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Self Control

April 21, 2012

Self Control
by Edmund Lao

October 24, 2010

Self control is the ability to purposefully direct, or suppress, change one’s emotions,
behavior, and desires in order to obtain some reward later. From our personal lives up
to the corporate world, control is essential. Without control, everything will be in

A very simple example is poor traffic control on our streets. When nobody directs, every
motorist tends to outmaneuver each other just to get to their destination faster. The result:
horrendous traffic jam that delays travel time. That is one of the reasons we got the tag
line “Filipino time”.

Our financial life can be compared to the traffic situation. In our haste to get hold of money
in the shortest time possible, what happens regularly is that we lack self control in dealing
with our emotions when it comes to money management. This often leads to panic during
payday. People become mad trying to spend all the money they received. Oftentimes, the
result is always the same: DEBT.

Let me share my actual experience recently with a colleague of mine. One Wednesday last
September,I noticed him to be bothered. Since we are close friends too, I asked what his
problem is, I got the usual answer which is money and the problem is that he is deep in
debt. For 2 years, he pawned his ATM (he was no longer certain about the original amount
of his loan) for a add-on monthly rate of 7% (84% per annum). He was paying Php 3,400 monthly
interest. Also, he always renewed his loan even before maturity. For the past 2 years, he was
able to pay a total of Php 80,000 interest. He was shocked to realize the truth. He didn’t notice
that he was able to afford to pay the huge interest in spite of hisminimum wage income. I told
him that his debt is the reason why he is still struggling with his finances..

As part of my advocacy, I made an offer he can not refuse: I told him I will assume his balance of
Php 17,000 and that he pay me back without interest (principle of debt consolidation). He was very
happy with my proposal, but under my condition that after he paid me back in full, he will
continuously pay the same amount regularly into his ATM (that I will keep for him). I told him
that since he already has the habit of paying the amortization for two years, then it will not be
hard for him to use this habit to save money.

Everything agreed upon verbally, he was able to make the first payment to me. Before
the second payment is due, he approached me again and said that he will pay me in full.
As I suspected, the payment he will make came from another loan, this time around 5%
monthly interest. I just can not understand what made him do that. I likened his situation to a
person in a quicksand. The person was pulled out of the quicksand. And after being rescued, he
jumped into it again. I asked him for the reason of his decision and after grilling him, he
revealed that it was his wife who is in control of their finances and his credit card (even if
he is the breadwinner).  His wife even pawned his “unearned yet” 13th month pay. I
remembered a saying and it goes like this” “Whoever controls your paycheck controls you”.
Apparently, my colleague is not in control of but is under control by his wife. The wife
has no self control and is always on panic mode every payday. The wife has no income of
her own and treated the husband as the unlimited ATM.  Now, I understood why my
advice and effort were in vain.
Money, like gun, is neutral. It depends on how we use them. Used properly, it gives security.
Otherwise, it gives trouble.  The wife is a poor money manager because she spent more
than my colleague’s income. They lived beyond their means. Now they are deep in debt.
There is a saying that whoever lives by the gun dies by it. The same way, whoever lives
by debt will meet death. Debt sounds like death. More often than not, debt is the cause
of one’s death.
No matter how hard and how long the husband, as long as the wife does not have the
discipline to control herself, he will never be free from debt. He will be forever be a
servant to the lender.

To avoid this kind of situation, the following suggestions are possible solution:

1. Cut the credit card. Doing this, he can eliminate his wife’s impulsive unnecessary
2. Pay off debt.  Start paying the debt with highest interest. Look for additional
source of income so that he will not resort to debt to pay another debt.
3. Start saving and investing. Stash away a portion of his income into a savings
account. Just bring home his net income after saving. If possible, he can save an
amount equal to his monthly debt payment. He should talk to his wife and both must
agree to create discipline and self control in managing finance.

4. Live below their means. He should take charge of their finance and base the budget on the
net income. Expenses must be based on needs only. As a rule,spend active income (income
derived from working) for needs and spend passive income (income derived from investment)
for wants.  If there is no passive income, it is better to delay instant gratification
and just buy the needs. Just be frugal and look for the best deals. Spend wisely
in order to build wealth, as RFP Alvin Tabanag said.

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