Monday, May 28, 2018

Sinking in Credit Card Debt

Borrowed this from Good News Pilipinas

Last week, people started trickling back into the office to prepare for work. Term and summer breaks are a gray area for PTFs. On one hand, you get some sort of breathing space for a few days or a few weeks. Then that turns to panic because you earn nothing and only get paid a month or so after work starts. Since we hadn’t seen each other for nearly a month, there was some catching up to do. One of those colleagues with a story to share was Sir W. 

I’ve known Sir W for a while since he also teaches at CoRK. He said that from a high of 50 Part Timers a year or so ago, they were now down to 5, and he’s got a lower course load this current term. So Hunger Games ang peg, really. 

Sir W is usually up and about checking out the latest restaurants, theater plays and movies, picking up the newest books. He also takes an Uber (when it was still around) and Grab going to and from work. He says since he’s working two jobs, the least he could do for himself was not to hassle himself with the tortuous commute. Sometimes other colleagues and staff members who share the same route home would share the car with him, other times it would be some food to share with the office peeps. So really, a nice and generous guy.

I’ve always wondered how he could afford to do all that. We share basically the same rank and earning rates. Even during the time that we were both getting full loads of work at CoRK and our current office, and therefore ostensibly double the earning capacity, I never dared to take Uber every day. I reserved it for when I felt like I was going to be late—and CoRK was notorious for deducting “late rates” even if you were already in the building and just waiting for the elevators. If I ate out all the time like he did, I wouldn’t have anything left at the end of a pay period. 

Last week, Sir W opened up that he was having liquidity problems. He’s mentioned this before, like when he’s asking if I’m watching Lion King and he says he’s watching but maybe just him and not take the partner along because that would be twice the cost. Said partner has resigned from his job a few months back and is struggling with a small business that tends to have seasonal demand.

But this time it’s different. He has two credit cards and he’s carrying huge balances on both. It must be a serious amount—I’m thinking in the 6 digits—and it’s been building up over two years of making only minimum payments. He’s asked his brother if there’s a loan he could take so that he could cut one of the cards, throw the money at the balance and pay it at a different rate—sorry, I’m not as familiar with credit card terms. His mother had bailed him out of a similar problem before, so he can’t turn to her now, as that would mean he hadn’t learned his lesson. There’s an aunt he could possibly approach, but again, this would be difficult do since the family already knew about the previous bailout. They would say he’s never learned how to handle his finances. 

So there we were, thinking of ways to get out of the huge debt. He mentioned maybe putting up some of his books up for sale next week. Or if only there were other collectors of the knick knacks he’s accumulated over the years. When he checked the credit card bills, he’s realized that all those Ubers and Grabs and eating out were taking up a huge chunk of his expenses. He’s asked his partner to cough up some money—after all, the debt was used to finance their expenses and lifestyle. The partner was half-hearted in his commitment to co-pay—there’s a family he also needed to support, the fledgling business, etc. 

He’s over 40, working two jobs part-time, lives at home, and now has huge credit card debt. Again. Who would bail him out now?

We’re in the same pay grade, and he’s doing twice the work load I have, then there is money to pay the bills. In my mind, the solution is to live more simply. When he asked me if I wanted to have lunch, I suggested the low cost employee canteen. I sensed the hesitation. There’s no way I’m spending over Php200 in a lunch out, especially since we’re not being paid yet. And neither do I want to go to the more expensive canteen, where the viand and rice would cost you Php110 easy. I tapped another colleague to join us so that it would be 2 vs 1. I don’t think he was too happy about it.

He recognizes that he needs to take charge of his finances. He’s not quite open to ditching the cabs and lunches and dinners out. It’s a lifestyle that he’s used to, and I don’t see him giving it up so easily. But in times like these, desperate measures are needed. He didn’t learn the first time around, and now knows the problem is real, shouldn’t he be willing to make adjustments? 

Makes you think that Filipinos do really need to learn about financial literacy. An article in today’s Inquirer quotes a study by the World Bank that only 2% of Filipino adults can be considered financially literate. 

I’m glad I don’t have this kind of problem though. Over the years, banks have sent me pre-approved credit cards and I never used them. You just get kind of shocked that you receive it in the mail. Recently, another bank surprised me by having an entry for a credit card in my online banking  account. I called and said I didn’t apply for a credit card. It’s still there though. Although there’s some convenience to not carrying cash and building a credit history, I’m not sure I’m willing to carry the possibility of soul-crushing debt. Then again, who knows if holding a piece of plastic will make you a swipe-addict. If I change my mind, you’ll be the first to know.