In my posts on my social media and here on the blog as well, I've declared myself as DEBT-FREE in early 2021!  I couldn't express how liberating it was to declare that I've paid all my dues to the credit card companies as well as other financial institutions with lending as their business.  But it was a different story two decades ago when I started to bury myself in debt.

Photo by Avery Evans on Unsplash

To cut the long story short, I accumulated a credit card debt totaling to around Php 1.3M.  This debt was from six (6) different credit card companies which spanned about 20 years.  Unbelievable right?  Looking back, I wish I knew better.  I wish people were more open to financial literacy.  I wish I was open to getting advice from financially literate people.  I also wish financial advisors were as popular as they are right now.  I also wish I was taught how to properly budget and lived within my means so that I could have avoided the debt that drowned me, financially speaking.

You're lucky you're now in a different era where there are many sources that tackle financial literacy.  I too learned a lot from my financial advisors.  But the most important of all apart from listening to them are having these qualities: humility and being open to learning.

When I learned how my spending and saving patterns were flawed in all levels.  I started correcting the mindset that I have when it comes to money.  I also realized how wrong my perceptions or understanding of credit, hence, I had a really bad credit history.

For years, I survived the anonymous calls I get asking me to pay them.  I got countless demand letters to pay their bank clients.  I was harassed by collecting agencies.  I was running away from my debts like a headless chicken.  I thought I was successful at hiding from them because they all gave up.  I could just decide not to pay them anymore.  But my conscience says otherwise and as years passed and I learned more about finances, I knew I really have to settle all my debts.

Sharing with you why I paid all my debts and why it's important to do so, even if no one's running after you anymore to pay them.  You may evade them, but at the back of your head, you still can't escape the truth. 

WHY I PAID ALL MY CREDIT CARD DEBTS IN FULL

• My conscience couldn't take it.  I may have successfully escaped from the wrath of those harassing collecting agents, but I can't ever escape the hard truth that I owe someone (banks) some money.  Money or credit I took or spent in exchange of goods and services but I never paid back.  I just can't accept the fact that I did such.  

• Being debt-free is having peace of mind.  It was an instant relief to be able to pay debts in full.  I can stand in front of anyone and look them in the eye to say I owe nothing to anyone.  I can finally sleep without worries that someday, a collecting agent would resurface my life.

• Paying in FULL saves me more money.  When you pay in full, sometimes, they recompute your principal and give a discount.  If you decide to pay in installment, that's also good, but there may be some interests to be paid, hence you pay more than what you should.

• Bad credit history will affect your future.  I learned the hard way.  When I was applying for a housing loan, no bank approved even if my present supporting documents say that I can afford paying the amortization.  They will always look at your credit history.  Your debts, especially credit card debts will almost permanently define your capacity to pay, even if at present you can afford it.