The Power of Desperation

Desperation is something no one would wish to fall into. But for some, it is the most important thing that happened in their life. There are many successful people who became what they are because in their desperation they did not lose hope and made one crucial step.

Imagine yourself about to drown in the sea and a piece of log is floating nearby. No doubt, you will swim your way to that log because that is your only hope of staying afloat until rescue comes. You wouldn’t be choosy and wait for a banca or the finest log to come by. You wouldn’t think of other options except what is available.

The good thing with desperation is that we are able to decide and move from where we are without waiting for something more ideal. It is an opportunity to maximize what we have and discover what we can do with so little. For some people who are paralyzed by too many options, because they are too idealistic, a desperate situation might just be heaven sent.

That initial step, making use of whatever is available, allows us to go to the next step, a more solid one, which will not be possible had we tarried and waited for something ideal. I always hear my wife say, it is easier to steer a car that is moving than one that is stationary.

Sometimes, waiting on God takes too long or even fruitless, because we don’t see that the less than ideal which is right in front of us, is what He wants us to start with and learn from. We don’t see that is where God will meet us, mold our character and teach us until we are ready for the next stage of the journey.

It is not the kind of situation we are in that matters. It is what do we do with what is available. Do we make progress by waiting or by moving on?

Many of us who decided to come out of our comfort zone soon realized that the next things that happened after that brought us to where we are.



















Mindsets That Hinder Us

The human mind is powerful. It can determine the course of our lives. It is important to know what exactly is hindering our progress. In business, as well as other aspects of life, we are made captive by certain wrong mindsets. Here are some common mindsets that may be hindering a person from making progress in the marketplace.

1. The Jackpot Mentality

Some people want to hit it big instantly. There are varied reasons for this. They may be in a tight financial situation and they need to address it quickly by hitting a jackpot. Or, they refuse to work hard and gradually increase their income because they want to retire early. The very thing they refuse to do, which is to increase their income gradually, as they work hard and develop their business is the very thing they need to make it in business. Healthy businesses exhibit growth overtime and they grow only as much as the owner grows in understanding and competence. In my entire career as a business consultant, I have never seen a jackpot happen. I have seen people who aimed for a jackpot and then failed. But I have also seen people who are willing to take the long road and are now managing big businesses.

jackpot mentality

2. Luck Mentality

This sounds like the brother of jackpot mentality. Once, I asked a businessman what accounted for the rapid increase in his sales. He didn’t know. All he knows is that buyers keep on coming back for more. The “lucky” break gave him enough reason to relax. He never exerted any effort to find out why his customers are buying. Years later, his company closed down after a sudden decline in sales. I asked him what caused it. He didn’t know either. Things just happened. A wise businessman knows why his sales go up and why they go down. He knows his customers. He is aware of the effect of the decisions he makes. As a good steward, he knows how to manage controllable factors and leave the uncontrollable or unknown to God.

luck mentality


3. Money begets money

If money produces more money, there is no need for entrepreneurial ability and management. The myth sounds like the thinking of one of the stewards in the parable of the talents who did nothing and buried his talent underground. Money is just a tool. To a good manager who knows how to handle his tool, money will grow. The one who mismanages will simply waste away resources assigned to him. This is the reason why there are businessmen who made it big, starting from almost nothing. There are those who started with much but did not produce anything. Mindset dictates our action which affects our lives. That is why God gave us principles on how to live and manage what is given to us. They are all in the bible.


4. Big Time Mentality

This is a big hindrance to taking the first crucial step in business. A person sees that the potential income is too small and so decides to forego the opportunity. He waits for the next big time opportunity. Problem is the big time opportunity that he is waiting for is something that is beyond his capability to handle. The person who has this mindset will not be able to take the first correct step.

bigtime mentality

5. Passion Syndrome

If passion is what we need to start working, we will wait for the right job or the right business that gives us a surge of passion. The problem is, it does not work that way. In any line of business, there are things we don’t love doing, yet we do it because it is our job. Passion comes when we work hard on something and we become good at it. That is the time we see money coming in. The rewards fuel our passion. It is pleasing to see a person who is good in what he is doing and loves doing it. Such a person must have worked hard until he became good. As a result, he became passionate in what he does.

passion syndrome

It is God’s will to prosper us that we may be a blessing to others. But we have to align our mind with His Word.


Romans 12:2 – “Do not conform to the pattern of this world, but be transformed by the renewing of your mind. Then you will be able to test and approve what God’s will is—his good, pleasing and perfect will.”
Proverbs 22:29 – “Do you see someone skilled in their work? They will serve before kings; they will not serve before officials of low rank.”


May we have eyes to see that He loves us and that He is for us and not against us.

The Marshmallow Experiment

A lesson on doing a project or business, or confronting a challenge, can be learned from Peter Skillman’s Marshmallow Experiment.

He gathered 4 groups of people. 1st group are business graduates, the 2nd group are lawyers, the 3rd group are CEO’s and lastly, a group of kindergartners.

He provided each of the teams, 20 pieces spaghetti sticks, 1 yard of tape, 1 yard of string, and a marshmallow. Using these, each team had to assemble a tower with the marshmallow on top within 20 minutes. The tallest tower wins.


The teams went to work. Each of the first 3 teams, the business grads, lawyers, and CEO’s, discussed strategy, brainstormed, planned, elected a leader before they launched to work. Overheard were words like strategic objective, center of gravity, tension, efficiency, etc. In contrast, the kindergartners launched to work at once, attempting new ways every time they fail which happened many times. While the first 3 teams sounded like board meetings, all that was heard from kinders were sounds like oops, try this, oh no, yes!

Guess who won? Here is the ranking. The business graduates landed at 4th. The lawyers, 3rd while the CEO’s got 2nd place. The kindergartners won 1st place.

How is this possible? All the teams except for the kindergartners are highly educated and knew more. Here is what happened.

The debates among the first 3 teams consumed time. A lot of things discussed were irrelevant. They wanted the best plan before making the first step. They executed with no failed step. However, they had no flexibility during execution, because everything was planned well and the leader called all the shots. They missed out on the best solution, that which can only be derived through trial and error and teamwork. The towers they came up with were much shorter than that of the kids.

The kindergartners failed many times but learned the best way of doing it in the process of trying and failing. They maximized the value of teamwork. As a result, they quickly discovered the best way that will work while doing it. They made the tallest tower, 3 inches taller than the tower made by the CEO’s.

While this experience may never happen if at all, in real life challenges, valuable lessons can be learned from this experiment.

1. Learn by doing. Some of us spend too much time studying and waiting for the perfect time before making the first step. Most of the time, we can never learn everything about step 1 to 10. We will know how step 2 should look like when we have made step 1. There is no complete data for the future. Sometimes, relevant learning comes only after we make the first step.

2. Create a safe environment where everyone can work as a team. In a group, there is a tendency for the majority to take a passive stance and just follow when they see that the leader or the loudest in the group knows what to do. As a result, the best idea do not come out. In the winning team, each child remained transparent and vulnerable and was never afraid to make mistakes because no one appeared to be the expert.

3. Work on several iterations. Keep on trying and improving as you progress.

4. Instead of going into “analysis paralysis”, trying to figure out everything perfectly before stepping out, we can start by harnessing our strength and collaborating with others in areas where are weak.

5. Move by faith. We forget that when we are walking with God, each step we make is a step of faith. We may fail many times but the Lord picks us up. Failure comes as an opportunity for learning.

These do not mean that we remove structures and organizational discipline. They are important. But we must be aware of the limitations they tend to impose on team members.

Proverbs 24:7   The godly may trip seven times, but they will get up again.

Exodus 4:1-3  Moses answered, “What if they do not believe me or listen to me and say, ‘The Lord did not appear to you’?” Then the Lord said to him, “What is that in your hand?” “A staff,” he replied.

Hebrews 11:6   And without faith it is impossible to please God because anyone who comes to him must believe that he exists and that he rewards those who earnestly seek him.

Make a step of faith and walk with God. Be amazed by how he opens the “Red Sea” for you.


When it comes to managing finances, a businessman’s greatest concern is the cash cycle.

A tight cash flow can be a real problem. Surprisingly, many business owners fail to anticipate and prevent a cash crunch. Here are some pointers to effectively manage your cash flow:

  1. Understand your cash cycle

cash cycle

Every business has a cash cycle. Look at this like blood flowing in your business. Since it is a cycle, what goes out must come back. It starts from the point when you release cash to the time you get it back. The shorter that period is, the better. In trading or retail, you release money to pay for goods or raw materials. They are processed, packed, stored in warehouses before they are distributed to your buyers. Or you may be selling services instead of goods, in which case, you are paying salaries to your direct personnel, who may be cleaners, photographers, editors or installers or you may be paying for subcontracted labor. The cash you release to pay for those must come back to you in a bigger amount to cover your overhead and profit.

  1. Watch your receivables


If you are giving your customers credit, say 30 days or more, that means your cash is tied up in receivable before they become cash. A delay in collection can affect your cash flow. If cash will be short because of this, make sure you don’t fall into borrowing at ridiculous high interest rates to cover your cash flow gaps.

  1. Monitor your inventory level

watch inventory1If you are dealing in goods, whether wholesale or retail, regularly monitor your inventory level. An increase in inventory means tied up cash. A decrease means inventory that has been converted into cash. A client of mine dealing with rapidly changing demands of his customers did not notice his overstocking on items that are rapidly becoming outmoded. Since new models were moving quickly, his focus veered away from the increasing inventory of old items. This resulted to tight cash flows. The problem eased only after he disposed of the old stock in a garage sale. Suppliers may be offering discounts if you buy in bulk. Before you decide to avail of their promos, evaluate the effect of higher than usual inventory on your cash.

  1. Gross Margin



gross marginThis is your profit expressed as a percentage of your sales. They vary from industry to industry. They are also affected by your efficiency. Your gross profit must cover your overhead and after that, produce an income. If your overhead is too big to be covered, you see red. If this happens, your margins may be too thin, or your sales are too low, or your overhead is too high. All 3 factors if managed well, will result to income.

  1. Overhead

Think like a salaried person and know your fixed monthly expense. All your recurring items, such as your salary and salaries paid to your employees, utilities, office rental, supplies, etc., fill up this item, which is an expense that is almost fixed and is not dependent on how much you sell. Your effective management of overhead, which means carefully evaluating decisions that result to additional fixed expenses (e.g. increasing rent, adding personnel, advertising, etc.) may spell the difference between income and loss. Wise managers do not allow significant increase in overhead unless they foresee a resulting increase of sales and income.

  1. Capital Expenditures


I have seen many miscalculation in this item that resulted in major disruption in the business. A businessman decided to put up a showroom for his products. This involved renting a property, then putting up a building. When the building was finished, money that was supposed to pay for raw materials was depleted. The owner resorted to borrowing to augment his working capital. But the interest cost is more than 3% per month. These series of decisions set into motion a serious disruption in the cash cycle which brought operation to a slowdown. With deliveries delayed, customers started cancelling orders and demanding reimbursement of deposits paid. More borrowings became the unavoidable solution which further aggravated the already bad financial condition. Careful evaluation of capital expenditures and how it is to be funded can prevent serious cash flow problems.

  1. Unbridled sales expansion


Expansion in sales does not always result to positive cash flow. Increase sales volume may mean more inventory and receivable which stretches your cash. Before you grab the huge order, try figuring out how you will fund the increase in your inventory and receivables.

Prudent management of the cash cycle results to more time being spent in studying how customers can be served better. That is where the major focus should be.

Proverbs 14:15 – The simple believes everything, but the prudent gives thought to his steps.


Bless the work of our hands, O’ Lord!


Mindset and Creativity

Ask a group of 5-year-old kids who among them can draw and everybody will raise their hands. As the same kids grow older, I’m pretty sure and I’m sure you will agree––fewer and fewer hands will be raised. The sad thing is, as they learn more and more, they become less and less creative.

Preschool kid raise arm up to answer teacher question on whiteboard in classroom,Kindergarten education concept

Imagine this for instance: out of 20 children, only 2 of them saw their drawings posted in the class bulletin board. Because of this, the rest were convinced that they are not good in drawing. Later in life, they will have only one answer, that they cannot draw.

We will understand this more clearly if we know what is happening inside our brain. In school, we were always taught that there’s only one answer to a problem or a question, and that those who get the right answers are the ones who get rewarded. These sets of questions and answers are then stored in our brain, and when asked a question, we draw from the library of answers we grew up knowing. We tend to think inside a box where we are safe. We begin to shun discovery which can be risky and unfamiliar.

classroom reward

Scientists have identified neurons or pathways inside the mass of grey matter called the brain. When confronted with the same problem or question, these neurons are activated to generate an answer. These neurons are very much like canals where water passes through, and water cannot pass any other way unless new canals are formed. Thoughts pass through these neurons and they follow established patterns like a programmed computer. For example, when our mind says, “been there, done that”, it ceases to function and resists looking for new solutions.

Jesus never repeated the same miracle. In the old testament, God never did the same thing. We tend to gravitate to old, tried and tested solutions. The familiar becomes the path of least resistance, the go-to answer we constantly and mindlessly reach for.

As time goes by, the world evolves, and so do our problems. They do not stay the same. Imagine for instance if we treat our teenage kids the same way we did when they were little children. We all know that won’t work, and we’d have deeply sheltered or troubled children!

Food for thought: while God does new things all the time, we think of Him as somebody just like us, who draws solutions from a library of answers. We miss out on the miracles because we expect him to do the same thing over and over again. We tend to look at God as religion. We put Him inside a box. Relationships tend to weaken, and not to mention become boring, when everything becomes boxed.  To know God is to discover.

Innovation is just as important as customers are to a business. Times change and with it, demands from these customers increase as more and more products flow into the market. Creativity is important to innovation. We have to take a critical look at solutions that worked before and analyze them, because it is likely that we cannot expect those same solutions to work tomorrow.

innovation and creativity

We have been told that if we do not work, we will not eat. If asked the question, “Why do we work?”, it is always for survival. That comes from our “library of answers”. We were told to study hard so that we will not go hungry. We forget that the reason why God placed us on earth is for us to manage his creation and rule over them, which sounds like way more than just surviving. To get out of that mentality, we have to put God at the center instead of money.

Creativity is important to God. He is the Creator. He made us in His image and likeness to fulfill His purpose for us, to be His managers here on earth. Adam and Eve fell because of their disobedience, but Jesus paid the price to bring us back to His image and likeness.

As innovators, we have to be like children. Unlike adults, children do not draw from a library of answers but instead, they discover. They look at the world with a lens wherein everything is new, the possibilities are endless. That may be the reason why Jesus said we have to be like children to enter the kingdom of God.

Creative people are willing to make mistakes. They take the path of discovery. Non-creatives are not willing to try, as fear grips them when they move out of the box. They would rather draw answers from their box of knowledge or copy than try discovering new things.

We are God’s stewards on earth and we can only fulfill what He asked if we stay connected to Him. When we abide in Him, discovery becomes a way of life. It becomes easier to discover than adhere to the usual, traditional answers. All things become possible with faith.

“If you can?” said Jesus. “Everything is possible for one who believes.” Mark 9:23

It’s All In The Mind

Mental capacity is not the issue, mindset is. With a wrong mindset, our mental capacity diminishes. For example, if we believe in luck, our mind will refuse to grow in knowledge, and life becomes merely a series of events with unpredictable outcomes. We lose control and we become victims.

I have met people who believe that their circumstances determine the kind of life they will have. On the other hand, I have also met people who had close to nothing when they started, but now manage huge companies.

One such person I cannot forget is someone I had met 3 years ago. At 11 years old, he became ill of measles. Gradually, his eyes began to dim and at 15 years old, he became totally blind. Now, at 32 years old, his parents have passed away. Without siblings to take care of him, he currently lives with a friend in a nearby province. What surprises me is that despite all of these, he has 3 businesses. First, he earns by climbing coconut trees and gathering coconuts. On the side, he sells coconut delicacies which his workers produce. His third means of income is by selling pigs—somebody lends him the piglets, he feeds them, and when they reach a certain size, he sells them. Recently, he brokered a property and made a sizeable figure. With the very little that he had, in the eyes of God, he might very well be included in heaven’s top 500 fortune companies.


I couldn’t help but ask him what his philosophy in life is. For a 32-year-old blind man, his answer was full of wisdom. He said that God gave him little but he does not complain, is thankful and is not a burden to anyone. He multiplies what was given to him and soon, he will have his own family. And then he said something that surprised me because he is blind, “God knows who produces value and who takes away value from other people”. I felt the anguish of a person who was denied medical help and became blind because of poverty. There are people who can see clearly, but are actually blind. Since they cannot see what they have, instead of adding value, they do the opposite.

In business, we are value creators. Just like this blind man, we create value from whatever we have, however little we have. We know that if we are faithful with what we already have, we will be given more. But we are just stewards here on earth; no one brings anything with him when he leaves this place.

His master replied, “Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!” Matthew 25:23

I pray that you will have the grace to see God’s faithfulness, and out of what you have, you will create value that serves others and will be given more.

That your work will bring glory to our creator, in Jesus name, amen.

More Than Just a Cup of Coffee


When asked what he does, my painter friend, Sherwin Tan, would always say, he brings peace with his art. The answer seems to be far from what he does because the fact is, he is a painter. But then for him, painting is more than just canvas and paint. He pours himself into his work. Out of the abundance of his heart, he paints.

How he defines his art makes a lot of difference to him and his customers. Imagine for instance if his answer will simply be, that he paints and sells them for money. He will not be distinguished from others who do the same thing to earn a living. He offers something that goes beyond what money can buy. He puts his heart into his business. People buy from him not only a canvas with paint, but something that enhances peace in their homes.

Indeed, people who buy his paintings say they feel a different kind of peace whenever they look at his painting. When Sherwin paints, he draws inspiration from the Prince of Peace, Jesus. Thus, even as he paints, he feels a different kind of peace.

Let’s say you own a coffee shop. If people ask you what you do, you might say, “I sell coffee.”, which makes you just like every other coffee shop owner. But, if let’s say you are the kind of person who enjoys helping people perk up their day, you might say you make people happy by perking up their day. It goes beyond a cup of coffee. You care about how a person starts their day and that makes a huge difference. Your definition also dictates how your staff prepares the coffee and treats your customers. They serve your customers with a smile, with energy, and attention because they do not just serve coffee, but they also make people happy. You make a difference in people’s lives because you don’t just put ground coffee beans into a cup of hot water, add other ingredients and get paid. Your love for people and your desire to make them happy goes with your service and product. Even the way your shop is designed is affected by the way you look at your business. Customers can feel that you are not just after their money.

David was an insignificant shepherd boy. Being the youngest, he was not even respected by his older brothers. When God chose him and he was anointed king, David’s view of himself changed. He slew the giant Goliath with a sling shot and made history. Soon, this king won a lot of battles. How God saw David affected how he viewed himself, which in turn determined his actions and his success.

We can learn a lesson from this. God did not just call us into the marketplace to make money. He called us to stand out. Just like David, we can do this by first acknowledging that it is more than making money. A change in perspective can shift the definition of our business to something beyond the ordinary. Customers look for more than the physical product or the service. They look for the intangibles that money cannot buy.

We all think of money whenever we do business. But where our focus is, is what matters. We want the money, the reward for our labor, but it gives us more joy when we put ourselves into what we are doing. What we are goes into the product or service that customers buy.

We can look at our business only as a means for us to get rich and forget what our customers need. We can also look at our business as a means to serve and keep on improving, which brings more customers. Chase money and it will fly away. Serve your customers and money will chase you.


“Cast but a glance at riches, and they are gone, for they will surely sprout wings and fly off to the sky like an eagle.”

-Proverbs 23:5


I pray that your business will be more than making money, giving glory to God who called you into the marketplace.





















Do Not Falter When You Grow Bigger

It is sad when businesses start failing when they get bigger.

When do failed businesses usually start their decline? That was the same question I had when I started consulting. Some statistics say that 80% of businesses do not make it beyond the 5th year. There might be lessons we can learn from that observation. Managing a big business is different from building a small enterprise. Sometimes, “big”-ness does not mean success. It could mean the start of a decline. Why, you ask?

In my decades of consulting, I have seen companies grow. Then they start having problems, which the owner is not ready to handle well.

Sales is important to any business and without it, there is no business. This explains why most businesses are started by marketing men. But as business grows, at some point, an important task that the owner must add to his list of to do’s is studying financial reports. It is just one of them, but is hugely important. Finance people do not run the company. But when operations grow big, the owner needs to listen to this pesky guy in the office who wants to bother him with reports. And why does he sound bothersome? They usually tell the truth.

Financial reports is to a business what an instrument panel is to an airplane. It tells you how long your fuel will last, the altitude, the plane’s trajectory, speed, etc. Without those signals, a business owner of a big company wouldn’t really know how to run his business.

Problems start when the owner who reached a level of success through his strength in selling ignores warning signs from financial data. This is like flying an airplane without looking at the instrument panel. We all know how dangerous that would be!

The company might have achieved its sales target and even surpassed it, but what if they are all collectibles? Collectibles cannot be used to pay salaries or buy raw materials. What if the inventory increases and is not moving fast enough? What if the company is beating competition and exceeding its targets but is having very low margins? Combine that low margin with high overhead which happens when sales grow very fast. You guessed it right. The low margin cannot cover the high overhead.

Wise business owners change their hats as the company reaches a certain level of growth. A savvy business owner knows when that time comes, and puts in place the information system he needs to manage well.

The following are the hindrances to being able to manage finances well in a growing company:

      1. Owner sees himself as a salesman

It is understandable when an entrepreneur loves performing in his area of competence. But when he is a business owner and no longer a salesman, his people expect him to lead the entire organization and not just one aspect of it.



      2. Gives little importance to financial reporting

Financial reports show the result of management decisions. Some owners who are marketers love meeting his sales people. But when his CFO or accountant knocks on his door to report what is happening to his company’s finances, he orders him to just put the report on paper so that he can read it when he has time. Chances are, he will have no time for it.

paper reports


     3. Poor listener

Some successful businessmen who achieved growth through excellent marketing eventually become poor listeners. They measure their success through the same metrics when the business was small. Since they are successful, they are not willing to listen to anything other than sales reports. While he should not to be expected to be good in all aspect, a good manager must at least be a good listener.



      4. Band aid solution for a deep management problem

When financial problems begin to appear, some owners look at the problem as an isolated one that will eventually solve itself. The owner does not see that certain decisions that he made are affecting cash flow. It could be a decision to sell more to the same customer who don’t pay on time. It could be a decision to buy and pay cash for a certain equipment which remain idle in the plant. It could be a decision to increase inventory to take advantage of huge discounts and cash tied in inventory is not moving. All these things may be happening without anybody evaluating and making quality decisions. Finance people in the company could see the interrelationships of certain decisions on cash. Cash is king in any business. When cash do not move the way it should, it could create entanglements in operations which hinder the flow of business. Even worse, sometimes there is nobody in the organization who is monitoring financial results for the consumption of the owner.

Expenses/Income. "Our only problem is working out how to switch these."


     5. Fighting fires become the norm

Perhaps the owner is used to acting when the problem starts to manifest itself. I call this fighting fires. Every payday, the owner does something extraordinary, like going to his favorite lender to fill the gap. After the fire is extinguished, the hero is glorified. Everybody can rest and then wait for the next explosion. Fighting fires become the norm. As a young boy, he might have been used to running to his favorite money machine when he runs out of cash. Lack of personal discipline easily creeps into one’s business.



      6. Financial reports do not make sense

Financial reports do not make sense when the owner does not know what to look for. Imagine a pilot who does not know how to read the instrument panel. Most of the time the problem is in the one reading the report. If he gives importance to financial reports owners must know what to look for and agree with his finance person what should be shown in the report. The report must be as simple as can be.

financial report


      7. Self Confidence

Having reached the top should not be a source of confidence. In Jim Collins’s book, “How the Mighty Fall”, he mentioned hubris or pride as the main culprit in a downfall. Here is one of the things he said in that book: “Whether you prevail or fail, endure or die, depends more on what you do to yourself than on what the world does to you.”



Now, how important is knowing and understanding financial data? Financial data are like blood analysis to a competent physician. Whenever something is amiss, the businessman should start looking at every nook and cranny of the business, trying to identify the root cause of the problem. I don’t go for doctors who tell me to take a pill but does not tell me to change certain habits that are causing the problem. I would rather go to the root of the problem and nip it at the bud.

With all the available software apps now, financial data can be available with a tap on the screen of our laptop or cellphone.

We are stewards and good stewards are good managers who are accountable.

“All who are prudent act with knowledge, but fools expose their folly.” -Proverbs 13:16


I pray that wisdom will guide you in your business and the Lord shall be your source of confidence.


HOW TO BE DEBT FREE Part 3: Free At Last

Part III


There must be a good reason why a person wants to get out of debt. Like we said, debt is a tool which in the hands of a good manager will produce good result. Why return the tool if it is doing what it is supposed to do, create additional value. To a good manager, his creditor is a friend who gives him the right tools to create value. To a creditor, the borrower is a friend who is a good manager who can add value to other people’s money, thereby paying the creditor interest.

When we talk of getting out of debt, we are talking about debt that has gone sour or about to. There are so many reasons for this and as we have discussed previously, management is a primary issue. The more that debt stays with the person, the more it eats up the income that the person should be enjoying. When the loan gets unpaid on due date, interest cost pile up, which becomes a problem that keeps on compounding itself. When this is happening, our human tendency is to think that this is a money problem and look at more money as the solution. Actually, money can be a temporary solution and one should not stop there. The person must retrace past moves and be honest to admit why and how the problem started.

Something happens when we start admitting our mistakes. God wants to be involved in our problems, but being a father, He wants us to learn from every mistake that we make. The journey towards a solution may be long and hard, but when we come out of trouble, we are changed persons. If we have God, our character will change, values will change, priorities will change. I believe that in our humility, God is able to work. He brings down the proud and exalts those who are humble and give them the grace to overcome. I have seen families get closer first to God and to each other, after a long drought that have aligned their values and character. They become so thankful for the lessons they have learned which they may not have learned if those trials did not come. God is so good, He does not want us to miss what is most valuable.

In journeying towards a solution, remember that there are always 2 parties to a debt transaction, lender and borrower. Imagine that at the beginning of the transaction, you had a chicken. The creditor agreed to provide the feeds until such time the chicken lays its eggs. Some eggs go to the creditor. Most of it go to you. When the chicken stops laying eggs, both of you should be happy. After months, something happens and it seems like the creditor is displeased with the way you are fulfilling your promises, not giving him his portion of eggs. As a result, he comes to you everyday, demanding that you give him the chicken because he no longer trusts you.

If you give him the chicken, you lose your means of livelihood. You have to convince him that your failure to give him his share of the eggs was just a glitch, something that can be cured. This means the borrower having an honest look at his situation and evaluating his options. Usually, it is like being in a boat which suddenly developed a hole and water is fast sipping in. You can delay sinking and drowning until you get to land only if you plug the hole if that is possible, or throw off some of your load to lighten the ship. This may mean, deciding to forego most of your luxuries, selling some of your assets, trimming your costs, and finding ways to be more efficient and increasing your income. This may mean asking for your creditor to lengthen the terms, lower the interest rate, so that you can still pay. You have to show, as in the example of the chicken, that the chicken will stay alive and continue to lay eggs if it stays with you. Most creditors want to stay as creditors. They want raising of chickens to stay with you. If you can convince him that you can still be trusted to take care of the fowl, he sticks it out with you. But understand that he will pay you more visits to make sure you are doing your duties. He will complain if he sees you on Facebook travelling, driving an Audi, enjoying the newest restaurants, or boasting about your new Armani suit, when he buys his stuff only from Uniqlo.

In extreme scenarios, you might want to look at the possibility of asking your creditor to settle for less eggs. When the creditor sees that will be the best option for him, regaining back his capital rather than losing it, he might agree, thus allowing you both to move forward.

As I have said before, interest rates of 3%per month and above is usually heavy. In this case debt should be avoided. The first thing to consider when borrowing is how good a manager you are, that you can manage other people’s money.

Let us remember that in all wealth creation activity, and even in our troubles, the Lord wants to get involved.

“But remember the Lord your God, for it is He who gives you the ability to create wealth, and so confirms His covenant as He swore to your forefathers as it is today.”

-Deuteronomy 8:18


I pray that you will grow in wisdom as you manage your resources, and that you will continually prosper as the Lord blesses you and that you will be a channel of His blessings.

HOW TO BE DEBT FREE Part 2: Wise and Unwise Debt

Part II: When borrowing is wise and when it is not

We have established what a loan is, and that it should be paid back with borrower and lender both winning in the transaction. Now, let us take a look at the different types of loans. Understanding these will help us avoid debt that might cause us problems.

I am categorizing the different type of loans according to whether or not they should be avoided. If you now have a loan that belongs to the category that must be avoided, please don’t despair. There is always hope.

I am saying that there are loans that should be avoided for the sake of those who haven’t taken a loan yet. The emphasis should be on improving management so the necessity of a loan to patch up cash flow deficiencies caused by poor management can be avoided. Many people use credit card debt to ease their cash flow and pay installment interest rate of 3.5%p.a. That is very high. A better way is to control expenses and pay the loan quickly so that interest expenses stop.

As we have said before, the issue is management and not debt. So, we can categorize debt into 2 classes, those that provide additional tools to enhance good management (qualified borrower) and those loans that hide our poor management (not qualified).

      1. Loan Obtained to Enhance Good Management

To give an example, several years ago we bought a house by taking a 10-year loan from a bank to partly pay for it. The rest of our payment came from sale of a small property and some savings. We prayed about this because it was our biggest investment then. We paid each monthly amortization and to do that, my wife and I had to make many sacrifices. After 7 years, somebody knocked on our door, offering to buy the property for 7 times my purchase value. We sold it, and used 70% of the proceeds to buy another house without taking a loan. So today, we are debt free on a house we own. Today, after 30 years, the value of my present house is 40 times the value of the first house I bought. If I did not take a loan, I could not have arrived at the same result. I will most probably be still living in an apartment. I used the loan for something that increased in value. My earnings paid for the loan.


How about cars? They don’t increase in value. But I need it to effectively perform in my business and earn income. Therefore, I can consider it as an earning asset and borrow for it for as long as my income can afford it.

The same thing can be applied to business. We should ask ourselves if the loan will be used to buy an appreciating or earning asset and whether or not earnings will match the payment or amortization required by the lender.


2. Loan Used to Cover the Result of Poor Management

Here is one case. The borrower does not know how he will repay the loan, and he is in such dire state that he needs more money to keep on going. So he borrows more to hide his deficiency. This is like a ticking time bomb.

Or the borrower is mismanaging his business but does not know it. Soon, cash flow becomes tight and still he has no clue about his poor management. To alleviate the situation, he borrows, which further aggravates the problem because now he has to pay interest which is an additional cost. Soon, he finds out that he is in a sinkhole. He didn’t bother to evaluate his management. Maybe there is pilferage. Maybe there is overstocking. Maybe there are collectibles that are not being collected and yet he keeps on selling to the same customer. Or maybe he mixed his business with his household finance and he did not realize his luxurious travel expenses have eaten up into his working capital.


Or the borrower is not actually in a bad situation but borrows too much without carefully evaluating how he is going to repay. In this case, the borrower might soon find out that he is in a bad situation because of the loan he took. This may be as simple as credit card debt or a loan used to buy asset whether for business or personal use. As I mentioned earlier, additional money from other people (OPM) must result to multiplication in value, without which, the borrower will not have the means to pay.

We can therefore conclude that debt is a tool. Like any other tool, the user must know how to use it. Placed in the hands of the good manager, he can create value that will benefit both borrower and lender. Placed in the hands of somebody who don’t know how to use it, debt can do harm.

Other things you have to consider when borrowing are the following. How long should the term of the loan be? This will depend on the type of asset and your capacity to pay.

For example, lenders don’t lend for more than 5 years for cars because of the perceived life of the asset. However, they can grant term of more than 10 years for loans intended for house purchase. Loans for short term use like business loans for raw materials or receivable financing are short term loans. Is the term of the loan matched with your capacity to pay?


Last Part: How to be free from debt