DEBT & CREDIT

DEBT and Pinoys

Just how bad is our debt situation?

Farmers to employees and even

businessmen, will reveal that

way too many of us have debt.

Even Filipino working overseas

are not spared from debt.

15-20% of Filipinos are in

default of their debts.

 DEBT and your

PURPOSE behavior
THINGS TO

CONSIDER IN

BUYING ON

CREDIT Like many things in personal

COST INTEREST finance, debt is one that is

first about behavior and

secondly abouth knowledge.

Many borrow instinctively

without much consideration

for the consequences.

Are you ready for

a Credit Card?

YOU'RE READY IF..... YOU'RE READY IF.....

You spend less than you
You can say 'no' to impulse

earn. shopping.
Are you ready for

a Credit Card?

YOU'RE NOT READY IF..... YOU'RE NOT READY IF.....

You view credit cards as
You need card to pay back

free money. a debt or buy a 'necessity'.

3 Steps to Shop for

the Perfect Credit

Card for you

Hone in on the

benefits.
Identify your
Apply fo the

needs. (interest
credit card

rates, credit
with the best

limit & penalties) value.

 CREDIT CARD: DO'S
Pay your bill on
Reduce your credit

Pay your balance in

Review your credit
limit if you are

time to avoid

full to avoid interest. card statements

tempted to

charges.
regularly. overspend.

Take advantage of
Protect yourself

perks and rewards

from credit card

programs. fraud.
 CREDIT CARD: DONT'S
Don't pick the first

Don't own too many

Don't depend on
Avoid big-item
credit card you

credit cards at one

credit cards to make
purchases with your
see without

time. ends meet. credit card (unless

checking other

you can actually pay

options.
the balance in full

with cash)

Don't treat your

Avoid paying the

credit card as free

minimum due

money. only.
What's in a CREDIT

SCORE?
Credit scores are not the same as

credit reports. Your credit score is a

number that lets creditor know - at

a glance - how likely you are to pay

your debts. While your credit report

holds the detailed story of your

entire credit history and your

current situation.
5 Factors Set the

Score
1. Payment History
2. Total outstanding debt
3. Credit types
4. Length of credit history
5. Credit applications history
How to establish

CREDIT?
An "excellent"

credit rating takes

up to seven years to

A credit report

build. An "average"

or "good" rating can

details the

Don't go into

be built in one or
past. A credit

debt to build

two years. score predicts

your credit.
your future

credit behavior.
Solutions to build

credit history:
Secured credit cards.

Authorized user status.

Credit-builder loans.
 How to repair

BAD Credit
1. Get a free copy of your

credit report.
2. Fix mistakes.
3. Pay down big credit card

balances.
4. Pay every bill on time, every

time.
 Debt-To-Income

Ratio
It is a percentage calculated by

dividing your total recurring

monthly debt by your monthly

gross income. Your DTI reveals

how well you manage your debt.

When it comes to DTI,

the lower the better.

Below 20% ---------------- EXCELLENT
20% to 40% --------------- AVERAGE
40% to 50% --------------- STRESSED
Over 50% ------------------ DANGER
 Figure out your
For Example:
DTI with this
Monthly gross income ------4,500
Food Expense ----------------1,000
FORMULA: Student loan payment -------240
Transportation Expense -----500
Total monthly debt payment 1,740
DTI (1,740/4,500) ------------ 38.7%

[Monthly Debt]/[Monthly Gross

Income] = DTI%
5 Ideas to get you out of

Credit Card Debt

Use Snow Ball Method.

Automate Payments.

Track your Expenses.

Use a part of your

Transfer Balances. Savings.

 The Move

AVALANCE

Towards Debt

EFFECT
Freedom
DEBT
FREEDOM
If you are already in debt and

DEBT
SNOWBALL
you feel that the burden of

INVENTORY EFFECT debt is already too much for

you to bear, then it's time to

be angry - angry at your

situation and angry enough

for you to take action to get

out of such a situation.

Thank you
Prepare for a quiz next

meeting.