Personal Finance 101

My parents never had credit cards. Not even to this day. Maybe it’s like the old people’s fear of technology that they never relied on having that piece of plastic for their purchases.

I became the very first member of our family to own a credit card. I got my very first card under my own name when I was 21. And ever since my first credit card bill came up, I have always made it a point to pay the whole amount that was due, down to the last centavo. I never availed of the Pay Easy Plan Minimum option that credit card companies offer.

No one taught me to do it that way. I guess being a business/economics major made it second-nature for me to compare options using computations when making financial decisions. I knew about interest rates and how these credit card companies make money from people who enjoy paying the minimum amount.

Watching a local late night TV show a few days ago, where a financial expert gave advises on personal finance, made me realize that there are a lot of people out there who are in deep financial mess due to credit card bills.

I do not claim to be a financial expert but I decide to use this entry to give out two basic tips on personal finance. If I can save at least just one being reading this blog from a future financial blunder, then that would make me so glad.

1.) Always pay the whole amount due on your monthly credit card bill. It is doable no matter what your monthly income is. And if your credit card payments are starting to squeeze hard on your cash flow, it doesn’t mean that you should completely abandon this exercise of full-payment. It just means that you are probably spending more than you can afford. Cut down on your spending (or find extra means of income) until you achieve a level of payment that would again be easy on your cash flow.

2.) When making financial decisions (like purchasing a new appliance), always write down your computations. Do the spreadsheet analysis. Never rely on guesswork. And never ever base your financial decision just on the reason that it is magaang (easy) or hindi mo mararamdaman. Those easy installment plans that some companies offer often come at a price. And it is a very expensive one if you do not do your homework. It is called interest rate.

Personal finance is just like a game. To win, you must always have a plan – a thoroughly-computed plan that you must follow. Do not rely on your feelings or gut feel. Coz if you do, you will most probably end up losing the game.