I usually write topics about internet marketing and how to build an online presence for brick and mortar businesses. But for now, please let me share a piece of my mind. For it felt like I’m obliged to do so. I’m writing this for my fellow Filipinos around the world, especially our dignified OFWs. I hope to give them the awareness that there is such a thing as financial freedom, and they too can achieve it.
But no one can attain such a degree without the right mindset, plus a pile of debt blocking the way to freedom.
Did you know that foreign employers identify Filipinos as good employees? True. I’ve been an OFW myself for thirteen and a half years.
I’m not stating that I’m the embodiment of a superb worker. I’m just saying that I’ve heard those same words directly from various bosses I’ve met on different companies while I was on foreign soil.
The Philippines is one of the top suppliers of the workforce needed to work abroad.
A common belief is that every Filipinos who came from working abroad should at least live a modest life. But from a financial standpoint, that’s not the case for most OFWs. Why then they strived so hard to get out of poverty, but finishing up more miserable at the end of their working career?
According to research, as of 2012, “Of all remittances sent to the Philippines, Filipino Americans sent 43%, and that amounts to US$10.6 Billion.” These numbers are from the US alone, imagine how much more is coming from the Middle East and other countries combined.
The Philippine economy is rising from the ashes by the decade. But why then most OFWs stay as an expatriate way up to even past their 60s?
Let’s identify the problems hindering us to financial freedom. Do you think we can fix them?
Why does financial freedom so elusive to some?
Every year, the cost of living is continuously on the rise. We can’t stop the inevitable. We can’t even blame the government for it.
Unfortunately, along with its growth are also an increase in most individual’s debt for petty reasons. Ridiculous reason like not failing to “keep up with the Joneses.” This habit makes financial freedom elusive.
We must break this habit of self-destructiveness before it’s too late. It will only lead us to too much distress. We can’t afford to stop supporting the family and eventually becoming burdened with everyday obligations and payable stacks of bills. It will only make us feel more helpless.
On the bright side of things, it is where we usually ponder the thought of — “how could anyone possibly gain financial freedom in this situation?”
Being financially free — achieving it and living a debt-free life is everyone’s dream. It’s the ability to pay everyday expenses without worries of running out of money and still provide enough for the family. Or at the very least, without the need of owing anything from anyone.
I know that everybody has different definitions of what financial freedom means. But just for now, can we look at the solution from the same perspective?
What solves the problem of achieving financial freedom?
To achieve financial freedom is not as difficult as everyone might think. It applies to everyone. People with bad debts can still turn their lives around and enjoy better living by implementing simple financial goals for their survival.
Rich and famous people plan their financial state ahead of time. They are making it as part of their tools to maintain their status. But let me remind you, it’s not exclusive for the elites to use. Anyone who wants to be financially free must and should engage in some form of financial planning.
You should be concerned if your economic situation controls you. Don’t allow that to happen. You should be the one in charge over it.
It comes with setting smart goals and committing yourself to do them; OFWs, you should know better. The rewards for these actions are undoubtedly sweet, and it will satisfy your cravings for financial freedom.
You should learn how to break the shackles of debt that’s been holding you back ever since. Develop the habit of saving money regularly without sacrificing the things you enjoy most in life.
Should you plan to achieve financial freedom?
Yes, you should. Below are your first three steps for doing that.
Accept it or not, most people are bad spenders, OFWs are no exception. Without the concept of budgeting in mind, being neck-deep in debt is inevitable.
Expecting high salaries every month will have tendencies to overspend. The typical propensities are keeping up with the latest trendy gadgets and buying stuff they don’t even need.
By the time they know it, pockets and wallets are empty. It is where the problem arises.
Now, worry kicks in when you notice the fact that there are still some bills you forgot to settle. When that happens, taking loans becomes an option, even if there are interests along with its repayments.
Problems after problems will keep adding up if you’re living above your budgets. Avoid these pitfalls.
Getting out of debt will much be easier if you’ll know how to develop the habit of budgeting. This one is just a simple bit of advice, but people always ignore the obvious.
Budgeting means ensuring your income does not exceed your daily expenditures. The goal of budgeting is to create a planned lifestyle that’s not extravagant yet not too restrained.
It should cover all necessary expenses and still provide extra for savings, personal spending pleasures, and for paying all of your debts. It does not limit only on your primary source of income, but it should also include all the other streams.
Now, about settling all your debts, keep in mind that paying only the principal’s interest will continuously drain your finances. It may seem logical to pay out the more significant debts first rather than focusing on smaller ones. But in reality, paying off the little debts first will free you from headaches and worries. And doing so will allow you to save more money in the long run.
Slowly work your way paying for your debts up to the more significant ones. You need to be more frugal on this part.
Don’t live and spend beyond that budget
There’s this student I know. Being an undergraduate, he has had no job experience yet in his entire life. But this is the problem — he spends way above the average. I think I know where he got that habit.
His father is a typical OFW, who spends too much on gadgets and gold trinkets that he even has no plans of wearing. But he never neglects his son, though. He regularly sends money for his son’s monthly school expenses and small pleasures.
Like other typical teenagers with parents working abroad, this son I know of is no different.
He thought money grows on trees. Naturally, he expects remittances regularly; but he periodically borrows money even before he gets hold of that remittances.
It’s a clear sign that the son, like his father, does not have any knowledge of living by the budget.
So what happened next? After two years of being away, the father’s vacation plan to be with his son is now imminent for cancellation.
He needs to keep working, to keep up with their expenses.
If only they knew how to budget and how to implement it, nothing like this would have happened.
Budgeting, as you plan it, will only be successful if you commit yourself to live within that budget. Resist buying impulsively and anything that may cause voluntary overspending.
The exception to the rule is real emergencies, e.g. accidents or health-related. The savings plan you have put in place should still cover it.
Oh! One more thing, if you have plans on replacing household furniture or other appliances, delay doing this if you want to be free of debts. As long as those items are still usable and not broken, I think you can live with it.
Exercise delayed gratification.
Increase your savings
“What’s the use of having money?” an uncle of mine used to ask.
He answered his question with “to spend it all!” with a wide grin on his face.
“The Richest Man in Babylon,” a book that opposes my uncle’s principles. Ever read it? If not, please give it a good read and note The First Cure.
In a nutshell, out of the hundredth you earned, 10% of that should go to yourself first.
It says that 90% of all your hard-earned money is actually not yours.
Come to think of it; the book tells the truth. All this money will go out. To pay the landlord (if you’re renting). Or maybe the real estate developer (if you bought a house and lot paid on an installment basis). The laundromat owner (if you’re lazy enough to do your laundry at home).
It depends on how you manage your money. Just remind yourself that that proportion serves as payments to all of your expenses and probably to some investments.
What remains is the one you have to pay yourself first, the 10% part of every amount you earn.
Do not forget to do this first before anything else. That’s why the book calls it the First Cure.
Allocate this percentage as your fixed portion for your savings, whatever the amount of money it would be.
Do not compromise on this amount for any reason. It is your key to future financial freedom.
With that said, for aspiring people around the world and OFWs alike, following these tips will help you pave your way towards financial freedom. Continuously being aware of your spending habits will keep you from sliding back to the muddy pits of debt.
Remember that you are not doing this solely for yourself, but also your loved ones.
JuanNomad wishes you the best in life. Good luck with your freedom!