To snowball or to stack? Tips to deal with your debt in 2025

Did you take out a loan last year, just before the Christmas season?

According to EJ Gomez’s report in “24 Oras Weekend” on Sunday, the number of Filipinos who took out loans increased in October as the holidays approached.

According to Bangko Sentral ng Pilipinas (BSP) data, 23.6% of Filipinos had taken out consumer loans as of October 2024, compared to 23.4% in September 2024. This includes credit card, motorcycle loans and salary-based general purpose consumption loans.

The BSP suggests three strategies to help you with your loans. 

First is debt stacking, or first paying off the debt with the highest interest while maintaining minimum payments on the others. When one debt is eliminated, you can them go on to focus on the one with the next highest interest.

The second option is the debt snowball, where you pay off debts from smallest to largest, with your momentum snowballing as you go from a small victory to a larger one each time.

The third is to seek loan restructuring, where you ask the bank or lender to agree to a more flexible and affordable payment method.

Raket time

The central bank also suggested getting a side job for additional income that will help pay off debts.

Meanwhile, a financial expert said that if your income increases, it doesn't mean you should be more carefree with spending.

“Hindi assurance ‘yon na kung tumaas na ‘yung kita, tumaas na ‘yung sahod, eh kung mataas din ang lifestyle, hindi rin maiiwasan ‘yung paghiram o pag-utang,” economist Michael Ricafort said.

(It's not an assurance. If your earnings or salary grows, but your lifestyle spending is also high, you will not be able to avoid borrowing money.)

Ricafort suggested adjusting your lifestyle according to financial capacity, disciplining oneself and learning to stick to your budget.

“Ang option doon, i-prepare o pag-ipunan ‘yung gastusin. Halimbawa, kung travel ‘yan, siyempre leisure ‘yun eh. So optional din ‘yon, so pwede siyang i do away with muna kapag hindi pa kaya. Kailangan stick muna doon sa necessity, ‘yung mga pinakakailangan,” he added. 

(The option is to prepare for or save up for your spending. For instance, with travel, that's a leisure expense. So it's optional and maybe you can do away with it in the meantime if you still can't afford it. Maybe for the moment you need to stick with the necessities, what you really need.) — Jade Yap/BM, GMA Integrated News