Why are we always in debt?

Buying on credit or getting goods on credit especially in the Philippines is generally no big problem. What with the so many credit card issuers who are literally "shoving" their promos to you to use their credit card. As a matter of fact there are several promos that entice you to charge to a certain minimum amount as these charge slips can now be redeemed as movie pass or can be used to get your favorite coffee for free. That is what I call an effective "pressure selling".

Likewise, almost everyday, there are telemarketers who will call you and/ or text you if you want to make a loan or avail of the cash advance feature of your credit card. I am not saying this is wrong, I always believe that it is the individual card holder, credit buyer or borrower who must exercise judicious and prudent credit purchases if he/she does not want to be consumed or be destroyed by the unwise or indiscreet use of credit. So, one may ask, why are we always in debt? My simple answer is we lack credit discipline.

Credit discipline is a topic I doubt if being taught in school. As a matter of fact this is also not being discussed at home. I don't know why, but I suspect that like sex, this topic is also classified as still "taboo" by our parents. To date, I know a lot of friends, associates and even former office mates who fell in the so called "debt-trap" and until now paying for it. For one to visualize what the true nature of credit is, always remember that credit is like a flame of fire, it is a good element-it will provide light, can cook with it - but can also be a source of big problem. One must use credit wisely, value it as a privilege and manage (pay on time) it well, or else, it will destroy you.

So, what is credit discipline, you may ask. Let me define the two (2) terms: credit and discipline. In simple terms, credit is defined simply as (1) trust; or (2) promise to "buy now and pay later" under designated "terms" for goods or services. The exact meaning depends from what side are you, the creditor or the debtor. Discipline on the other hand is defined as strict and regular mental or moral training. So in short, credit discipline can be defined as "strict and regular control on promise/s to pay, within designated/ agreed terms."

Credit discipline is important because it affects positively or negatively to our credit history and credit health or more commonly known as credit risk score. Credit risk scoring system is a rating system now being widely used by lenders, credit issuers, banks, financing and financial institutions to let them know ones credit risk level and to help them make sound credit decisions.

Attaining credit discipline is easier said than done. The ease of getting credit or loan makes people feel that they have purchasing power and control. Likewise, sometimes consumers are made to feel guilty for not using credit (loss of points) or for not having a credit card at all.

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Seminar Invitation: Effective Credit Administration & Collection Management seminar on November 12-13 at Parklane Hotel, Cebu City. Interested party may call: AGF Philippines, Direct Office Line: (032) 316-4110. Mobile: 0917-726-9195 / Email: [email protected]  

For comments, rejoinders and questions on credit & collection call or text 0917-7220521 or email at