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Stay out of bad debt


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I WAS once asked in a seminar, “Chinkee, if there is one financial advice that you can give me, what would it be?”

Without any hesitation, I an­swered, “Avoid bad debt at all costs.”

My parents often reminded me, “No matter what happens, never ever borrow money for pleasure. If you borrow money for pleasure, you will enjoy now and will suffer later. It is better to sacrifice now and enjoy later.”

Growing up, I was trained to practice delayed gratification. It became my ticket to staying out of bad debt.

It’s also important for our children to learn that there are two kinds of debt: GOOD DEBT and BAD DEBT.

GOOD DEBT is when you borrow money to earn from it. For example, your child wants to sell ice candy. If he or she doesn’t have enough capital to start it, your child can bor­row money. A debt that will be used to start a business opportunity is the only time that I ever encourage people to borrow money.

For your kids, you can teach them the same thing. If they should ever incur any debt, it should be good debt. And of course, when they earn a profit from their business, what they need to do is to PAY FIRST, before spending on anything else.

On the other hand, BAD DEBT is when they borrow money only to spend it. If your child borrows money from you to buy himself or herself a shirt, that is a form of bad debt. A bad debt is a kind of debt that must be avoided at all costs.

Hate debt at all costs

Do you know that borrowing mon­ey is a habit? As you know, habits are the things that people do repeatedly, and our children can either develop good habits or bad habits. It’s up to us, as parents, to train them to only keep on acquiring the good ones, and get rid of the bad ones.

The secret of financial indepen­dence depends on the habits that we choose to practice. And, debt is definitely a bad habit.

There’s something about debt that tempts a person to keep on spending even though he or she can’t really afford it. I’m sure you’ve already experienced this at one point in your life, especially our kids, as we are now raising the new YOLO GENERATION. YOLO stands for, “You only live once.”

Why worry about the future? What’s important is to live for the now. And this is exactly the kind of mindset that debt feeds on.

The major attraction of debt is this getting that emotional high from being able to acquire new things and getting the things that you want to have in an instant. It doesn’t matter what will happen tomorrow, what is important is right now.

At first, it feels completely harm­less. It seems like there is no consequence for this. It feels com­pletely normal to be able to get something for nothing, to acquire something without costing you any­thing. There’s this inner voice that tells you, “A little debt won’t hurt. Anyway, my money will be coming soon, I can pay it back once I have the money.”

This is also how party drugs are introduced to the young people. First, they try it out because any­way, it’s free. But then they start to get addicted to it. It doesn’t matter anymore if it’s at a hefty price, they just need to have it.

Not only are they willing to pay lots of money for it, but sometimes they don’t realize that they are already paying for it with their very life. We are all aware of the incident in Pasay City in 2016 where five young people died because of party drugs.

You see, debt is like an addic­tion. Once a person is addicted to something, it is so hard to get him or her out of it. I’ve seen many lives shattered because of this debt addiction.

No matter what happens, you have to teach your children to HATE DEBT at any cost. I have never seen anything positive come out of debt.

This is the reason why we should hate debt and avoid it like a plague.


Do they understand the real impact of having bad debt? Do you have some experience with bad debt? How did debt affect your everyday life?