100% provided that you meet all their requirements. The processing time is supposedly 10 business days, but I got my card in the mail after three weeks.