Debt is, hands down, the heaviest burden for most Filipino households, as many families struggle with managing credit card bills, loans, and other sundry obligations.

Data from ING Bank showed Filipino households had been piling up debt since 2022, most likely to pay for what are termed as retaliatory costs.

ING Bank, citing government data, said the amount of outstanding consumer loans had climbed dramatically from P1.12 trillion at the start of 2022 to P1.69 trillion as of November 2023.

“The rise in credit card loans was so pronounced that it recently overtook car loans (in terms of volume) which had previously been the largest segment of consumer credit,” ING said.

“If consumers were willing to take on debt just to sustain consumption, it appears that their weapon of choice was their credit card,” said the bank.

Don’t ignore it

Financial advisor Irene Lopez told DAILY TRIBUNE in a Zoom call that ignoring debt won’t make it disappear.

While Filipinos are known for their honesty, Lopez said that applying that same honesty to their finances is an important step in financial stability.

“Hiding from debt only makes it worse. The first step is acknowledging the problem and taking stock of your finances,” she said.

Budgeting payments

Sarah Velasquez, a single mother of two, found herself drowning in credit card debt after her mother died from Covid-19 on top of her being given to impulse buying.

“I felt so ashamed,” said Velasquez. “Every centavo went towards the minimum payments, but the debt just kept growing.”

The turning point came when a friend introduced her to the concept of budgeting.

Sarah thereafter meticulously tracked her income and expenses, realizing where her finances were leaking.

“Cold brew subscriptions and impulse buys all add up,” she realized.

With a newfound awareness, Velasquez created a realistic budget, prioritizing essential needs and allocating funds toward debt repayment.

She explored cheaper grocery options, found free entertainment for her kids, and even started a side hustle selling crafts online.

Slowly but surely, the tide began to turn. Velasquez religiously stuck to her budget, resulting in her debts shrinking and a sense of control returning.

“It wasn’t easy,” she said, “but seeing that progress fueled my motivation.”

Today, Sarah is not only debt-free but also boasts a healthy emergency fund.

‘Snowball” method works

Karel San Jose, a tech entrepreneur, also found himself trapped in a cycle of keeping up with the Cruzes. His expensive lifestyle brought him a mountain of credit card debt.

He decided to solve his financial problem through a “debt snowball,” a method that prioritizes smaller debts first.

“Seeing progress motivates me,” San Jose said as he started gaining momentum with each loan paid off.

San Jose also started embracing minimalism. He downsized his apartment, sold unnecessary belongings, and embraced a simpler life.

This freed up significant income, which allowed him to prioritize debt repayment. He also focused on increasing his earning potential through freelance work.

“Letting go of material things was liberating,” said San Jose. “I discovered that true happiness comes from experiences and relationships, not possessions.”

Seeking help

For some, professional help is crucial. Debt counselors can plot personalized strategies and negotiate with creditors. The Bangko Sentral ng Pilipinas offers financial literacy programs to empower Filipinos with knowledge on money matters.

Getting out of debt is a marathon, not a sprint. With a combination of budgeting, strategic debt repayment plans, and the Filipino fighting spirit, more and more Pinoys are finding financial freedom.