If there is something that I regret the most about my previous financial decisions, it was when I lost my pay slip's virginity due to my lack of financial literacy. What I mean by losing my pay slip's virginity is by having it dented with salary deductions I've incurred from multiple loan applications.
- From Private to Public School
It was in 2015 when I left the private school where I was teaching to apply as a public-school teacher. From 9,000 pesos monthly salary in the private school, my pay suddenly increased by 10,000 as I luckily got an item to teach in a large secondary high school. The salary of Teacher I then was 19,077 pesos which gradually increased through the SSL V Program of the former President Rodrigo Duterte.
- Upgraded Lifestyle
Though my salary increased more than a hundred percent, I started upgrading my lifestyle, so once I received my first payment (which was accumulated and was released after three months), I bought my new laptop, smartphone, bags, shoes, and clothes. I thoughtlessly spent everything in shopping and dining out with my family thinking that I will receive my salary regularly for the succeeding months.
After a few months of being a one-day-millionaire, we finally received the copy of our appointment. This made us eligible to apply for salary loan. This term is actually new to me, but as time passes, I started to rely on and get addicted to it.
- Introduction to Salary Loan
After a few months of spending my whole monthly salary, without saving anything, and just patiently waiting for my next pay, I happened to talk to my colleague (who was appointed to the same school together with me) and he shared how he was able to buy a new car and a laptop. That was how I learned that by presenting my appointment and 3 latest pay slips, I could easily apply for a salary loan in any bank with an interest that is as low as 7.5% per annum and payable for 3 years.
- Salary Deductions
"Aha!" I secretly smiled and started thinking of how much I should borrow to buy the things that I really want to buy! That weekend, I was already in the bank together with one of my colleagues who will sign as my comaker. My first salary loan was 100,000 pesos which I spent in less than a month for material things. Looking back, I wasn't able to buy any valuable items or invest my money in some profitable investments. I only spent it on travels, eating out, buying clothes, and treating my friends and families. After 2 months, my pay slip was no longer as virgin as the monthly amortization for my first loan started to get deducted and reflected on my pay slip.
- Loan "Addiction"
Months passed by and I reapplied for an additional loan on the same bank. All I wanted to do was borrow money so that I could buy whatever comes in my mind. I did not care about the deductions until I realized that my net take-home pay is nearing the minimum which is 5000 pesos. That was when started to ask myself where I spent all those money, because after 3 years of being a public-school teacher, I was only able to buy myself a motorcycle, a laptop and a phone.
- Feelings of Regret
- The Lesson
- I would never take out a loan for my personal consumption, unless I would use the money to generate more income such as starting my own business.
- I would put a portion of my salary in time deposits which could generate more dividends.
- I would spend money within my means and would strictly follow a budget.
- I would learn how stocks, cryptocurrencies, and other promising opportunities works before investing my "extra" money on them.
- I would engage with side hustles which could generate extra income.
Keep posted as I give regular updates in my journey into becoming debt-free!