The horrible effect of debt: An OFW story

I had arranged a personal interview with Johnny (pseudonym) at Black Canyon at the Robinson Mall, a famous shopping mall in Thailand. He is like a younger brother to me. In fact, Johnny and his wife are close to our two children as they play with them mostly on weekends. Sometimes we would go out with our families to have dinner together.

They are wonderful people and have been OFWs in Thailand for a couple of years. Johnny is a school teacher, including his wife. However, his wife recently moved to another country to find a better job opportunity. So, Johnny’s wife was not around when I conducted the interview.

It was ten in the morning. I ordered iced chocolate latte for both of us before I got my computer and a paper to take down notes.

Then Johnny started to share his story.

A few years back, Johnny and his wife-to-be (who was already pregnant that time) were planning to have their wedding. The options were to have a simple wedding at the Philippine embassy in Thailand or have a grand wedding ceremony either in a hotel or resort in Thailand. They chose the latter.

The couple then figured out the estimated amount they will need for that specific special occasion. It turned out Johnny will need to have about 120 thousand Thai baht (or equivalent to about Php170,000). The amount would cover everything including the wedding dress, flowers and decorations, photographers, food, program and invitation, resort accommodations, and plane tickets of their respective relatives from the Philippines.

They made sure that even the small details of their wedding would be great and memorable. After all, a wedding is just once in a lifetime. However, what they failed to plan was how to have sound financial budgeting for the wedding.

The truth was Johnny only had 30 thousand baht (about Php45,000) cash on hand. In other words, he needed to raise about 90 thousand baht (about Php130,000) more. The cash on hand was definitely not enough as they were
three times in deficit of the money they needed. Johnny didn‘t know what to do. Because he didn’t plan the wedding ahead of time, he was preparing to fail financially. As a result, the excitement was replaced by worry and stress.

Consequences of Borrowing Money

Nevertheless, because they were eager to have a wedding celebration, both of them decided to borrow money. Anyway, they had stable jobs. They thought it‘s perfectly fine to loan money from their friends and family members. Fortunately, they lent the money from their friends, but with a 10 percent interest rate. Their projection was that they will be able to pay the personal loans in at least three months’ time.

The wedding went well. However, the finances of the newly-wed couple did not go well. Unlike when they were still single, Johnny needed extra money because their expenses had ballooned.

For instance, he had to include in the budget the check-up and pregnancy test of his wife. He needed to pay the visa and plane ticket of his mother-in-law who would take care of his wife and baby when his wife gives birth. His mother-in-law arrived in Thailand a few months before his wife gave birth. He also needed to pay the loan, including other miscellaneous expenses. Because the expenses grew, they struggled to pay their debts on time.

Things did not go easier for the newly-wed couple. The spouse had been absent from work several times as she suffered discomfort during the pregnancy period. Unfortunately, due to her absences, the school did not renew her visa. Johnny was left the only one working while they incurred debt that had expectedly built up over time.

Lowest Point in Life

Johnny didn’t realize that January 2016 was just the beginning of the lowest point of their lives. His mother-in-law had an illness. Of course, his wife also got worried. His mother-in-law felt lumps on her breast. The couple wanted to bring her to the doctor to diagnose her medical condition. However, they could not afford to do so as it‘s not yet payday. So they had to wait until they have the money. The doctor performed a mammogram examination to check her health condition.

The doctor suspected she might have breast cancer and wanted to have a further check-up to ensure proper diagnosis. He suggested having a biopsy. The result came out immediately and they discovered she had stage two cancer. Johnny’s wife was shocked.

The couple was devastated. It‘s like they have been enveloped by an enormous monster called fear. They don’t know what to do or how to approach the unexpected challenge in their life. They had lots of questions. Who would take care of their baby now that his mother-in-law is ill? How will they be able to pay their debts? Will his mother-in-law recover? These were some questions that bothered the couple. While the transition period from being a single to a new parent was already a big challenge, the condition of his mother-in-law made it even harder for them to adjust. However, Johnny prayed earnestly to overcome the trials and stay positive despite the situation. At this point in time, he believed his faith must be greater than fear and worry.

After a few months of staying in Thailand, Johnny’s mother-in-law planned to go back to the Philippines. The couple agreed. After all, it is much better to recuperate at home considering the family support she would receive from relatives.
So, she went back to the Philippines with the baby. Because they didn‘t have emergency funds, they needed to borrow money for the tickets. Imagine buying new plane tickets from loan while there were still previous unpaid tickets? The result was more debt.

Borrowing Money to Pay for the Borrowed Money

The financial condition of the couple got even worse. The expenses became larger as their debt also became bigger.

Because Johnny’s mother-in-law had no health insurance, his wife felt pressured to raise an extra Php30,000 just for her regular check up and maintenance medicine. In addition, they had to pay the nanny who would take care of the baby, pay the previous personal loans, and pay the plane ticket, and other miscellaneous expenses, like diaper and milk for the newborn baby. They needed at least Php100,000 to cover all the expenses.

The question is where will they get the money? In an emergency situation like this, the couple had to find people who could help them. So they began to approach a few people. First, they talked with family members, then with their circle of friends, until they even spoke to people they didn‘t really know. As expected, many people turned them down. Fortunately, they were able to raise Php100,000.

However, they borrowed money from five different people. For Johnny and his wife, it was quite difficult to deal with five different lenders. Again, the interest rate was ten percent. Only one lender allowed the couple to loan with a seven percent interest rate.

With personal loans left and right, their debt ballooned until they became buried in debt. They had to borrow money to pay the interest aside from the principal amount. Worse, they had to give their passports as collateral to secure a loan. With this kind of debt cycle, the impending result was financial distress.

Unfortunately, they did not meet their financial obligations several times. And it became a big burden afterwards. Johnny had to pay the penalty for not paying on time. On top of the ten percent interest was another five hundred baht penalty (about Php700) for every month they failed to pay on time.

So, they learned to negotiate with creditors and pleaded for consideration. In addition, they requested the creditors to exempt them from paying the interest. Sad to say, Johnny‘s monthly wage was spent repaying their loans. With loans and high interest rate, he realized he was just working for their creditors.

Almost every day, they received hurtful messages from creditors. Sometimes, the creditors thought they might run away. They needed to explain why they cannot pay the loan that month. Of course, they could not blame the lenders because they owed money from them.

The husband and wife would wake up early in the morning or in the middle of the night thinking how they will be able to pay their debt. With so much financial burden, Johnny and his wife began to lose weight.

How do you get through when you are in such a difficult situation like  this? Will this end?  Johnny realized he and his wife needed a break.   They decided to deactivate their Facebook account, not to escape the problem or to run away from people, but to somehow disconnect with lenders and to rest from financial pressure. The emotional pain and pressure was so horrible, they wished they could escape from the financial distress one day.

While their debt piled up, his wife had thought of selling her mom’s piece of land in Mindanao to cover up the debt and other expenses. His wife had
anticipated about Php100,000 from the proceeds of selling the land. This was their only hope! However, they didn‘t realize the title had already been pawned off to someone.

While Johnny was in the middle of telling me their story, he couldn’t hold back his tears. He began to cry. I continued to listen to him.

I could feel the burden on his shoulders as he paused for a while and recalled the pain and depression he and his wife felt.

I don’t know what to say that very moment. I tried to comfort him and said, “Mahirap talaga yang pinag-daanan nyo, Johnny.” (You really had a difficult time, Johnny).

He replied, “Hindi lang kuya mahirap, as in sobrang hirap.” (It wasn’t just difficult. It was very, very difficult).

While it’s true that money cannot buy happiness, surely lack of proper money management can rob us of our happiness. Financial problems can definitely take away our peace of mind.

Prayer with Proper Mindset

I imagined them holding a rope trying to get out from a deep pit of debt. The truth is, I admired their resilience in coping with their problems and how they supported each other. They realized there was no reason to give up. Instead, they continued to pray and seek God to give them hope and courage. Though the spirit was down, they never ran away from creditors. Instead, they ran to God. With proper mindset, they held on to the belief that there is no problem too big that the rich Father in heaven cannot solve.

Most importantly, his wife did not give up. She continued to find ways how get out of debt. She did an online search about the banks in the Philippines where she could possibly take a loan for an OFW like her. Fortunately, she was able to borrow Php80,000. But this money was still not enough.

Johnny appealed to his family the second time. He unloaded his burden and told them everything about his financial problem to his family. Consequently, his family agreed to help him and they asked for two months’ time to raise funds for him. After two months, they were able to raise Php100,000! Their burden was lightened up. Certainly, with earnest prayer, the Lord provided the right people a solution to their financial problems.

Because their salary in Thailand is not that big, Johnny’s wife decided to apply to another country. Although she didn’t know anyone there, she decided to go because she wanted to help in her mom‘s medication. His wife was hoping her mother will recuperate and she believed providing financial and medical assistance would be a great help.

Fortunately, a Christian couple adapted Johnny‘s wife for a few weeks until she found a job. She got two years’ visa and worked hard until she received news that her mom had passed away because of breast cancer. The couple‘s faith was tested again.

Johnny‘s wife had to go back again to the Philippines.

Words to Fellow OFWs

I asked Johnny what advice he would like to share with fellow OFWs based on his experience. He told me to save for the rainy season. While still summer, OFWs must learn to keep a portion of their income and improve their finances. He told me it is important to control your spending and live simply. It means you should only buy what you need.

What caught my attention was that he had gained positive insight about his experience. He was very thankful they were still young and have more strength to overcome financial distress in life.

Should they be in their fifties, they might not have been able to survive due to the horrible effect of debt. In addition, he emphasized the importance of writing down your goals and reading books for you to grow. For him, it is important to continue to grow and read books. What is encouraging to hear is that they have managed to pay their debts gradually. As OFWs, Johnny and his wife were able to learn the importance of financial literacy in a hard way. I believe this doesn’t have to be your story.

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JUN AMPARO is a personal finance advocate and founder of Richly Blessed Today. He is an OFW currently working as a school counselor in an international school in Thailand. This article is an excerpt from his book “OMG! OFW’s Money is Gone: Practical Tips on How to Be Wise with Your Hard-earned Money.” To get a copy of the book, you may check his blog www.richlyblessedtoday.com