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!

How to Get a Bank Clearance for your Credit Card

If you decided to stop paying your credit card, and have been receiving calls regularly, chances are your record has been passed on to a credit card debt collector. From what I know, banks would turn over (or sell) your record to a third-party collector after a month.

If you happen to be reading this and your latest due date has not passed one month yet, save yourself some trouble by contacting your bank immediately and ask for a remedial or amnesty. You could be very honest about your financial status and be ready to negotiate nicely. This option is so much better than receiving endless calls and letters with threats later on.
In my case, I avoided these debt collectors for six years. I was only renting so changing an address was easy. I also got a new mobile number although I did not deactivate the old one which every now and then receives calls from unknown numbers. Of course, I never answered.

In September 2016, upon the suggestion of BPI where I applied for a home loan, I contacted HSBC. This was a last resort as BPI nor any other bank, will not consider my loan application unless I submit a clearance. I was so hesitant that it actually took my agents months to convince me to do it.



I went through my old emails and found my credit card number. I then called their hotline and upon giving them my information, I was transferred to their Recovery Department. Basically, I stated my case and expressed my willingness to settle. It was not as difficult as I thought, no lawyers, no subpoenas, no court orders! Don’t believe the credit card debt collectors. Here’s what happened during and after the call:

  • The Credit Risk Management representative whom I spoke with was very nice. During the call I learned that my total balance including interests that have accumulated in the past six years is now at Php120,000+.
  • I said I don’t have that much money and asked if we could deduct all the interest.
  • She came up with Php35,000. I couldn’t remember my exact total balance from six years ago, it must have been around Php25,000 (without interest) so I was okay with the offer. I thought it was fair and reasonable for a 6-year old debt.
  • I agreed to meet up with the representative at the lobby of HSBC in Taguig, near St. Luke’s. We went straight to the deposit machine and she had me fill-out the deposit slip myself. We deposited the money and I kept the receipt from the machine. She then asked me to sign the clearance and handed me my copy. I checked all the details and confirmed everything to be correct. I went on and took several pictures of the clearance to make sure I have soft copies.

What a relief!It was quite an experience, literally liberating. I will no longer be afraid to answer calls from unknown numbers. I can now change my Jobstreet and LinkedIn profile settings to “public”. Most of all, I can now continue with my home loan application with BPI!

If you have the same problem, and don’t want to settle with rude credit card debt collectors, call your bank. Be nice.