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6 Tips on How OFW Parent can Teach Money Management on their Kids

Parents are the kids’ first teacher. Being their first teacher, you are tasked to teach not only the basic knowledge they will need in school such as letters and numbers but also life skills and values they will need later on in their lives. This includes money management.

If you are an OFW parent, this is something you need to work on with your kids even if you are miles apart. This is because the financial success as a family will depend not just on you and how you save but also how your family, including your children, treat money. You need to impart the value of money on your children not only to allow them to buy what they want but also for their future.

You might ask how. You can try these tips:

1) Always start with a piggy bank. 

You can never go wrong with the good ol’ piggy bank. In fact, this is still the most basic way to teach kids about money and saving.

Give them a piggy bank – and make sure it is something they cannot easily open to prevent any form of temptation. This way, your children will realize and understand how to grow money and at the same time, teach them the concept of saving. At the same time, you teach your kids the importance of safekeeping money.

Tip: Let your child choose his/her piggy bank. This could encourage your child more to fill it up if they like what they’re seeing.

2) Minimize monetary reward. 

Your child helped in washing the dishes or cleaned his room. That means P50 each for every chore done and that will keep your child happy.

It’s okay to give monetary reward to your children for every good deed, but you are not really teaching your kids the importance and value of money. Instead of understanding the life skills you want to impart on your kids, their main motivation is money.

What you can do is to set a positive reward system for every good deed. For instance, every chore done equates to one star and 10 stars mean they can get an item they like that will be included in the balikbayan box.

3) Try delayed gratification. 

Let’s say your son wants a new rubber shoes, which is not yet available in the Philippines. To make up for the time lost, you decided to buy it on your next payday and send a package back home.

Unfortunately, this is not the best way to go. To teach the value of money, you need to practice delayed gratification.

“10 sleeps seem like eternity for them,” you might say. That’s true. What you can do is to make a compromise with your kids instead of giving them what they want immediately. For instance, if they can save P100, you will give them P200 to match their savings. It’s hard to explain, but kids will realize the importance of money if you don’t easily give in to their demands.

4) Make the most out of your vacation by teaching them about money. 

Read stories about money, including stories about successful entrepreneurs who started from scratch or OFW-turned-businessmen. You can also tour the Bangko Sentral ng Pilipinas museum to give them a better understanding of money while showing them the evolution of peso throughout the years.

Another activity you can try is to go to the grocery with your kids. Give them a budget (preferably not more than P300) and let them buy what they want as long as it is within the given budget.

Visiting a bank is also a must if you are in the Philippines. This can be a good way for your child to observe how money is kept and the different products offered to help people grow their money.

5) Keep them involved in the budget. 

Budget is a collective effort and is something shared with every member of the family. Before you leave for work abroad or during your stay in the Philippines, make sure to sit down as a family and discuss how the family budget will go. Listen to what your kids have to say as well and explain why you can’t consider their input, especially if their suggestions are not necessary (for instance, weekly eating out).

Let the voice of your kids be heard.

6) Set a good example. 

Children learn by example. Before you teach them about money and savings, make sure you show them how these concepts are applied in your daily life. Don’t expect them to save if you constantly send them a balikbayan box full of goodies. If you want them to embrace the value of money, show and live a prudent and simple life.

Being a parent is not easy, especially if you are miles away from your family. Nonetheless, don’t use it as an excuse for poor money management. Everything starts from home so be a good example.

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5 Tips on How to Get the Best Deal on Your OFW Loan

Most people think that if someone in the family works abroad, life is easier and better. After all, someone is earning in dollars (and we know how much the exchange rate is now, which is currently at P50 mark as of this writing). When you earn in dollars, this could mean you and your family can easily afford anything you like, or at least according to their expectations.

On the other hand, lenders, both commercial banks and private financial institutions, realize that not all OFWs are living the good life. In fact, there are still many who are having a hard time, especially in the financial aspect. This is why they offer various products specifically for OFWs – with perks.

Here’s the challenge: finding the best deal on your loan, regardless of the kind of loan you are getting.

Here’s what you can do to make sure you get the best deal every time you apply for a loan – and make the loan work for you:

1) Always submit the requirements needed. 

You have the tendency to blame the lender for not immediately processing your loan. Aside from processing tons of loan applications in a day, one of the reasons why there is delay is because you did not submit all documents required.

If you want to speed up the processing of your loan application, then make sure you submit everything they ask for. The same goes for online application.

2) First, compare and then decide. 

It’s okay to ask recommendations from friends about the best lenders in town. Before you say yes to a specific lender, make sure you explore your options first.

Use the Internet and look for lenders that offer the loan facility you are looking for. Many lenders post their rates and charges, so make sure to take note of that. Don’t forget to check the “Review” section to see what other clients are saying.

Tip: Look for loan comparison charts or tools similar to this one. Through this, you can easily see how much every lender charges and help you decide which lender you can afford.

3) Know how much is your capacity to pay.

One of the common mistakes made by OFWs when applying for a loan is asking for too much. This means when you are earning P40,000 every month and owns a property worth P300,000, you will ask for a million-worth of loan. That is outright rejection since lenders will be concerned on how you can pay for the loan.

Before you apply for a loan, make sure you check on your finances and savings first to determine how much you are worth. Any existing debt, whether from credit card or other loans, must also be included since they could affect your cash flow and capacity to pay the new loan.

In other words, be realistic. Don’t ask for too much when you don’t have enough assets to back it up to avoid loan rejection.

4) Go for the right type of loan and according to your needs. 

The good news is loan comes in various types that will match your specific needs. Even if they have a common denominator, which is loan, loan products are designed in such a way that could work for you. The rates and charges vary too, so look into that as well.

Know what you need first then check if your lender offers a facility specifically for that need.

5) It’s okay to negotiate the rates and loan terms. 

Yes, you read that right. Lenders follow the rate prescribed by the Bangko Sentral ng Pilipinas (BSP) and adjust it to make sure they can earn. Nonetheless, try negotiating the rates and terms of the loan to make it favorable to you, without compromising the bank’s standing.

Still, this would depend. Improve your savings account, prove your ability to pay, and maintain a good credit score. This is no guarantee, but these three factors could help.

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7 Business Tips OFWs Must Know to Succeed

Business Tips for OFWsWe may sound like a broken record here, but it’s true; working overseas is not forever. There will come a time when you need to go home and continue your life in the Philippines.

“What about my family? How will we survive if I don’t work abroad?”

The truth is there are many ways to help you attain financial freedom. Aside from investing in the right and sustainable products, putting up your own business, no matter how small it is, can be another way to succeed. Take it from these former OFWs who are now entrepreneurs.

You might say that you know nothing about business and that there is no assurance that you will make it big. Fine, these are legitimate concerns, but these tips could help you give a headstart to help you succeed eventually:

1) Know what type of business to start. 

There are many business options available worth trying. The challenge now is finding the business you can focus on.

Here’s the secret: there is no right or wrong when it comes to business. On the other hand, what will set you apart from the thousands of entrepreneurs is your passion for that particular brand or product you are selling.

To determine the business you will start, look into what you are passionate about, say a skill or hobby. You can also evaluate your experiences as an OFW and see if you can get something from there, which you can share with other people and turn into business.

2) Be updated. 

So much has changed while you were away. More so, the culture you were used to in the country where you worked is more likely different than how it is done in the Philippines.

Before you rush in opening your business, make sure to update yourself first about the latest. By knowing what’s in and out, you will be able to determine the right target market and how to sell your brand among others. You might even use the trends and techniques you learned from living abroad and apply it in Philippine setting.

3) Prepare the requirements. 

You know what type of business to start. Through observation and immersion, you were also able to identify the latest trends, which you can use to market your business.

This is just the beginning. You need to comply with tons of requirements to make your business legitimate to avoid hassle. This includes but not limited to:

  • Business registration with DTI (for sole proprietorship) or SEC (for corporation)
  • Business permits, both from the City Hall and barangay where you plan to put up your business
  • BIR Clearance
  • Business TIN, for tax purposes
  • Appropriate licenses

4) Prepare the capital. 

You need money or capital to start or run your business. You have two options to secure funding: you can use your savings or borrow from lenders like us.

Should you decide to borrow, make sure that you avoid these common mistakes to increase the possibility of loan approval.

5) Make sure you involve your family. 

Starting a business and making it grow will never be easy. You will need all the help to manage your business since you can never do it alone. Give each member of your family a responsibility to grow your business. Make them feel that they play an important role to keep them motivated.

Tip: If you have kids who are knowledgeable about computers and social media, assign the number seven tip on them.

6) Be seen. 

This is the beauty of doing business these days. You don’t need a physical store just to inform people that your business is existing. You don’t even have to pay for billboards for ads. More importantly, you can send your brand’s message across various channels and reach out to potential customers.

To succeed in business, make sure to use online platforms available such as Facebook and Instagram. If budget permits, put up your own website, especially when you are selling multiple items. Building an online profile will make it easier for people to find you.

Tip: Focus on one platform first then build on it. This will make it easier for you to manage and maintain your online profile instead of using several social media channels at the same time.

7) Build a relationship with your customers. 

And potential customers as well. This is where the importance of social media comes in. Aside from marketing your product for free, people can easily reach out to you and inquire about what you’re offering.

Be respectful and answer the queries, no matter how annoying or repetitive the questions may be. Keep in mind that one bad review could potentially cause harm on your business and you don’t want that to happen.

With these tips in mind, are you ready to start your own business?

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You Will Succeed: Success Stories of Former OFWs that Will Inspire You

They say you can’t be an OFW forever. That’s true. At some point in your life, you will feel tired and you want to just stay in the Philippines, open a small business you and your family can sustain, and grow old here.

The challenge is how. More importantly, can you do it?

The answer is yes. In fact, there are many former OFWs who eventually succeed with the right amount of timing, hard work, and determination. If you’re looking for something to lift your spirit, then this one is for you.

Peter Ramores: From mechanic to real estate magnate 

He started working as a mechanic in Saudi Arabia when he was 21 years old. Eventually, Ramores rose from the ranks and became a foreman, senior mechanic, and supervisor. Unfortunately, higher ranks in the company he is working for requires Arabs or Arabic-speaking individuals, so he was stuck with his position.

He learned about house and condominium properties offered to Filipinos in Middle East. Although selling wasn’t his forte, he took a chance and worked his way up until he became a manager after three years.

At present, Peter, together with this wife Rachel, are now managing a network of hundred sellers in the Middle East with an average of P1 billion sales every year. Aside from that, they are managing five rental properties that are earning P1 million every month.

Ronelyn Achacoso: From housekeeper to handicrafts owner

She worked as a housekeeper in Brunei. Unfortunately, her employer maltreated her and was accused of theft. She was able to get back home, but her bad experience didn’t stop her from aiming for success.

When she got back home, she looked for opportunities to earn income in her hometown in Davao. She started attending trainings by OWWA on DIY invitation card designs using abaca sheets and flower-making. She was also into arts and crafts, so she used that passion to put up her own business, Nelyn’s Handicrafts.

At present, Ronelyn supplies her crafts to department stores in Davao City.

Rodolfo Valenzuela: From civil engineer-turned hardware salesman to owner of hardware stores

He may be a civil engineer, but he had a hard time looking for a high-paying job that could support his family. As a result, he went to Saudi Arabia and took a job as hardware salesman. His experiences taught him well, paving and encouraging him to put up his own hardware stores.

His advice: make sure to spend and save your salary wisely. More importantly, don’t be afraid to do business.

Mike Casas: From mechanical engineer to King of bottled sardines 

He worked in Brunei for four years as a mechanical engineer. His frugal personality made him venture into bottled sardines business, starting with only four people and selling it to friends and family. Word of mouth travelled fast and Mike’s bottled sardines soon became popular not just in his hometown, Dipolog City, but also nationwide.

At present, the bottled sardines are sold nationwide in specialty stores and supermarkets. Some Filipino supermarkets abroad are also carrying his products. He also participated in trade fairs and started exporting his products in Canada and United States. More importantly, Mike hires local fishermen, bottlers, and other personnel so they don’t have to work overseas.

Imelda Ahalul-Dagas: From executive assistant to coffee shop owner

She worked as an executive assistant in Oman and stayed there for 19 years. Later on, Imelda realized that being an OFW is not forever because of the many uncertainties. She looked into her other options until she realized that she wanted to be an entrepreneur. She attended seminars conducted by GoNegosyo and Association of Filipino Franchisers then eventually pursued her passion project of reviving Dennis Coffee, a coffee shop that her grandmother started in Sulu in 1962.

At present, Imelda transformed Dennis Coffee’s old town feel into a “first of its kind” social nook in Zamboanga. Her tips to success: plan well and plan ahead, start with being a part-time entrepreneur to gain experience, and be courageous. Being an entrepreneur calls for a leap of faith.

That being said, are you ready to start your own business? We hope this post inspired you to try and be courageous.

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You Don’t Need Millions: Business Ideas You Can Try with Little Capital

Business Ideas for OFWsLet’s say you won in the lottery and the jackpot prize is P50 million. What will you do with the money? Surely, you’ll buy your own house, car (or two!), pay off all your debts, and put up your own business.

What if we tell you that you don’t need millions to become an entrepreneur? Believe it or not, there are business ideas worth trying with only little money involved. Even if it didn’t turn out the way you hoped it would, at least you did not invest a big chunk of your savings on it.

If you are an OFW and looking for affordable business ideas that could help increase your family’s cash flow, then this one is for you. Check out this list and find out what could work for you:

1) Street food business

Many Filipinos love to eat fishballs, kikiam, pork barbecue, isaw, kwek-kwek, and any other street food you can find, especially for merienda. Take advantage of that by putting up your own street food business. All you need is a stall, which can even be in front of your home, griller, and food variants you will sell and you’re all set.

Tip: Aside from the staples, offer other foods like cheese sticks, french fries, hotdogs, and even hard-boiled eggs. Having a variety means you get to cater to different markets, both old and young. Don’t forget the drinks.

2) Cellphone loading 

Who doesn’t have or need a mobile phone? It doesn’t matter how much it costs, but many people need a phone to make communication easier and more convenient. Since not everyone can afford getting a post-paid plan, many Filipinos are still sticking to prepaid. This can be a perfect opportunity to make the most out of this demand by having your own cellphone loading station.

The capital to start this business plus the return may not be that big, but it could give you something extra for the rainy days.

Tip: Make sure that load is available anytime. The more consistent you are, the more customers you will have.

3) Eatery or Carinderia

Who doesn’t love food? If your spouse has the knack for cooking and serving delicious meals, then maximize that talent and put up your own carinderia.

Don’t be afraid to try this one. Target market is not an issue, but the key here is your location, so make sure to set up the carinderia in the right place.

Tip: Consider food delivery service in offices or any business establishments. Everyday, make a menu and deliver the food according to the number of orders. This will give your family extra cash, plus who knows, it could lead to something bigger, say your own restaurant.

4) Food Cart 

Let’s say you are drawn to the food business but not really into cooking. That’s fine. There are many franchisers offering food carts for as little as P20,000, which is ideal for starting entrepreneurs like you.

The good thing about this business is that you don’t have to worry about anything since everything is provided, except that you need the right location. Make sure you choose an area with high foot traffic to encourage more sales.

Tip: Take a risk and start your own food cart. With the right marketing techniques and product, you might soon be a franchisor with people wanting to franchise your business.

5) Online Selling

Online entrepreneurs are becoming popular these days. All you need is a laptop, a good camera, decent Internet connection, and products to sell, and you’re good to go. You can source your products from where you are working or if any of your family members is good at anything, say crafting or baking, then maximize on it.

For starters, you can advertise your products in e-commerce sites like Ebay Philippines and OLX. Facebook and Instagram are also popular channels with many users logging in everyday (who can be your potential customers too). Just make sure to update your page regularly and be nice to customers.

Tip: Choose a product that is not common to many online sellers. This will set you apart from the rest and you will be able to penetrate the market with lesser competition; hence higher sales.

Don’t just limit yourself with these business ideas. Explore your options, know what is required of that particular venture, and stick to it. It will take time before you see the results of your investment, so be patient.

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Car vs. House: Which One Should You Buy First?

Let’s say you have a five million pesos at your disposal. What will you buy first – a car or a house? Or both?

This is a common dilemma among many OFW families. You work hard overseas to give your family the best things in the world and that includes a house and a car you can call your own, Apparently, you can’t have both since both are major purchases that could affect your cash flow.

This leads you now to the next dilemma: what should you buy first between a car and a house? We hope this post will help to help you decide on which is worth investing first.

But first, evaluate your current situation 

Before you decide on what to buy, you need to assess your current financial standing first. Here are some questions you need to answer to help you evaluate your financial condition:

  • How much money am I making?
  • How much money do I have left after all expenses and savings?
  • Can I pay the car or house in full?
  • How much do I have to pay if I decide to get a car or a house?
  • What expenses can I forego in order to accommodate the loan?
  • Do I have extra money to accommodate the monthly amortization?
  • Will the monthly amortization create a strain on my buying capacity?
  • Do I have savings or emergency fund that could back me up in case of loss employment?

These simple questions can help you look into your financial standing and determine whether or not buying a new car or house is within your means.

Buying your dream car

Advantages

  • Allows you to go from one place to another with ease and comfort since you and your family don’t have to ride public transport.
  • Makes it easier for you to travel with your family, especially if you are going out of the city.
  • If you avail of a loan, you can choose your loan term according to your capacity to pay, but up to five years only. This makes it faster for you to pay off your loan.

Disadvantages

  • You have to pay for after-sales costs such as insurance, car maintenance, and repairs in case the car breakdowns.
  • It is advisable that you have a parking slot first to avoid causing hassle not just on your neighbors but also on other people who pass by your area.
  • The price of the car depreciates over time and as soon as it stepped out of the dealer’s store. This means the P1 million car you bought now will only be less than that after a year.

Buying your dream house

Advantages

  • Owning a house is a status symbol that signifies financial achievement.
  • The price appreciates over time. If you buy a house worth P1 million today, there is a higher possibility that the value will be doubled or even tripled after 10 years, especially if you bought the right property in the right location.
  • A type of investment that you can pass on to other generations.
  • You can finally have a place you can call your own.

Disadvantages

  • There are many developers who are offering sub-standard quality of houses. Before you make a purchase, make sure to check the developer to make sure you are getting your money’s worth.
  • Higher monthly amortization with longer loan term.
  • More costly to maintain compared to cars.

Whether you decide to go for the car or house is all up to you. We enumerated the pros and cons of buying a car or a house to help you decide on the best investment option. Use this as a guide and more importantly, consider your family’s needs to help you in making the right purchase.

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6 Money Management Tips for the OFW Spouse

There is a reason why your spouse decided to take a leap of faith and work overseas: s/he wanted to provide a better life for you and your children. Since s/he is earning more by working abroad, getting that dream home or setting up your retirement fund is now possible.

Admit it. There are times when you are tempted to spend the money sent by your spouse to buy new set of clothes, shoes for your kids, and even the latest gadgets. “Pwede naman magpadala ulit eh. Minsan lang naman,” you tell yourself.

Don’t be too complacent. The problem with this kind of thinking is that you will constantly look for excuses to justify your spending that you might be surprised finding yourself with little to no money left. Worse, you lose the trust of your spouse, who is working hard just to make sure s/he provides a better life.

What can you do to protect and preserve your spouse’s hard-earned money? Here’s what: 

1) Live a simple and modest lifestyle.

The thought of your spouse earning in dollars excites you. Finally, you can afford beautiful things you never thought you could own. As a result, you upgraded your lifestyle, buying things you don’t really need. Still, keep in mind that every peso you spend is equivalent to blood, sweat, tears, and hard work of your spouse who sacrificed a lot just to provide a better life for your family.

Therefore, live a simple life. Being an OFW is not forever. Maintain a simple lifestyle and use your spouse’s hard-earned money for important things such as savings.

2) Set a budget. 

Here’s how to do it: determine how much money your spouse is sending every month. Then make a list of all the expenses, whether daily, weekly, or monthly and then deduct it from the money you are getting to see how much you have left. Whatever is left must be allocated to savings and investment.

Tip: Check your list of expenses and see what you can eliminate from the list. Make sure to prioritize basic necessities so you can have more budget for savings.

3) Don’t be too generous. 

Common Filipino thinking dictates that when one member of the family is working overseas, the entire family is living a good life. As a result, you are often a prey to your relatives’ needs. They would often call you and ask if they can borrow money or finance their needs.

DON’T GIVE IN all the time. Remember that your spouse is working hard for that money sent to you. Don’t give it away for the sake of utang na loob. Put your family’s needs first before the others. When you are the one in need, they might not even help you anyway.

4) Take it easy on loans and credit cards. 

Loans and credit cards are there to save the day, especially during emergency. (READ: When is the right time to apply for a loan?) On the other hand, there are cases when you need to say no to protect your family’s financial status.

As much as possible, save up for what you need and pay it in cash. Don’t spend the money you still don’t have. If you are not too careful, you might find yourself swimming in a pool of debt and you don’t want that to happen.

5) Keep the kids involved in handling finances. 

Handling your spouse’s money is not just your sole responsibility. Make sure you include your kids, if any, on various ways to preserve your spouse’s hard-earned money. Encourage saving, no matter how small the amount is. Set financial goals that your kids can easily achieve. By keeping them involved, you will be able to grow your spouse’s money in no time.

6) Educate yourself about investment. 

Do you know that common reason why Filipinos don’t invest? It’s because they don’t know or they don’t understand how it works.

The good news is there are tons of information available online that will help you understand how various investment products works. Take advantage of the videos, articles, and courses offered to educate yourself more about the many investment tools you can try. The more educated you are, the better the possibility of growing your money.

Remember that being an OFW is not forever. There will come a time when your spouse will go home or his employment will be cut short and you need to be prepared when that time comes. Save, invest, and live a simple life. These tricks will help you sustain a better future for the family.

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5 Money Mistakes Seafarers Make (and What to Do to Reverse It!)

 The employment for seafarers is endless. Since 2000, the marine industry was flourishing, thereby providing tons of jobs for many Filipinos. Nonetheless, being a seafarer is difficult. You have to leave your family to secure a better future while spending a lot of time in the middle of the ocean. Still, all the sacrifices are worth it. You get to earn more than what you can earn here and give your family a more convenient life.

Don’t get too excited. Living the dream of a good life may keep your family happy, but this could send you to bankruptcy, especially if you are not too careful with your money. The good news is you can do something to avoid the bankrupt path by avoiding these money mistakes many seafarers make:

1) Splurging on material things

This is a common mistake committed not just by seafarers but almost all Filipinos.

Now that you are a seafarer, you have the privilege of earning twice or thrice than what you can earn here and that makes you excited. The tips you get from customers on the ship and bonuses, if you’re lucky, can make you buy the latest gadgets or the newest shoes for your family. Plus, it is cheaper overseas than buying those items in the Philippines, so you figured why not.

It’s okay if you buy once in a while. On the other hand, splurging on material things on a regular habit, say sending them a package every month, is too much. Yes, it will keep your family happy, but what about your savings?

What to do: Create a budget list, which indicates items you really need. Sure, you want the best for your family, but by best, this means giving them something that will last a lifetime. Never let material things be your family’s definition of happiness or a gauge on whether you love them or not.

2) Salary dedicated to remittance

You want your family to experience the good life and that’s fine. To make sure they live comfortably, you send all (or at least a big chunk of) your salary to your family back home. Worse, you may even carry the burden of shouldering even your extended family’s needs.

(Read: How to say NO to your extended family’s requests)

What to do: Stick to a budget. It’s okay to send money back home, but don’t send everything. Allot money for your savings as well because you need something for the rainy days. As to your extended family’s requests, don’t easily give in to their demands. Let them stand on their own feet because the more you say yes, the more they will take advantage.

3) No budget 

You got your monthly salary and you’re happy. The challenge now is what to do with it. Many seafarers and OFWs in general don’t know how to budget. As a result, many end up using their entire salary and leaving little to nothing for the most important expenses such as investment or savings.

What to do: Make a budget starting with your monthly salary on top (salary must be in net amount, which means salary after all the deductions). Then list all your daily expenses, regardless of the amount, such as transportation fees, food, rent, and monthly remittances. See how much more you have left then allocate the remaining amount for savings and other types of investment. Stick to it to make budgeting more effective.

4) Not saving for retirement

You can’t be a seafarer forever. There might also be instances when your employment is terminated early due to unforeseen circumstances. Unfortunately, many Filipino seafarers are focusing on the now and fails to look at retirement plans.

What to do: Start thinking about future plans, including your retirement. Save as much as you can and look for options on how to grow your money. We also shared six tips on how to help you save for retirement, which you can read here.

5) The “Pasikat” mentality

Many Filipinos think that if one member of the family is working abroad, then the family must be living a good life. As a result, you feel pressured to live up to that expectation, which explains why you always throw a party or treat your friends and family if you are back home. Sadly, there is a danger in that and before you know it, you are using your monthly salary splurging on things that won’t last long, just to keep up with that expectation.

What to do: Ditch the pasikat mentality and start focusing on your family’s future. It doesn’t matter if you don’t own the latest gadget or if your son is not wearing the newest Nike rubber shoes. As long as you invest your money in the right ventures, you will be able to grow them and finally, you get to enjoy things you sacrificed before.

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8 Questions You Need to Ask Before You Apply for a Loan

You already identified the right instances on when to apply for a loan. Assuming you really need one, this doesn’t mean you should go to your preferred lender immediately and submit your loan application together with the other requirements. There are several factors you need to consider first to avoid getting yourself in a pool of debt.

Before you apply for a loan, here are eight questions you need to ask first: 

1) Am I qualified to apply for a loan?

This is the first question you need to ask before you apply for any kind of loan. Keep in mind that there are many factors lenders consider in applying for a loan. This includes your capacity to pay, asset that you are willing to offer as a security, and your credit score among many others. These factors will help you determine whether you are qualified for a loan or not.  

2) Where will I use the loan proceeds? 

Getting a loan to pay for your travel expenses or purchase of material things like a new iPhone are instances where loan is not highly recommended.

If you plan to apply for a loan, establish where you will use the proceeds, say to put up your own business or pursue higher education. If it is something personal and won’t benefit you in the long run, then it is best to hold that expense first and save for it instead of getting a loan.

3) How much do I need? 

One of the most common mistakes committed by OFWs is asking more than what they can really pay. This means if you are earning P40,000 every month with P100,000-worth of collateral to offer, don’t expect the bank to extend P500,000 credit to you.

Know how much you need while taking into consideration your monthly cash flow. Be realistic with your loan amount to improve your chances of approval.

4) How will I pay for the loan? 

Now that you have a realistic loan amount, the next thing you need to answer is how to pay for your loan.

Ideally, your monthly salary should cover for it, but keep in mind that you have other expenses such as remittances. Before you apply for a loan, take a look at your budget first and see if you can accommodate another expense. If you don’t have adequate amount of cash on hand, hold that loan first since there is a higher chance of getting denied.

5) Do I have to offer a security for the loan? 

There are two types of loan: secured and non-secured. Lenders would prefer secured loan since there is an assurance of payment in case of default. On the other hand, many OFWs have no asset to offer as a collateral, which is why you can opt for a non-collateral loan.

Here’s the catch: non-collateral loan means you will be charged with higher interest rate. This is the lender’s form of security since there is no asset they can recover from in case of non-payment of loan.

6) How long will I have to repay the loan? 

Loan term depends on the type of loan you are getting. Housing loan can go as much as 15 to 20 years while car loan is anytime between one and five years. For personal loans, it can go from one month to a year (or more).

When applying for a loan, make sure you’ll consider the loan term as well. The longer the term, the more interest you have to pay. Don’t forget to ask about pre-termination fee, if any, since some lenders charge a fee if you will pay off your loan before the due date.

7) What will happen if I missed a payment? 

This is another factor you need to look into. When you apply for a loan, don’t forget to ask the penalty fee in case you weren’t able to pay on time.

Tip: Some lenders may agree to waive penalty fee, depending on certain factors. Make sure you have consistent remittances and maintain a good credit standing to be able to enjoy this privilege.

8) Will the loan be beneficial for me? 

More importantly, do you really need to get a loan? The loan must be beneficial for you, say to help you grow your business. If getting a loan won’t help you in any way and you might end up swimming in a pool of debt, then it is best to hold off that application first.

Are you ready to get a loan? Balikbayad is here to help! Give us a call and let’s talk so we can see how we can help each other. 

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When Is the Right Time to Apply for a Loan?

Medical bills, tuition fee of kids, unpaid bills with past due notices – these are some of the many instances that forces you to borrow money in order to pay for these expenses. By borrowing money, this could mean borrowing from friends or family or getting a loan from the bank, whichever is applicable.

Here’s the thing: there are instances when you might not need to borrow money from banks or your family.

Check out these guidelines or instances on when is the right time to get a loan. 

1) Repay a loan with higher interest

As a rule, borrowing money to pay off your already borrowed money is a big no-no. On the other hand, there are instances when you are allowed to get a loan to pay for your existing debts.

If your existing loan has higher interest rate, then look for a loan with lower interest rate. In doing so, you will be able to save more on interest, thereby increasing your chances of repayment. This could get an instant boost in your credit score as well.

Tip: Consider debt consolidation. This means all of the loans are under one unified loan with one interest rate and one due date. This will make it easier for you to manage debts.

2) Getting a higher education

You can’t be an OFW forever and that’s okay. If you plan to pursue higher education or get further studies, then getting a loan is fine.

It’s not just any other loan. Apply for a salary loan so it will be easier for you to pay for the loan while getting a career boost.

3) Established cash flow every month

Time and again, we always emphasized the importance of growing your money through various investments. After all, you can’t work overseas forever. This is why it is imperative that you start growing your money so you will have a stable cash flow in case something happens, say sudden termination of employment or accidents.

Once you have an established cash flow, that’s the time that getting a loan is advisable. Keep in mind that lenders look closely at your ability to pay, whether in the form of monthly salary or any other modes of cash income. If you are able to prove that you can pay your loan, then there is a higher chance of approval.

On the other hand, there are cases when getting a loan is not advisable. These instances include:

  •  Travel money – Going somewhere with the family can be exciting. Still, borrowing money to be able to pay for your travel expenses is not advisable. If you plan to pay for your travel expenses by getting a loan, then it is best not to get a loan and save up for that instead.
  • Buying material things – Want a new phone or a tablet but you have not enough funds to finance for it? Then save up for it instead of getting a loan. Borrowing money to buy goods, especially something that won’t last is not recommended.

Lenders like Balikbayad will always be there to help you with your cash needs. Still, keep in mind that they consider a lot of factors before you get that loan approval. Avoid borrowing money just to get out of your current situation. Loans will always be loans and any unpaid loans can take a toll in your credit score.