Fragility, naïveté…

This post analyzes the motivation of the play Muñeca de Porcelana (China Doll). It might contain spoilers. You have been warned.

Last Saturday, I watched the Spanish adaptation of David Mamet’s “China Doll”. My friend and I kept guessing why the playwright chose that title, but even at the end, we weren’t able to wrap our heads around the idea.

About the play

Muñeca de Porcelana isn’t just another conspiracy theory-based story. It shows one side of a filthy, golden coin- the price of fame, fortune and power, if you wish. Accordingly, it invites the viewers to guess, assume, suspect and mistrust what’s being said right in front of their very noses.

As dialogues get more intense, thinking becomes the only possible option, because at that point, viewers realize that they have somehow become an accomplice of something horrible, and they need an explanation. So they start rubbing their neurons together, to see if a filament of some sort would light up.

porcelana2-555x675

Image courtesy of: https://madridesteatro.com

The scene starts with a pompous display of wealth and power, where the big boss- entrusted into the hands of the sublime José Sacristán– barks at his loyal assistant because the latter was handing him the day’s newspaper, when he didn’t really ask for it in the first place. The role of the devoted secretary is strongly portrayed by Javier Godino, the perfect complement to the seniority and experience of his counterpart.

What motivated the play?

The piece clearly insinuates that power is concentrated among an elite few; where having money is not enough to get in the “club”.  Membership depends on the family tree and perhaps any ancient personal favor from one clan to another (I doubt if there was one member of that club whose ancestry couldn’t be traced to a Mayflower passenger). Very distinctly, it also shows that even in places that boast of being bastions of democracy, it is still the rich and the influential who hold the key to the machinery of the society.

Oh, but being rich and influential are but tickets to join the club. To remain in it is another hurdle. Exhaustive training is needed if one is to thrive, and a crafty mind with zero moral sense is crucial to triumph. And so that, according to Godino, is the origin of the title, “China doll”. It refers to the fragility of the triumphant based on the fact that he is nothing but a product; victorious, yet always and forever conditioned by the existence of incriminating evidence against him. A chess piece inside the board he is trying to conquer.

The way I see it, the play’s motivation is to open people’s eyes to that filthy side of the golden coin, as mentioned earlier. I’m not sure how society behaved when Mamet launched this opus, but in this generation, people only tend to look at the brightness of an item, not minding the dirty rag that polished it clean.

In an interview, Godino said he had an impression that viewers seem to evade what Mamet is trying to demonstrate, because it causes distress. He alluded to the naïveté to which spectators hold on, as a way to fight the awkwardness. (They’re just missing the point, then. But hey, their money, their choice.)

The ending, though, didn’t distress me. It was just as one would expect people to act given the situation and their current condition.

Et cetera…

At the end of the day, we’re all porcelain dolls: fragile in our naïveté. They don’t say “knowledge is power” for nothing.

Advertisements

A tale as old as time…*

“As long as there is any property, and while money is the standard of all other things, I cannot think that a nation can be governed either justly or happily; not justly, because the best things will fall to the share of the worst men; nor happily, because all things will be divided among a few, the rest being left to be absolutely miserable.”

“It was evidently quite obvious to a powerful intellect like his that the one essential condition for a healthy society was equal distribution of goods – which I suspect is impossible under capitalism. For, when everyone’s entitled to get as much for himself as he can, all available property, however much there is of it, is bound to fall into the hands of a small minority, which means that everyone else is poor.”

Can you guess who penned these words?

Adam Smith?

David Ricardo?

Karl Marx?

Rose Luxemburg?

Noam Chomsky?

NO.

It was Saint Thomas More, in the 16th century.

Think about it.

 

*Title borrowed from the “Beauty and the Beast” theme

 

 

Colorfulifesite responds: Is spirituality compatible with wealth accumulation?

My automatic answer would be: NO. Why? because of the simple reason that wealth is expressed in what’s physical and ephemeral, whereas spirituality concerns itself with the intangible and eternal (like a memory, a proverb, or values passed on from generation to generation).

Yet upon deeper pondering, it occurred to me that it might be just the way we choose to understand the question. Let me explain: in what way are we inquiring about the compatibility of spiritual interest with the burden of accumulating wealth?

As a mother, I see both matters as compatible. Accumulating material things would help me raise my family (cat included!) more comfortably. This would give them a feeling of safety, and being loved, as they are well-provided for. And with our basic needs covered, we could “worry” about the next-level needs such as esteem and self-actualization, both of which are strongly connected with spiritual growth. 

This is only me, of course: a career-woman living in a developed country, lucky enough to have a livelihood and a strong social network of support.

What about the woman who’s the exact opposite of me? a younger, single female, living in a poorer country, with no job and no one to rely on? would she have a stronger or equal faith than/as what I have? would she be more spiritually mature than I am? is she holding on to spirituality as her means of consolation, or is she really maximizing her full potential in spiritual development because she’s not distracted with “worldly” and “material” concerns?

SPIRITUAL WEALTH MENTAL WEALTH FINANCIAL WEALTH PHYSICAL WEALTH WORLD PEACE LIVE AND AFFECTION

Image courtesy of: http://love-peace-gratitude.blogspot.com.es/p/spiritual-wealth.html

As a citizen, my stance only became more confounded the day I read the Dalai Lama utter the following statement:

The economic system of Marxism is founded on moral principles, while capitalism is concerned only with gain and profitability. Marxism is concerned with the distribution of wealth on an equal basis … as well as the fate of those who are underprivileged and in need, and [it] cares about the victims of minority-imposed exploitation. For those reasons, the system appeals to me, and it seems fair. (“Of course the Dalai Lama’s a Marxist”, The Guardian)

because wealth distribution is only feasible after there has been prior accumulation! (Karl Marx actually predicted that capitalism would evolve in a more socialist/communist system and the material wealth that has been accumulated would make a fairer redistribution possible.)

Therefore, to be able to apply the moral principles the Dalai Lama spoke of, it is necessary (but not limited) to have “something” with which to materialize those concepts. For instance, buddhist households must have enough rice to give alms to the monks, if they want to express compassion. And how would they have “enough” rice to share if they hadn’t previously saved and accumulated it? Although this is not the only way compassion can be practiced, it is one very important aspect to consider.

Inspired from the same above-mentioned article about the Dalai Lama, I started to form my final conclusion. It also noted that:

[…] relief of suffering can only come from the realisation that pleasing ourselves doesn’t bring happiness – instead we must try to work skilfully and compassionately with others, as part of interwoven systems of connectivity that bind us together.

I believe that the accord between material abundance and spirituality boils down to the INTENTION of accumulating wealth in the first place.

Individuals who aim to earn a lot of money to fulfill their roles as breadwinners are not only executing their obligation, but they are also practicing generosity, compassion and patience towards others. This undoubtedly cultivates the spirit.

Households who save and invest their money to guarantee a good future for the younger members are exercising generosity and sacrifice, to say the least. This sets an example for other family members and therefore expands the cause of spirituality.

A society that allows the public use and enjoyment of environmental wealth (forest and seas, for example), who redistributes existing richness to the less-privileged are implementing social and economic justice to its citizens. This makes indiviual spirituality flourish, may it be through the soothing effects of being surrounded by nature, or the satisfaction of being assured of one’s survival.

My final answer then is a YES. Accumulating wealth is compatible with spirituality provided that the intention for doing so leads to practicing moral principles and advancing the cause of spirituality.

Of thieves, value and the bitcoin

On the eve of the Epiphany (Feast of 3 Kings), our house got robbed. Thankfully, not many things were stolen, only some jewelries. The loss of my meaningful trinkets upset me a lot (not to mention the fact that my sense of safety and security were both shaken up). After all, they weren’t only pretty, shiny things- they also held great sentimental value as most of them were gifts. Of course, for the thieves, the only value those jewels have is their monetary value.

For centuries now, men have assigned value on different objects ranging from salt to gold. Those same objects were even used as a means for payment because of the value attached to them. Consensually, society has given value on objects that would otherwise be just “things”. That is why the crooks who broke into our house were tempted to steal my jewelries: to make the most of the accumulated value held by the precious metals and stones.

I suppose that their end game would be to exchange those knicknacks for money, another “value holder”- commonly accepted in exchange for goods and services, and also useful to amass value (although its value could potentially decrease in time, while the value of jewelries could go up).

All of these got me thinking how much the things we hold valuable have changed now. It’s no longer news that digitalisation has allowed for the birth of new tenders and payment methods. Currently, it has become possible for many people to purchase, settle debts and save money without having to use real cash (through credit or debit cards, mobile transactions, e-money or different investment vehicles). Why is that? well, just as is the case with money, all these new means of payment work out because of a consensus. Aside from the convened value they hold, an important part of it also depends upon the public’s willingness to support the value agreed.

The same goes with the biggest frenzy at the moment: the bitcoin. I’ve been trying my best to express my thoughts about it, but I found an article online so I simply decided to translate it and share it with you, dear reader. Please stay tuned for Colorfulifesite’s opinion on this subject.

Note about the article’s author: The original article was written by economist Daniel Villegas of the Mexican National Autonomous University (UNAM) for Dinero En Imagen online news. Mr Villegas was kind enough to give me permission to translate this simple, straight-to-the-point and insightful article so non-Spanish speakers could get a glimpse of his illuminating ideas.

Gracias D. Villegas, ha sido un verdadero placer aprender de su artículo.

I bought bitcoin and I realized why it could be the start of a great bubble

By: DANIEL VILLEGAS

EDITOR. Economist at the UNAM with exprience in macroeconomic indicators.

 

Mexico City – The bitcoin euphoria has reached suspicious heights.

Nobody imagined that at the start of the year, this cryptocurrency’s value would rise up to 1,695% in 2017. Indeed, when it was created, it started with a value of 908 which hiked up to 17,600 US dollars.

btcusd

Image courtesy of: http://www.dineroeimagen.com

Public opinion has also escalated regarding this digital currency. Even the Bank of Mexico, the country’s Ministry of Finance and the National Banking and Securities Commission have said their piece about it (arguing that it is not a legal tender in the country).

(Investopedia defines legal tender as “any official medium of payment recognized by law that can be used to extinguish a public or private debt, or meet a financial obligation.”)

In a joint press release, members of the Mexican financial authorities warned that the virutal assets are used as a device to store and interchange electronic information, without any legal support from any of them or from the government.

Despite this, many Mexicans still take their chances on the bitcoin, without minding that its soaring price is sustained on a fragile backing: the belief that everybody else thinks it has value. A common factor among the biggest financial crises in the past.

This presents a great problem since Mexican bitcoin enthusiasts could be living in an informational bubble that fogs their reality.

Why? because people purchase bitcoins with the hope of eventually using it to spend on goods and services they regularly acquire, without having to covert it to Mexican pesos.

The problem

We tried to discover just how acknowledged this cryptocurrency is; that is to say, how much do people know or not know about this type of “digital asset”.

Some would be ready to reply, “of course they (vendors) won’t accept it, it’s better to change it to pesos”, to which we should then respond that one of the purposes of the bitcoin is to serve as a (direct) means of payment (eg: one can possess 3g of gold but most probably no shop would accept it to pay for a purchase).

The experiment was disappointing: we talked to nearly 15 business establishments- most of them located in a shopping center- to inquire whether they would accept my bitcoin as payment. The answer was always a firm NO.

Some didn’t even have the slightest idea about the bitcoin, something that shouldn’t come as a surprise.

According to the National Survey for Financial Inclusion 2015, only 44% of the adult population are “banked” and only 9.5% of them rely on mobile banking services.

Add to this the fact that 92% of the respondents revealed thay they prefer other types of payment such as credit cards or digital transactions.

This is but a small proof of why it could be difficult for the bitcoin to be accepted as a regular means of payment in Mexico.

So then, if it won’t work as a payment method -and most probably it won’t do so for a long time-, why are people risking their money investing on the bitcoin?

Perhaps we could turn to one of the most influential economists of the 20th century, John Maynard Keynes.

In one of his most cited passages, he proposed an experiment:

“A contest… where the participants would have to select 6 of the most beautiful faces among hundreds of pictures.

The winner will be the person whose choice approximately matches the average preference of the rest of participants.

This way, each contestant would have to choose NOT those who they consider more beautiful, but those whom he thinks will please the rest.”

How would this apply to the bitcoin? Keynes used this make-believe contest to explain the behavior of investors and the weakness attributed to these types of markets.

This weakness refers to the gradual increase of people who invest in businesses they don’t really know much about. (So proportionally, there are more and more people putting their money in enterprises they are ignorant of. Remember the most recent financial crisis triggered by junk bonds?)

Additionally, he explains that a “conventional valuation” (ie: agreed estimated value) established as a result of the “mass psychology” of many ignorant people is prone to violent alterations due to strong changes in opinion, as a consequence of factors not highly related to the probable returns (of the investment).

(That is to say: the evolution of the bitcoin’s value is more susceptible to public opinion, than to the changes in demand -because supply is already capped- or the arrival of other cryptocurrencies.)

This is the most worrying part: the belief that the bitcoin could make people rich could end at any given time, and this could easily mean an abandonment of the investment and a substantial crash in its price.

Simply put, the question as to “how far would the bitcoin’s price go?” is at this moment, more for psychologists than for financiers.

(End of article)

***

To be continued…

Adulting and Money Management 4: The Money that They Owe You

 PayMe.Candle.qkx

Image courtesy of: http://www.luckymojo.com

This article is inspired by several Facebook posts pertaining to the irony that it’s the money lender who feels shame when asking their money back, instead of the other way around. Especially when it comes to following up a late payment.

At first, after a talk with one of my friends, I thought that the main problem lies in assertiveness, or the lack of it. And then I thought that perhaps certain cultures encourage assertiveness, more than others but it really is not the question. I didn’t do the numbers, but it’s clear how what I thought was a cultural aspect in lending money, is actually a very personal choice of each son of a man. That is, the choice whether to “donate” or “collect” the amount of money that was lent.

But I’m getting ahead of myself, because even before a payment could be followed-up, there must have first been a pledge to do so.

I myself have rarely lent money to anyone, perhaps because I give the impression of being riff-raff (hahaha!). But whenever I did, I made sure both parties understood and agreed that the money being exchanged was a loan, and not a gift. And in the case where the money were a gift, I also made that very clear.

Risking to state the obvious, the difference between a loan and a gift is that the former has to be returned to the money lender at a given time, with a given interest rate. The latter is simply to be graciously accepted and appreciated.

Now, the problem with some people is they are easily caught by surprise and instead of thinking twice before lending money, they immediately agree to “giving” something that is to be returned “in the future”, “without haste”. In 98% of these cases, no payback ever takes place.

In the world of adulting, taking time to think before acting is basically lesson number 1. In the more specific town of adulting and money management, this moment for reflection becomes as necessary as breathing. Every cent counts, whether it be a past, present or a future cent of a currency. As thus, lending money means sacrificing having the “cents” today with a guarantee of getting them back in the future. In the case of giving, the former sentence would end after the word “sacrificing” and that would be it.

Personally, what I usually do when asked for a loan is to:

  1. Ask how much they need
  2. How urgent they need it
  3. When can they repay me
  4. How will they procure the money to repay me

If I’m satisfied with the answers to the former questions, I tell them that I’d think about it. Afterwards, I ask myself:

  1. How will lending a certain amount of money affect my budget until it gets repaid?
  2. Will I be alright if I never get to see that money again?

If, after analyzing my own situation, I still choose to lend my money, I make the following very clear when I finally decide to go ahead with the transaction:

  1. I make sure they understand that the money has to be returned
  2. I make sure that we both agree on the date of repayment (with or without interest)
  3. I would make them understand that although I don’t need that money now (and that’s why I can lend it to them), I would need it in the future.
  4. Depending on how much I trust the borrower, I would make him sign an agreement including a clause which mentions a possible collateral

(Are you still wondering why people don’t borrow money from me?)

You might be asking: what if, at the agreed date of repayment, the borrower refuses/cannot/does not return the money?

This is where the importance of assertiveness comes in. Being firm in reclaiming what is his own actually helps achieve the goal. And in the case they still refuse to pay you, then this is where a signed document would be useful.

In some instances, no amount of assertiveness can ever get a borrower to pay up. No matter how many touching, beautiful speeches are delivered, they wouldn’t budge. Because the truth is, the list that I wrote above- it’s just me. In real life, and depending on many other factors, the things I just said would be easier said than done.

So what is best advice I could give? be wise, and before you lend an important amount of money, make sure that your finances are sound enough in case you don’t get it back.

Happy lending!

 

Adulting and Money Management (3.3): The Money that I Owe

Adulting and Money Management (3.3): The Money that I Owe

On How I Acquired Loans Responsibly

The first time I formally owed money was when I took on a store credit to buy a bed. I was 22 years old and just moved out of my parents’ house.

Needless to say, I was very nervous when I signed the papers. I grew up in a family where borrowing money is a big no-no and I have always been told that it could bring a lot of misery and trouble. I’ve seen families fight, children who cut all contact with parents and even friends who stopped talking to each other because of money lent and borrowed to one another. Because of all that, I was afraid to get any kind of credit and was doubtful about my ability to honor the payments. It didn’t matter that I had a one year contract at work, neither that I had 8 months to pay it off, nor the fact that there was no interest rate applied (the store had a special promotion).

Knowing what I know now, I only wish somebody could’ve told me that:

  1. at some point in life, it would be necessary for me to borrow money,
  2. there are ways to not be enslaved by loans and,
  3. it is possible to live happily with debt, if one borrowed money responsibly.

Resultado de imagen de responsible loan

Image courtesy of: http://mzansilive.co.za/

The importance of taking the time to honestly reflect

So far, no debt has financially strained me to a cracking point. I guess the reason is because I think more than twice before acquiring a loan of any kind. All the scary stories and the horrible experiences I witnessed from peers and friends have served as a starting point in each and every debt decision I’ve ever made.

I usually go by the motto, “If you can’t buy it in cash, you can’t afford it”. So whenever faced with a buying dilemma, first I evaluate the usefulness or the value of what I’m going to buy:

-How long will I use/enjoy the item?

-Will its value increase our decrease over time?

-Can I sell the item if I find it of no use to me in the future?

Secondly, I examine my current financial standing:

-Why can’t I afford it?

-Is it a problem of liquidity (availability of cash or other means of payment), or a matter of really not having enough resources to purchase the item?

-Can I perhaps save for it today and buy it in the future? Or would the item increase in price by the time I have enough money saved?

Lastly, I make sure that paying for such debt would not cause a great dent on my future quality of life. Technically, this could be achieved none other than by sitting in front of a calculator, pen and paper (or a spreadsheet) and start crunching the numbers.

When choosing a creditor, go with the one who offers the best terms of payment FOR YOU

You might ask, “How is it even possible to have a debt and live comfortably?”. It IS possible.

The first condition certainly would be to not overwhelm yourself with loans. Borrow only the amount that you are able to return.

Equally important is that this could be achieved if you invest time and effort in searching for a creditor whose terms of payments suit your situation.

Below, I’ve made a list of the most important purchases I’ve made on credit. All of them have one thing in common: I got them at 0% interest rate. This is where the time and effort came in: once I set my mind to getting something extra-special that needs a financial sacrifice (debts make you sacrifice your future purchasing capacity), I start browsing the market (virtually and physically) for different kinds of offer. Personally, I prefer to go to a physical store and talk to the salesperson. I’ve always gotten the best deals through one-on-one negotiations.

Some stores give you the option to determine how many installments (usually in months) you need to pay the credit off. In these cases, I always chose the least possible. The soonest I can get out of the debt, the better.

Past credits to stores:

  1. Bed: 8 months
  2. Thermomix: 3 months
  3. Wedding earrings: 3 months
  4. House appliances (dishwasher, refrigerator and microwave oven): 4 months

Credit card debts (payable 3 months after purchase):

  1. Plane tickets
  2. Hotel reservations

Outstanding debt:

  1. Student Loan

The role of emergency savings

It’s important for me to briefly discuss something about my outstanding debt.

As I’ve said, I don’t pay interest for this loan. So every month, a flat rate gets deducted from my bank account. This would go on until the principal amount has been paid off; and according to the terms I signed, it would still take some time before I see that day arrive. This is to say that the greatest risk I face is the suspension of my steady revenue flow before fully paying the loan; in my case, it will be unemployment.

Truth be told, I actually faced this situation not long ago. I lost my job, but luckily I was eligible to receive unemployment allowance. However that too, was a limited source of income. So when it got depleted, I had to tap my savings- my emergency savings. I had to set aside such amount that would allow for one whole year of payment for this loan while I search for a job. (I simply decided that it would take me one more year before getting back to work.)

Fortunately I am now back to having a salaried employment, and it didn’t take me one year!

Resultado de imagen de responsible debt

Image courtesy of: https://www.agingcare.com

So now, until that debt gets paid off, I consider each monthly installment just as I budget fixed household costs (ie: rent, electricity, water, food, etc…), like what my friend Edward mentioned in this post. At the same time, I exert a conscious effort to increase my savings, especially my emergency savings.

I am aware that most people’s idea of having emergency savings is for it to be used during a health crisis, a natural calamity or the death of a loved one. But emergency savings also have to cover whatever household needs there are when the regular flow of income is interrupted, or reduced.

DO NOT TAKE UP LOANS FOR THINGS YOU DON’T REALLY NEED

Half a year after having a regular job with a stable salary deposited in my bank account, I also started to receive letters from the bank informing that I have automatically secured a 3,000-Euro loan! I also got an instant approval to avail a “golden” credit card from the same bank. To top it all, my husband also got the same letters!

We just threw those in the garbage.

My husband and I could’ve enjoyed the “easy” money back then. But we decided to be frugal and live within our real means.

On Personal Loans

My attitude towards personal loans is even more strict and rigorous than with the formal ones. As far as relationships go, I try very hard not to let money get in the way. Actually, the best way to preserve a relationship is to set money matters aside. But when times get tough, to whom would one go for help? To a friend or family member, right?

In my limited experience on personal loans, I’ve always carefully chosen the people who I plan to borrow money from. They should be financially comfortable enough to lend the amount I will ask, without having to sacrifice their quality of living. They should also be people I greatly trust and who trust me equally. Additionally, I choose those who I believe are unafraid to call my attention in case I forget to pay, or give them the incorrect amount.

It’s very important to be clear that the money being passed from one person to another is eventually going to be returned the other way around. If you’re lucky to have a friend or family member who would insist that the money be a gift instead of a loan, then enjoy! Otherwise, be clear on the terms of payment: interest rate, installments, “deadline”, and so forth. Trust me, it’s not worth losing a loved one over money.

Responsible borrowing

Acquiring loans responsibly takes a lot of time and effort, just like any other “adulting” activity. Although compared with other “adulting” decisions, this will cause a direct and immediate effect on your quality of life in the near future- once the payments set in.

It would seem boring and tiresome but it’s worth thinking more than twice before deciding to take up a loan. Then once the decision has been made, it becomes even more important to take a moment to search for the most suitable creditor and to plan your new budget considering the periodic installments.

Borrowing responsibly also means being prepared for various risks that might mean having difficulty in making the payments (such as being unemployed). For this reason, it’s important to factor in an additional amount in one’s emergency savings when preparing the new budget.

One risk worth remembering is the temptation of acquiring an “easy” loan with seemingly “comfortable” terms and conditions. I have never heard of anybody live comfortably with a loan that was used for something they didn’t really need.

Lastly, responsible borrowing entails mixing personal and financial affairs the least possible. Though when inevitable, another round of reflection, research and budgeting has to be made, all in order to be able to live happily even when indebted.

Resultado de imagen de responsible borrowing

Image courtesy of: http://www.smartcampaign.org/

Adulting and Money Management (3.2): The Money That I Owe by guest blogger Gino

Foreword by Colorfulifesite admin:

Gino’s experience differs a lot from that of Edward, not only because of the generational gap but because of the way the former decided to approach his debt dilemma. The fact that he has not had time to save enough money to be considered “financially stable” is a great factor in his decision to pay his debts with another loan. Now normally, people are advised against this because as you might already guess, it does pose a risk of entering into a debt cycle from where it could then be very hard to exit. It takes discipline, focus and great will power to not fall into a credit trap. Most importantly, Gino did not only take another loan to pay his initial debt- he also made it a point to earn additional money from various sources of income. But I don’t want to get ahead of myself. Dear reader, learn and enjoy!

***

Karessa asked me why I volunteered to be a guest blogger in Colorfulifesite Blog. The truth is I’m really eager to inform people about how I somehow recovered (slowly) and survived from my personal financial crisis. I would also like to share my experience, in case it could give them options on how to solve their debts.

Resultado de imagen de debt

Image courtesy of: http://www.fitslimstrong.com/

The Backstory:

Several years ago, my friends and I set up a corporation. It was the first business venture of my life. Needless to say, I was new to the corporate world and had not even the fundamental knowledge of things. I just took the opportunity. It was a “strike while the iron is hot” kind of thing. I was excited and impulsive at the same time that I didn’t even bother to educate myself, believing that I could learn along the way. Likewise, I joined the business world without any “financial muscle” because supposedly my contribution would be my skills. (Actually, the majority of the founders didn’t have money to invest. All we had were our Information Technology or IT skills.) This was why we needed an investor to sustain the various costs of this venture: marketing expenses, logistics, employees, and so forth.

One of the founding members met a potential financier who we all thought was an angel investor. After me and my friends agreed on his participation, he gave us a big amount of money as seed funds. We divided the financial responsibility and assigned each one an amount to be paid to the angel investor when the time came. All along, we believed that we would pay him back upon the success of the company’s project. After the papers were signed, the corporation became a legitimate one.

Unfortunately, things eventually started to go downhill due to the company’s internal issues. These issues imploded up to a point where I had to personally borrow money from loan sharks just so I could pay our employees’ salaries. I was confident I could pay the loan sharks, but little did I know that a deeper financial trouble was about to blow up in our faces:

What we thought was an angel investment was actually not. It turns out we signed a document stating that he was loaning money to the corporation, not investing! Furthermore, the terms stated that the loan should be paid within a year.

To top this all off, I have acquired credit card bills as well as other personal debts to settle.

Resultado de imagen de loan shark

Image courtesy of: https://es.123rf.com

Thankfully, the debt to the “investor” was cleared by the person who invited him to the corporation. Still, I found myself looking at an important financial dent.

The Debt Story:

I had to start getting rid of the accumulated debt I still have. So what I did was that I sold everything I could and pawned some of my belongings. That gave me some “starting money” to do something about my debts.

Resultado de imagen de debt

Image courtesy of: http://www.kiplinger.com/

Likewise, I returned to my parents’ house to save on rent and started recycling some things, like my old computer. Most importantly, I got help from my family in getting a loan to pay the loan sharks. My mom helped me get loan from cooperatives (Credit Unions) that give a lesser interest rate and a longer period payment plan. Loan sharks’ conditions of payment were tougher than a bank’s, so it was of my great interest to get them off my case as soon as possible. That’s the bad thing about getting a loan that doesn’t require any type of verification such as tax declaration, employment record, etc… Anyway I paid a big part of my debt through those cooperatives.

According to Investopedia,

A credit union is a member-owned financial co-operative. These institutions are created and operated by their members and profits are shared amongst the owners.

… (They) represent an alternative to banks and possible solutions to common complaints about traditional banking institutions… (It is) a savings and loan entity formed by a group of people who share some common characteristics, such as a profession or geographic location. The members of the group pool their money to provide loans and demand deposit accounts to other members. Credit unions are not-for-profit entities that are owned and founded by their members; they function as democracies, with each member having a say in how the credit union is run.

As a matter of fact, we borrowed from 3 credit unions. On 2 of them, my mom was the account holder while the other one is under my younger brother’s name. I did this because they were the only ones who were qualified to apply for a loan.

Part of the money I used to pay the cooperatives was earned through online jobs. I had to work double shifts and with multiple employers. All of these, without counting other jobs, so all in all that required me to work for 10-16 hours a day. I went on getting local contracted jobs too, like designing small business solutions for small enterprises. The pay was small but at least I got something, rather than nothing. (It also helped me build more contacts.)

As I mentioned before, I got some money came from pawning and selling my belongings. Some proceeds from the sold stuff were used to get along with my everyday life. I’m not even talking about spending for leisure; I meant something more commonplace like buying food and paying for fare. This money also allowed me to pay some of my other personal, smaller debts.

Then my father said he will pay some of my debt from one of my mom’s cooperative account and I can pay him whenever I could, without interest. I was relieved!

After that, I got a chance to enroll in an MBA course to educate myself on how to properly run a business. While I was in school I kept on accepting online work and working for local clients mostly to pay my school tuition, my dad, my mom and my brother. To this day I’m still not 100% clear of my debt but it’s more manageable compared to what had happened to me few years back.

-The End-

Colorfulifesite’s Note: Gino has long since learned his lesson regarding the need to be financially literate and equipped before entering a business venture. He is currently a Managing Partner at a couple of startups focused on helping small enterprises get the best adapted business solutions.

Sources:

  1. Credit Unions, Investopedia, available at: http://www.investopedia.com/articles/pf/08/credit-union.asp