1,500,000 advise (father loves debt)

[muiris]

Hello Pioneer redditors, kindly requesting advise for this.

Background : My Father is addicted in having loans. Ever since, gusto niya talaga may utang. According to him, it makes him to work hard more kapag may utang siya. (Hindi na talaga siya napipigilan 55 years na, and he really does work hard naman kapag may utang siya, pero ako as a son, I really want him to learn how to stop because I think its not healthy to have debts)
When he was in the Philippines he was earning (60-70k) a month, now he is in abroad earning net 400k monthly) he is now on his 3rd month sa work niya abroad

I am earning 33 k monthly at 25 years old.
I am the one handling our finances because my family trusts me enough since I have a finance background.

Now my father is again looking to have a loan abroad worh 1,500,000. I am trying to stop him since kaya naman niya ipunin yun in just 5 months. Pero according to him it makes him work harder, hindi ko na gusto pigilan kasi nagagalit.

Now redditors, I just want to make use of this, altho I don't agree him having debt again I wsnt to find ways still to somewhat counter the interests cost of this loan.

Do you have any advise where to put the money? Because we really don't need that money yet.

I am thinking to buy a house and lot for our family (we have a house in our grand parents lot) or put it muna on a business or investment

(Most of our savings are currently in seabank, pagibig mp2)

foreign loan interest rate is at 16% PerAnn

 

[tmcp]

@muiris Borrowing money to make more money is called leverage. Busineses do it all the time.

However, in your family's case, if you don't even know where to put the money, then borrowing money would be a stupid idea.

 

[muiris]

@tmcp Same idea po.

That is why I am really trying hard to find ways where to put the money so I can turn it in greener pastures

 

[tmcp]

@muiris What's the interest rate of the loan?

You need to know that first so that you can filter which investments make sense.

 

[muiris]

@tmcp Hello po per checking it is at 16% annually

 

[finicy]

@muiris ang laki ng interest. can you ask your dad to look for a loan na lower interest than that? masyadong malaki..

i took out a 700k loan din but 7.5% naman, but i use it to buy a lot.

 

[anilo]

@finicy that is a good percentage, which bank would that be anually?

 

[mahogany41]

@muiris That's ridiculous. As a banker I dont even think licensed financial institutions can legally do that.

With your father's occupation he can easily get a loan from a bank with Effective Annual Rate of 8-9%.

 

[tmcp]

@muiris Only high risk investments like business and bitcoin can beat that. But take note that you could lose it all.

 

[muiris]

@tmcp Its okay if we cannot cover the whole rate. Kahit sana half lang

 

[tmcp]

@muiris

Its okay if we cannot cover the whole rate.

How is that ok? That's financial stupidity.

 

[muiris]

@tmcp Can you not be rude.
As you said only high risk investments may counter that.

That is why I will result to the next best option.

 

[tmcp]

@muiris Not getting a 16% interest rate loan in the first place is my advice. If you choose to ignore that, then good luck to you.

 

[muiris]

@tmcp I am not ignoring po, but I already stated the facts in the body of the posts.

Altho I appreciate your suggestions, using rude words like stupid is not okay.

Thank you still.

 

[theairbud]

@muiris The person never called you stupid, but the idea/decision definitely is. Learn to accept harsh (but very true) input without taking it personal. Emotions are a big no no when it comes to making difficult financial decisions.

 

[muiris]

@tmcp Hello po per checking it is at 16% annually

 

[treewolf]

@muiris Here's my two cents.

Your father is old. He will retire in 5 years and just by reading I deduce wala pa syang ipon for retirement. That should be his priority actually.

I don't agree in buying lot or house from this money and the rest of the money he will earn. Assuming he can work for another 5 years and your family spend only half of income the total money before retirement is 12M. If you buy a lot and house out of that say, 5 to 7M he will have left only 5M for retirement which I think is on the low side.

What your family should do is to live modestly as much as you can and save the rest of the money for rainy days and retirement which is very near. Fate forbid na meron health emergency and money saved can be wiped easily.

 

[muiris]

@treewolf This is true, I actually comsidered this that is why I opened an MP2 savings for them.

Unfortunately, he is set on the loan.

 

[chaorabite]

@muiris A 1.5m loan on a 400k salary seems reasonable. As long as you are putting this on an income generating product then it's good.

 

[muiris]

@chaorabite I do agree rin, kaya lang kasi wala kami so far use of the money, nanghihinayang talaga ako sa sunk costs of the interest

Kaya I want to ask help sana where can we put it.