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them on Instagram and learn about all their benefits. Welcome to Economics tata your finance podcast. Here we will speak lightly and sincerely of money, where together we will turn the difficult into easy and clear we will take our finances to another level. From now on, your numbers will be as if you' ve never committed errols for a choice past, a healthy present, a promising future, and a grateful pocket. That' s why we' re following
us on Instagram, Facebook, tik tok, Linkedin and Twitter. Arroba economic silver welcome to a new episode of Economics, tata to your favorite finance podcast.
I' m Kimberley and I' m already working. Today we will talk about the major headache of many people, about something that gives them anxiety, fear of uncertainty, which they prefer to avoid because if in the face of what we are going to talk about today, it is something that can affect them greatly throughout their life, when for us it is totally the opposite. What are we going to talk about today? Laura from my dear debts,
but I feel like you' re saying the opposite for us. But I think we' ve acquired that knowledge of losing fear over time, because I don' t know you, but I, in my house, never talked about taking a loan like that one didn' t talk about it and like I wasn' t educated about it, just like in the finance issue, that' s you that nobody prepares you to say that a loan isn ' t a bad thing, but as a loan can drive you to achieve your goals. It' s just that in your case, there was no
such thing. Right, yes, there' s never been any talk about it You knew if your parents were in debt or knew anything. No. In my case, very much like IT, until the day came when I got a credit card, an extension, but they never told me anything look so that as you know me, you know me here on the credit card.
They didn' t tell me about boundaries, they didn' t tell me about dates, they didn' t tell me that money came from somewhere, they didn' t just take it, and you didn' t even know if your house took a loan or if your parents' car took a
loan. I mean, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, Look, gentlemen, where we' re living, we' re know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you
know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you
know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you
know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you paying a loan for this. I saved for an initial that helped us have this roof that we have today then or you' re creating maybe that fear, because what you see is that there' s a loan. That'
s gonna cost me That' s got an interest rate. I' m going to get in there I' m going to throw them at the target. It' s a can give you profit, because there are people who also feel about it, like I want to earn it all from the bank. You' re not going to gain any weight from me. I' m not taking a loan, I' m not taking a loan. I ' m gonna save all the money for a house. So, how long will it take me to have that amount in two thousand and five hundred years?
Well, then, to get into matter, we put a square, a question box. Well, several boxes on our Instagram for people to tell us how they feel about debts and I can tell them that the Mayans, that is, the answers that prevailed in this poll. I feel anxious, stressed, anxious, scared, scared, super stressed, distressed, exhausted and
I haven' t taken any loans yet. Wow. Wow. It creates anxiety, it creates panic, it gives me uncertainty, I don' t know if I can afford it, how much it will affect my future. I' m afraid, because right now I' ve managed to settle them, I mean, imagine you. The fear stays even when you' ve already settled the debts. WOW, then we ask and here goes a million - dollar doubt. It' s either good or bad debts. Tell us below, in the video, in the comments, both in Spotify, on
YouTube and in the real that we raise debts are good or bad. Well, here are the answers from Instagram followers who tell us they' re good. In some cases it depends on IT. I like that answer, because it doesn' t depend on the air of thinking about you They' re bad, but sometimes there' s no other. Listen to these answers. That depends on you is very interesting, because a good debt can become a bad debt for you. If you take it a long time ago, if you don' t pay it on time, even if it' s a
good debt, we' ll talk about what good debts are. If you don' t commit to it, it' s going to be a bad debt for your financial landscape. So are others who say that I understand that they are bad. Someone wrote referring to a Kiyosaki book as entering the rat race. Others say ay buenos, there are bad, but if they are bad, they are very bad Ok. Gentlemen may be good, but I ' m terrified. I say that for one to be able to first understand
how one feels about debts. We need to look further back. We need to see why we feel that way about debts. It was that they told us bad about the debts. It was that when I was growing up, I saw that my parents were in a debt mess, I saw that my uncles were in a debt mess, I saw that someone my family who brow that a neighbor seized him, that is, what happened in the history of
my life so that I felt like that with the debts. It' s something you have to internalize, because it' s something that definitely comes from behind, because you just didn' t open your eyes and there I' m afraid of debts. That doesn' t come from some ori. Of course, then you have to identify that origin in order to work it,
in order to break it. Also, gentlemen, we have to understand that what many people were saying, that you were telling us laura, that there are good debts, there are bad debts, but it is also up to you that those good debts are good. They' re not always going to be good because they are, but it depends on you, on your handling, it depends on you taking it in the right financial time for you that you can pay that fee, that you can even make payments to that fee
to lower the financial burden and everything else. And I' m telling you something that I really mean, I' m really happy to have this po, because the truth is that taking a debt I mean, let' s
be clear here we' re honest. It' s stressful, that is, it' s stressful and more when you don' t have all the knowledge, when you don' t have all the details, so I' m really glad that we do this episode so that people, when they' re in that search process, of a search vehicle, of a real estate, which is not an easy decision, it takes time to reach this capital to take this debt and acquire that property that if they see houses, that if they compare that if the debt is very high, that if they don
' t, I mean, it' s a process that really, if
we don' t have information, can become very stressful. If we don ' t have what details we have to take into account, it can unsquare a financial picture If we don' t have all the advice we should give before taking a loan don' t take them and already after we' re in trouble see what we' re going to do, so this episode is going to be very much like a guide for those people to take into account What I have to take into account when taking the, what methods I can
first that it' s a good debt, which is a bad debt. do to settle it before this time. Taking a loan to twenty years, thirty years does not mean that I have to last that term, so we can go further to create a plan methods to settle debts and take advantage of those surpluses that we believe by saving them and supporting them for other goals. If you hit the nail, debts definitely depend on the information you have.
Depends on how you feel about them. How stressed you are in the process, in the interim of your request, of your signing that document, of your deciding to take a debt depends on how much information you have, because it is that without that information you feel to him and above all with something that involves money and that also involves an expense for you, because we are talking about interests and many other casts that come to the side of the debt.
Imagine taking that with a blindfold that you don' t know you signed a fifty- page document and you didn' t understand half of what the document says and I don' t take advantage of, for example, doing the tricks that allow me to make extraordinary love and everything else. I mean, today we' re gonna have this whole guide all the way we started. Or let' s say already, we' ve borrowed both vehicle saints as a mortgage and I' m in the process, gentlemen, of taking
another, but that' s very mortgage and suppose I know nothing. What ' s the first thing I have to take into account here I really want to buy a house. What details do I have to see. Look, you have to see a lot of things, because for you to be able to buy a real estate, you need a little money. I mean, you say you can' t jump at night to say I' m going to buy a house, I mean, I woke up today I want a house. No, I mean in a house, it' s not a
bottle of water you' re gonna buy. It is a good that requires a lot of preparation. So you need to know before I mean, you can' t say I want to buy a real estate. I don' t mean I have to meet before I need an initial. I need to cover the costs that the Bank is also going to ask for those legal costs from the Bank. Everything else, I need to be in the building. I also need to know the tax scheme that comes next. I sign that
loan, which is the transfer tax. But also, with the interim passing of the years, there are taxes that can also fall you depending on the property you have and depending on the value of that property. But we' re talking about a lot of costs that depend on you true to your preparation. Then you have to know all that. Then we need to get into what the Bank is asking of you, that is, what are those documents
that the Bank requires, how I document it. Usually you tend to want, because obviously, your identity documents, the justification of how you generate income, how you are going to be useful actually paying that loan, your credit history that you care about everything We emphasize the importance of being able to build
it correctly. Your evidence of income. The Bank is also asking you and, for example, in the United States, we are also asking for all the investments we have, that is, before there you look for a house. You have to have a prequalification, which is where you get your credit precisely, that is, here comes the importance of having a good credit score, because on that will depend the good conditions that You can get tell yourself
good interest rate, good conditions that allow me to make extraordinary fertilizers. You can negotiate the cup a little bit, and that' s very important. Keimerly doesn' t necessarily leave with the first rate that gives you bank,
that is, one, always has to compare. Not the first option is going to be the best and once you compare let' s say that you can go back to that institution and tell him to look at this other institution they' re giving me a better rate, or they gave me the benefit of making extraordinary fertilizers and maybe they can negotiate with you that other condition.
So it is very important that we take into account, as we said, either the value of the property or the value of the vehicle, because it can also be a vehicle loan that we actually make a scenario that goes according to what we can afford, because obviously you have a mountain in your head. But if I don' t set the scenario of how much the rate is now on mortgage loans or vehicle loans, and if that monthly fee I won' t be able to cover it, I' m taking a bad
debt exactly. It' s very important. We will put a link of some calculators where listeners can make their scenario according to the rates they can see on the market that they ask according to their credit score, and make a scenario of what I can afford monthly, both for that vehicle, but as for that property. Yes, the app you already use is called App Long call as a calculator and there I can place the amount. It' s
the capital I want to borrow. I place the months, the amount of months and I put the cup and there it tells me immediately I throw the amortization table of how much I would have to be paying due for that loans without taking into account the insurance that is a separate cost. But it' s a tool that really helps you evaluate if you' re really going to be able to cover that fee. Usually a person falls into an over- endoding scenario by the time he passes thirty, thirty- five percent of what
he enters by paying for it we enter. So that' s a number we need to keep in mind so we don' t just fall into living to pay debts, because there' s also a stress coming from there that I don' t want any more debts because look at how I' m extremely drowned, but it' s just that you didn' t do the
homework, that is, the problem is yours not the debt. You totally didn' t do that scenario, that calculation that we have to do to see if we can afford it monthly, because a lot of people focus on the initial, on reaching the 20 percent initial, but we don' t know that apart there are other costs like those that mentioned legal kimberligastos, taxes, monthly maintenance. That is, it is not only, gentlemen, to
reach twenty percent initial, but also to know if monthly. I' m gonna be able to afford that,' cause that' s gonna break your financial landscape. In case you can' t the website that I use I ' m going to put it here too it' s morgage painting calculator that is online on Google. They can look for it and there they also tell you the case of those who live in the United States, they put you property taxes, they put you a choy or you put it according to the
fact that it pays the housing that you are looking for. The acho is simply monthly maintenance. There is also something there that allows you to give less than twenty percent of America' s start. In the United States you are
allowed to give less than twenty percent of the property. But in case you give less than twenty percent, let' s say you give five percent, ten percent, you have to pay an additional insurance that' s called piema Y and in that calculator you can also include the piema and because it' s a monthly expense that you' re going to have by not giving twenty
percent. I mean, ideally, you can be 20 percent. But in case you' ve already made the decision that you have maybe fifteen percent and you' re already going to commit that in the short term you' re going to reach twenty percent, because you know you' re going to have that monthly extra cost of the exact piema. Let us assume that you know all these expenses, that you are soaked, that you have this amount of initial already strengthened, well on track and you are already closer to taking the
step. What is the task, because you have to call the banking institutions. He has to communicate, and I' m not just talking about banks. You can ask for a loan in the same way in cooperatives, in associations you save, we print in a bank that may not be multiple or
you can compare in different institutions and ask. And here comes your homework and here comes that you' re going to sit with a blank sheet, with the huar open how you feel comfortable And you' re going to ask what are the rates that you offer me for loans the vehicle mortgage loans, for what term, and not only for what maturity period, but also for what term the cup is fixed when it starts to vary. All that I have
to know. You can even ask for tables this amortization, where you can see how much you' re going to be paying for that loan and you can ask what the bank costs are, tell me about your raters how much they charge. You can tap into that single call from all the casts and
you have to take into account when taking a loan. And since you' re going to be comparing and you' re going to call three, four or five six entities, don' t get tired, I mean, in the end it' s a job that combines you is a help to your
pocket. There are people who get married and say it' s not that I' m married to a bank, but then you' re going to restrain yourself from another better chance, from another better condition in another institution, so I always recommend comparing, even you here that when you took your various
loans, you took it in different institutions. Yes, I took two mortgage loans and two loaned this vehicle and the four, but we are in four different institutions, because, because I did my homework, I compared and at that time, where I took those loans, I agreed to one institution over another. And obviously, I prefer that, because in my pocket, what suits me the most, and that' s why I chose the loans,
where at that moment it was totally convenient for me. I' ve also taken two loans, a mortgage and full of vehicles, and they were also in Stefa institution. And in this second immaculate thing I' m going to buy, I' m not going to marry the necessary one either. I said good if you don' t give me good rate at good conditions, because I compare because aha, very easy is to decide with the one who already gave me the cup, who already has my information, but if he
is giving me a higher rate that people usually think. People say they' re what they have all of me, they' re what always help me. They' re always there. Aha, but compare me, kimerlay I ' ll tell you something, that is us. We got the credit to make that prequalification and that same day we were called without lying to twenty lenders what because it' s online and that is you have to go to an additional website that he too will put in the comments for people living in the
United States is that I don' t remember the name. Then I' m going to put it there on the website, where it' s a government page that you can restrict those calls because, at the end of the day, those, as it' s digital, can share your information. But this website allows you to protect yourself. It is precisely from that that that I inform you of the exact person. I wrote to one person and
20 people called me and 20 people called my husband. So this website that the U S government has is very important to protect your data and that they are not calling you people that you did not give your information and as you comment to yourself pro- user, the Superintendency of Banks here also has that facility, that facility that you can put your information so that they are not calling you for credit cards and loans, that is also a good tip where
we are taking these loans. Also, there are more expensive debts than others. We' ve basically talked about mortgage loans, vehicle loans. But also a bad debt is to borrow by credit card or to borrow from a usurer who give too high crazy cups. So these are bad debts and that really we, when we see a person who has a debt with a credit card or a usurer, is a priority goal to settle as soon as possible.
Why, because, in the case of credit cards you are debting yourself to sixty percent annually, both in pesos and dollars, So if right now you have a credit card debt in dollars, you have to settle it yesterday, of course because that will create a snowball of interest that will affect your pocket.
Likewise, if you have debts with usurers, settle them as soon as possible for those goals that we sometimes go on a trip and give cards without control or, we ask for a loan, a usurer for not this trip, because at the end of the day you will be paying interest for years for a week that you went on a trip, that for that week perfectly you could plan, save and invest, and those same savings in those investment instruments will generate interest, that they will help you to experiences for that trip
or to afford some food or support another goal that you have In conclusion, bad debts are those trips, those luxuries, those debts with credit cards where you are paying the minimum and each time you pay the minimum, then they will charge you five percent of everything that you owed on that card to that short, or not, or debts with usureros, good debts already being those doubts that if you report something positive monetaryly speaking and in the case, for
example, of education, I say that maybe not monetaryly so direct that you see it immediately, but in the long term, of income, of course it gives you greater possibility. So good debts, a piece of furniture. There are some financial specialists who say that it' s not a bad debt,
that you better pay rent. I differ I differ I have my property debt and I feel much more at peace with myself to be paying that fee for a loan from a property that is mine and that is rising plus worth and that eventually I can rent it too, or I can sell it with plus worth to me to be paying a rent as long as it lasts years paying And I remember, when I calculated, I paid like two million and a peak of pesos in rent and that was at a rate of one hundred
percent. Of course, a gift has a friend, that' s yours for your asset that you have, that you did fund and maybe my Angelio would cover your loan, that' s exactly what I' m going to do with my first property. I' m going to leave it rented and that' s going to pay the loan fee, the maintenance, the taxes and it' s going to leave us a little bit more monthly amen So, there you' re creating a heritage without you noticing clearly. So that
' s definitely an investment or an expense. Another debt and good can be it these people who are brilliant, who take a loan at a lower cost, at a lower rate, then take this money and invest it in either a business, either a company, either in the same stock market, in a bond, in some product that generates you a larger cup, so you ' re earning the spread. You' re basically making money out of intermediation,
you' re making treasury yourself. So, that kind of debt is positive, but, as we mentioned at the beginning, any of these good positive teudas that they bring to you can be converted. There are negatives and you take it at a time when you' re drowning, where you' re paying more than thirty- five percent of your income in installments alone.
So here that debt is no longer pretty, it' s no longer good, it' s paying you back and it' s become a debt that can affect you a lot, because of course, when debts aren' t handled properly, they can affect you, they can damage your history, as you say the history. Creditio goes up the stairs, exactly. Yes, yes, yes, and it' s real, sir The score is real.
Creditio climbs up the stairs, because late up he hears as much as you behave well that goes up there on the step, step by step, ladder by ladder and comes down this fast by the elevator, by an elevator of these fast. And now here, since we' ve talked about what a good debt is, what a bad debt is, what details we have to take into account when taking a debt, because we' re going to
talk a little bit about the methods for us to settle these debts. One first understand that, from our point of view, you' re never going to take a debt to keep it to maturity. That' s not financially
smart. If you' re going to take a debt that can, for example, be a swim of vehicles that expires in five or seven years or a mortgage finger that expires in twenty, twenty- five, thirty years, you' re never going to stay in life paying that up to maturity, because you' re going to be paying three, four, or five times
the real amount of that that you' re acquiring. So you take a debt, well you can take it to a longer term With that and I don' t have a problem, because there are people who also say the maximum term of a mortgage loan is thirty years, but I' m not
going to take it more than fifteen years. Of course not. I don ' t mean, I don' t have any problems, even if you take it for thirty years, because that fee accommodates you at that time, as long as your number one business, let' s have extraordinary loans for that loan without penalty and number two that you' re planning, as we ' re going to teach you now to make extraordinary payments that debt and lower
the deadline. So there, every time you make that thirty- year fertilizer, you' re going to get it down and maybe it' s going to go down in three years, four, years, two years, and already there you' re seeing that you' re not paying your debt thirty years, but that it' s so low that you' ve already ended up paying it in eighteen years, in seventeen years, and even an extra trick that you take into account is to include the clause that you' re
allowed to cancel it early. So, apart from ok extra credits without penalty, also let me cancel it aptincupally because you don' t know if a bonus you have will help you too much to cancel long before, so it ' s very important that when we sign the contract, if we don' t understand from you, call that lawyer friend, that we all have a lawyer friend who will help you understand if it includes these clauses, so that you make sure that you are signing that loan with the best conditions. That
' s right, so tell me about those two methods. There are two methods that are for balance of debts. What is the snowball method, the vo of the snow method is the one that we focus on the outstanding balance of each debit, that is, we' re going to assume that we have several debts, let' s say mortgage loan, vehicle loan and personal loan, that is, we have three debts. What are we going to focus on this plan, because I have to make the caveat that I am
going to continue paying all my monthly dues, that is here. That' s not negotiable. Here we continue to pay those three loans monthly on the set date, but additionally I will create an extra savings to support the balance of those debts in the snowball method. I' m going to organize my debts with the outstanding balance, that is, where, in order of amount of outstanding balance, and I' m going to focus from the smaller balance
to the larger balance, that is, first. First, I' m going to put the loan that has the smallest outstanding balance and then I' m going to go on with the second one and then I' m going on with the third one. So what am I gonna do to those three
loans? I pay the normal monthly fee and the first, which has less outstanding balance because I' m going to add a little bit, add an extra, to make an extraordinary payment And this is going to go little by little creating a snowball, because I' m going to go paying this first
loan before the deadline. And when I get that first loan out, because I' m going to have a surplus, I' m going to have the extraordinary abon surplus plus that monthly fee that I had, and that' s going to add it to the second loan I had and so, little here. I haven' t seen any interest rate here. Here, what by little I' m creating a snowball. So I don' t focus I saw is the amount of the outstanding balance and I organized it from minor
to major. This method works a lot for people who like to quickly cross out those goals, like ah look I' m out of it already. I think it' s psychological. I' d say that ah I' m skipping debts a little bit faster because I' m focusing on the lowest amount. Exactly then there is the avalanche method, which consists in your ordering the debts that you have in order of rate you will place the debt with
the highest cup up to the debt with the lowest rate. So, if you, for example, have debt card, credit, debt and mortgage, vehicle debt, personal debt, because you' re going to sort it in order from higher cup to lower and you' re going to focus on going
to the higher cup debt. Every month suppose that debt you are paying him ten thousand pesos of quota, for example, you will add to him the potential that you have to make that monthly payment, that is two thousand five hundred pesos, because every month you will continue to add two thousand five hundred your thousand five hundred to that main debt and the issues you continue to pay equal with the quota that you have normal already go t sardes that first debt
of higher cup. You take both the share of that debt and what you were abhorring him extra and you go to the second major cup debt. And this causes an avalanche that you are shutting down your larger debts that cost you more of a higher rate up to the lower rate debt. This method, the avalanche method, if it makes a more economic sense, because you are
attacking the debt that costs you the highest rate of debt. I really am very inclined to start attacking credit cards first, which are a very costly debt. We' re talking sixty percent a year. Then I focus on me going to be cute on those credit cards. I leave the card this credit, which is a big hole if you' re financing yourself with them and I keep on with my debts, you get taller. So that' s basically the trick for me. Yes, and even that avalanche method makes the
most economic sense. And I would also like to make a disclaimer that in case you like the snowball and you have a debt on credit cards, because maybe focus on those and then you make the order of the amount from minor to major, because, as you say, a debt with credit card will square any panorama exactly in truth. That' s a combination that I use a lot in the financial advice of people who are highly indebted. I remember I got a guy who had seventeen WOW debts, and the first thing we
did was put the six cards you had on the IBA Hey me. This is sinking you. We' re going to attack them six credit cards that you owe. We' re going to settle those credit cards or ask for a consolidation loan to s settle those cards and then we' re going to
continue with the debt in order of amount using the snowball method. Yes, totally good, because I think, Kim, that here we gave a general introductory guide, but very important for those people who are in the process of taking a new debt or who already have a debt and want to make a plan, they didn' t know how to do it, because using one of these methods. So I feel like it' s so good for those people who are about to take a debt and have no idea what they have
to take into account. And that you see those people who already have debts and maybe they feel a little bit drowned or feel that they will never finish paying them, because here we talk about those two methods so that you can apply it, take advantage of those extraordinary income that have that bonus, that they have every certain time, of or many people have it in April, because it is a good time for you not only to focus on the travel
goals or to buy a luxury, but also to see those debts that you have and support them a little bit exactly, definitely a macro guide episode, so that you can know all the details that you should know about the debts, so that you will lose the fear that anxiety that we talked about at the beginning, that stress that gives you think about taking a debt and start seeing them as an ally that approaches you to every important financial goal that you
will have throughout your life. If you think you' re going to take a loan in your life, I can assure you you' re wrong. And I don' t, I don' t bet, I don' t bet, but I will bet. I could bet the weight that at some point you' re going to take a debt, because eventually you' re going to need that banking institution for that push, for that goal.
It is large mortgage of vehicle, of investment property, of business that will eventually come to your life, because in the end, all, although we are at different points, at some point we go through similar situations, similar
needs. So it' s going to be your turn, buddy, it ' s going to be your turn and it' s good that you met this episode, you heard that information so that when that moment comes in front of you with all the base you need to do it without fear, we ' ll see you in a next episode share what I' m sure that here you ended up nourishing on a topic of debt that is very much needed, so it' s an episode that is worth repeating and it' s worth sharing with the whole family, with all the friends, we' ll
see you in the next Chao