April 6, 2016

In my previous blog “Bakit Ka Nangutang”, I talked about the two kinds of debts: bad debt and good debt.

In this blog, I’ll also share with you 3 reasons why we need to be responsible money borrowers.

As of this moment, you too, might have a debt still unpaid. Like me, I am still on my way to my freedom from my bad debts incurred in the past years of being a financial illiterate professional. Ironic, isn’t it?

The truth is, it’s hard to avoid debts, but we have to see to it that we are borrowing a good debt and once we are in debt, we must be responsible to pay to avoid the following 3 serious consequences.

  1. The loan interest eats you up alive  

With this, I will share with you the story of my SSS loan.


In the early 2006, my last year of teaching at my previous school in the Philippines, I applied for an SSS salary loan which was immediately approved.

I was granted 6,500 Pesos salary loan but only received 5,785 Pesos as SSS usually deducts the first year interest. The next month, I flew to China to start with my OFW life.

Focusing too much to my job abroad, I totally forget about this loan. And needless to say, I stopped paying my monthly SSS premiums. Not until recently, I have decided to continue my contributions and that’s the time that I finally recall my loan 10 years ago.

And, so after 10 years, the 6,500 Pesos I borrowed back in 2006 incurred 5,579.45 Pesos interest. After 10 years, the 6,500 Pesos amazingly doubled into 12,079.45 Pesos.

Not only that, “pretending” to forget your debt will also provide you with the next headache. PENALTY

2. Penalty flushes your money down the drain

10 years of neglecting my SSS loan does not only lash me out with accumulated unpaid interest but it also hits me hard with the incurred penalty.

By not paying the monthly amortization of my loan for 10 years, my penalty ballooned up to 9,796.23 Pesos

See, the penalty is nearly twice the amount of the money I actually received and spent which is only 5,685 Pesos.

With all these interests and penalties, I am throwing away money that is supposed to be used for other things, or that is supposed to be invested.

3. Paying back huge amount of money you never actually used

Being an irresponsible borrower, forgetting, avoiding debts brings you nothing but headaches. You might be having a good time now but at the end of the day it will still be you who will suffer.

And paying a big chunk of money that you haven’t actually used is painful not only to your wallet but to you as well.

It is a big “sayang” (a waste). It pains me to pay 21,875.68 Pesos all in all thinking that it’s only 5,785 Pesos that I actually spent.

Neglecting a debt is like allowing a thief to rob you at broad day light, in front of a police station.

Borrowing money always costs more because of the interest of the principal but the burden of paying off unnecessary interests and penalties can be minimized by becoming a responsible borrower.

Important Note:

SSS does not deduct the loan payment from the member’s accumulated monthly contributions.


This is a 6,500 Pesos debt that turns into 21,875.68 Pesos in 10 years. But what if instead of borrowing this amount, I invested it into the Stock market and just totally forget about it for 10 years, the result would have also be the exact opposite.


Pay off the debt and continue investing because this experience proves that money actually grows through compounding. But instead of making compounded interest your enemy, make it your friend.







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