We as Filipinos have a slightly skewed sense of the word “debt”. And why wouldn’t we? The Filipino word “utang” has so much negative connotations to it—it’s something to be ashamed of, something you have to pay all your life, and we even have debts of gratitude or “utang na loob” for every little thing that other people do for us—that it leaves a bad taste in the mouth. This can blind us to the extent that a lot of great opportunities are hinged to getting a good debt, like making a business loan in Manila or anywhere in the Philippines.
So what exactly are good debts? There isn’t a single straight answer to illustrate it but we’ll try through some examples.
Good Debt is Fair
By all means, debts are meant to help you so a good debt is meant to get you out of a ditch while you pull yourself back up. In as much as you have to be a good payer for this to work, you also have to find a good lender who will not take advantage of you. Read through your loan’s fine print, get a payment summary of your dues, make sure that your interest rate is manageable, and don’t dive into loans that seem too big to be payable.
Good Debt is Productive
When do you not need to worry about paying off a debt? When the debt can pay for itself! A very good example of a good debt is getting a business loan in the busiest city in the country, Manila. Not only do you have the opportunity to borrow money; you also have a chance to grow it. Depending on how well your business goes, you might even be able to settle your debt ahead of time. A good debt must be productive such that you are making more money than what you’re actually paying off.
Good Debt is Live Saving
In the novel The Alchemist by Paulo Coelho, a poignant quote is to be always taken to heart when the alchemist said, “What good is money to you if you’re going to die? It’s not often that money can save someone’s life.” If you incur debt for use of medical reasons, especially if its life threatening, do not take it for losses. Some people will give everything to save the life of a loved one, even lining up for days on end at PCSO to get government grants or working 2-3 more jobs to make extra; don’t feel bad about getting in debt for medical reasons. A debt that saves a life or preserves health is a good debt.
Good Debt is a Privilege
If you put debt in the simplest perspective possible, it’s borrowing and then giving back what you borrowed but also giving a little bit of incentive to whomever you borrowed from. Put it this way: you borrowed someone’s pliers so you can finally fix your chicken wire fence. After your problem is fixed, you give it back with maybe a “thank you” cupcake. In the same way, you can make a better life for yourself by getting a business loan in Manila, starting your own new negosyo like a milk tea shop or a samgyupsal restaurant, and turn what was once borrowed money into grown assets.