Dealing with Debt November 9, 2008
Posted by mona in : Uncategorized , 6commentsA long time ago, a good friend once told me that debt isn’t altogether bad. Rich people use the power to borrow in order to get ahead and to expand their businesses. But for the lesser mortals, getting stuck in a mountainpile of payables is not too uncommon. This, however, can be dealt with wisely if only one is willing to sacrifice or to put in an extra bit more effort to seriously payoff the debt.
1) Borrow from friends and family to pay off a debt (or at least part of it)
In the Philippine setting, this is more common than sand on the beach. Family and friends understand your situation better than any other institution. It doesn’t entail paperwork nor credit investigation. This, however, is more often than not a gravely abused solution to a problem because there are a lot (believe me, a LOT!) of people who do this and then suddenly act as if they’ve been struck with some sort of severe amnesia.
2) Examine (and re-examine and re-examine) and cut down on your expenses.
All too often debts remain unpaid all because people don’t want to sacrifice anything. They simply don’t want to face the truth that there are still some things left in their lives that they can still give up and live without.
Cable TV is one of them. I have yet to hear of a kid dying of boredom all because he can’t watch Cartoon Network or Nickelodeon. If you sum up the hours that you actually spend watching TV, maybe you’ll find out that you’re just actually paying more for your househelp to watch Cinema One all day while you’re out working yourself to the bone in the office.
Do you really need all that plastic in your wallet? I know it’s just not me receiving all these calls from credit card agents offering one more credit card. Think of how much you are spending for annual fees. Think of paying for annual fees for cards you don’t even use at all. Cut them off before they start charging you after the one-year waived fee is over.
There are a lot of ways to cut down your expenses. Times like these call for sticking to the basics. You simply have to think of essentials…nothing more till all debt has been paid off.
3) Speaking of credit cards, try to pay more attention to the interest rates. Going for a balance transfer with much lower interest rates could be the key to paying off that debt before it starts to balloon with interest, finance charges and late payment charges.
4) Hard as it is, you have to pay more than the minimum amount due. Paying the minimum will never make your load any lighter. It would only mean going by the rules set forth by the credit card company. Pay them the minimum and you would only make the loan stay a little longer making them earn more money as you suffer.
5) Lastly, this may not be totally in every book but sometimes it does pay if you contact your creditors AT ONCE at the first sign of you having problems in paying your debt. Showing the goodwill to find ways to settle the problem sometimes work far better than you hiding everytime the collectors come knocking on your door. The more you hide, the more inconsiderate these people will become all because you are giving them such a hard time. Remember, you are the one in debt. You owe them. And they are not and will never be in the position to understand your financial situation, however bad it may be.
Why I Think You Shouldn’t Do Business with People You Love. September 15, 2008
Posted by mona in : Business, Personal , add a commentPeople usually say, you must pick a business that would be enjoyable for you so as to ensure success. Well, I used to think that it would be so much fun putting up a business together with my friends. It’s like rolling business and pleasure into one. Yeah, we’d have lots of time to hang around and have a ball. Like it would be so much more exciting planning how we’ll be spending our glory days in some far away land sipping pinacoladas under the sun once the business starts running smoothly.
Well, that point of view, of course, has changed over the years. And boy, am I glad I never opted to go into such partnerships! And if, like me, you put more premium on RELATIONSHIPS (whether they’re family or friends) over MONEY, I’d say you read on and try to see how things really work in the real world.
These are the top three reasons why I decided not to do business with friends and relatives.
1. Commitment - Even if you jive well together, it doesn’t necessarily equate to all of you having the same level of commitment. There will always be the issue of who did more work for the business.
Say for instance you guys decided that having you own spa would be cool. So each of you decided to put in equal amounts of money as capitalization. There would be some who are just so into it so they put in a lot of effort in planning, researching, sourcing, marketing, etc. There would be others who are into it only because they’d feel left out if they didn’t join. Still there would be some who join but don’t always have the time to put into the business because of a lot of reasons. And there would also be those who would just sit and watch everybody else do the work.
Sometimes, no matter how hard you try to divide the tasks equally among yourselves, it doesn’t always get done equally and up to par to everyone else.
2. Discipline - The hardest part would always be telling your friend, your sister or your relative that he is not doing his job well and to exact punishments for wrongdoings. If your friend is always yakking on the phone all day instead of working or if your sister always comes in late or if your uncle is always sleeping on the job and you don’t try to even call their attention to it, it would trickle down to your other employees. Why punish them for being late when your sister does it? Why scold them for unfinished reports when your friend isn’t even doing her job?
3. Money - Each one of you is different. Some have time to spare. Some don’t. Some have the skills. Some don’t. Some have the patience. Some don’t. Even if all of you spend eight hours in the office everyday, your outputs will always vary.
So who gets paid more?
I have never tried getting into business with friends. And I no longer have the intention to. I have seen some very good and tight relationships ending in fierce squabbles about business because of the reasons I’ve stated above.
I’m not saying there’s no way around it and that doing business with friends would just end up in total disaster. Maybe there is a way around it if you’d sit down and discuss these issues beforehand and try to come up with a compromise that would work well for all you. But one thing’s for certain. It’s going to be one tough ride that would certainly test you to the very core of your beings.
As for me, even if there’s a way around it, I wont. My relationships are just to precious to risk for the sake of money.
What’s stopping you from going into business? 1 - Lack of Capital August 12, 2008
Posted by mona in : Business , add a commentI’ve often come across people telling me how much they want and need to start their own businesses. And I always ask “So, why don’t you?”
Topmost on the list of reasons why people can’t start their business is the LACK OF CAPITAL.
Some have really great business ideas that remain just that - IDEAS - because they don’t have enough personal financial resources to make them happen. Some are afraid to apply for bank loans because they lack the multitude of “necessary documents” for such loans in the Philippines. Others have bad credit standings with banks and lending institutions so they wouldn’t even dare try and show face. So they simply stop there.
They fail to look beyond that problem to think of more creative ways to make their dream businesses come true…I’m not rich and I’m no business guru, but over the years, I have learned how to deal with the “happy problem” of making money out of other people’s pockets…
Here’s how:
1. The Power of Family, Relatives and Friends (FRFs)
People have a tendency to shy away from FRFs when money matters are involved. You don’t simply approach relatives, family and friends and say “I need to borrow half a million from you to start my dream business.” Haha! Tough luck!
Most of the time, these are the people who want and expect their capital to come “only from one source.” Unless you belong to the circle of the rich and famous, you are facing a blank wall here, kid! You must keep in mind that FRFs can help a lot in “pooling” enough funds to kick off the business. A little from A, a little from B and some from C can spell a lot of difference.
2. The Power of Downpayments and Progressive Billings
Believe it or not, there are times when you can make money without having to shell out from your own pockets. You don’t simply turn a client away because you don’t have money. It’s like flushing a great opportunity to earn down the drain.
Downpayments are always a must for us. You simply have to learn how to manage it. Scheduling purchases and limiting personal drawings is key. Talk “terms of payment” with suppliers.
Sometimes, when the downpayment is not enough to cover for the expenses to finish off the project, you have to talk to the client for a reasonable schedule of progressive payments.
3. Trimming Off the Excess Fat
Nope. I’m not asking you to go on a diet or to lessen your food intake to raise funds. What I mean is, knowing the “baseline” for the fund that you need to have just so you can start.
There are a lot of people who dream BIG. There’s really no problem with that. In fact, it is highly encouraged in business. However, there’s an ocean of difference between DREAMING BIG and STARTING BIG.
Big dreams don’t always come with a BANG. Start small. Go for the lowest overhead. Do you really need that posh business address to get your clients? Haha! Think again. There are more clients who prefer to be wooed and dined out or met in the convenience of their own offices than those who’d like to visit your headquarters and enjoy your airconditioning and state-of-the-art furniture. Do you really need the full office staff combo when you’re starting? Sometimes a secretary can only do so much as answer calls and take down messages. The client still needs to talk to YOU. So, why not just hire an answering service or make sure that you cellphone is always charged to answer those calls and text messages yourself? There are also cases when you can consider getting people on a contractual or on a per project basis.
Bottomline is, plan on doing what you can do yourself and lessening the frills when you’re starting…YOU are the MAIN MAN in YOUR BUSINESS…NO ONE should know your business better than you do…and ABSOLUTELY NO ONE should be able to do a better job at controlling it than YOU….
Who knows? Maybe, once you start doing this, you just might trim those excess fats… 
