The 6 Truths about Being an OFW and the OFW Life

“Sigurado ako marami ka ng pera.” “Wow, dollars, pautang naman.” “Ang ginhawa na siguro ng buhay ng pamilya mo, noh?” 

How many times do you hear these from friends and relatives?

For most Filipinos, being an OFW is a promise of good life. You get to earn more than what you can earn here and you are now able to provide a better future for your family. On the other hand, not everyone is aware of the hard work and sacrifices you need to make to be able to give your family a comfortable life. In fact, below are some of the truths behind the OFW life:

1) No, OFWs are not rich. 

There will always be success stories and former OFWs who made it big either in the Philippines or abroad. Believe it or not, most OFWs are still not living the good life despite earning more and in dollars. Some even have an existing home or auto loan with banks that they are unable to pay.

Blame it on the lack of financial knowledge, poor money management, and never-ending family issues that keep majority of OFWs from becoming millionaires.

2) Setting aside money for savings is never easy. 

Did you know that only 35.8 percent of OFWs have savings? The number is increasing over the years, but it only shows that not everyone are setting aside enough money for the rainy days.

With the bills that need to be paid, a balikbayan box waiting to be filled, and everyday expenses abroad, there is little left for savings. This could be the reason why OFWs continuously work overseas to be able to finance the family’s everyday living.

3) Income is not as big as you imagined. 

You might think that since OFWs earn in dollars, it means they earn more than what you earn. That is true. Unfortunately, they get to spend in dollars too. The cost of living varies per country, but one thing is for sure: it is more expensive to live in other countries than to live in the Philippines.

Yes, OFWs earn bigger income, but the cost of living is higher, which explains why they take more than one job to make ends meet.

4) It takes time to fill up a balikbayan box. 

Contrary to popular belief, OFWs don’t spend an entire day shopping to send a box full of goodies back home (they would rather work since a no work day equates to money lost). Believe it or not, it will take time for them to complete their family’s bilin, to the point of scrimping or foregoing basic necessities for their family’s sake.

5) Multiple debts is the new normal. 

Many OFWs are swimming in a pool of debt, even to the point of borrowing money to pay for placement and documentation fees. To pay-off existing loans. some even borrow money, thereby adding another loan in the list. This is normal for most OFWs.

6) Life overseas is not as easy as it seems. 

Filipinos working overseas are not living the carefree life. Most of them have more than one job to make end meets and be able to send a bigger amount in their family back home. Many are letting go of their basic needs just to cover the expenses of their family. Even if you see them posting travel pictures on Facebook, most likely they availed of budget travel package or saved up for their much-deserved vacation for months.

In other words, being an OFW is not as easy as you think it looks. It entails a lo of hard work and sacrifice, which we all need to acknowledge.

Get to Know the 4 Different Ways on How to Protect Your Hard-Earned Money

OFW MoneyHow many years are you working abroad? In that, say two or three years, how much were you able to save? If you don’t have enough cash to last you for at least three to six months, then perhaps you are doing something wrong along the way, at least in the financial aspect.

Don’t worry. It’s not too late for you. You can still protect your hard-earned money (and have something for the rainy days) with the help of these tips:

1) Be wise with your investments. 

Admit it. You are saving up for your dream home or dream car for the family. Apart from setting aside a portion of your money for that, you also considered getting a loan to cover a big chunk of the purchase price. The problem with this is that being an OFW is not forever and there is a possibility that you might not be able to pay the amortization regularly.

This is where investments come in. Consider opening a time deposit account or try the stock market.  The more diverse your portfolio is, the better for you to grow your money.

2) Protect yourself against uncertainties. 

The future is and will always be uncertain. You will never know what could happen to you, which is why you need to prepare yourself for the worst. By worst, this could mean loss of employment, sudden sickness in the family that could deplete your savings, or even death.

This is why it is important to be prepared.

Start by creating your own emergency fund, which should be at least three to six months-worth of your current income. Getting an insurance can also be another option to prepare you for uncertainties (know more about OFW Compulsory Insurance here). Setting up a retirement fund can also help you start in case an unexpected event happens.

3) Always be wise with your spending. 

Working overseas means you have access to things you don’t normally find in the Philippines. Since you are earning more (and in dollars), you might be tempted to buy anything you could find and send it back home.

If you are serious about protecting your hard-earned money, then you need to be wise with your spending. Here’s what you can do:

  • Always set aside a portion of your money according to your expenses.
  • Avoid sending the biggest chunk of your money for remittance.
  • Consider packed lunch instead of buying food from restaurants.
  • Don’t focus on material things. Your family doesn’t need new shoes every month.
  • Share a room with fellow Filipinos to save on rent (in case housing is not part of your benefits).

In other words, be disciplined with your money and spend it wisely.

4) Avoid the “I deserve this” mentality. 

You sacrificed a lot for your family, to the point of leaving them behind and work overseas. You forego your own happiness just to give them a better future. So if you see that watch you’ve been eyeing for years, it’s okay to buy them since you deserve to reward yourself for all the sacrifices you made.

Here’s the thing: sometimes, the “I deserve this” mentality could go out of control. You might end up spending too much on certain things since you deserve it for all the hard work you did. If this continues, you might find yourself going back home with little to no money on your pocket – and you surely don’t want that to happen.

The bottom line is this: working overseas is never going to be easy. Protect your money by investing on you and your family’s future and not on what will make everyone in the family happy – for now.

Common Business Questions Asked by OFWs

Working overseas is not forever. There will come a time when your contract will expire, or you’ll get sick and required to go home, or the country where you’re working will experience crisis, prompting you and the thousands of Filipinos to go home. Before that happens, you want to make sure that you are prepared – and by prepared, bear in mind that savings is not enough.

What’s your plan B? Put up your own business.

Here’s the thing: starting your own business can be tricky. Check out the most common business questions asked by OFWs and use this as a guide when you decide to start your own business too:

1) What is the best business for OFWs? 

It depends. There is no right or wrong idea when it comes to business. You can start with food carts, or sell your own tried-and-tested recipes, be an Uber or Grab driver, build your own poultry farm, or even star with a sari-sari store.

To help you determine the best business for you, it is imperative that you find out what you are most passionate about. The more you like what you’re doing, the higher the chances of sticking to your business, which equates to growth as well.

You may check this post for some business ideas you can do for additional income.

2) Can I avail of a loan even if I’m abroad? 

Yes and no.

If you are working abroad, you may still apply for a loan through a representative. This chosen representative must have a Special Power of Attorney (SPA) authorizing him/her to transact and process the loan on your behalf. This SPA must be executed and certified in the Philippine Embassy or Consulate where you are located to make it binding.

On the other hand, some lenders require physical appearance to allow you to avail of a loan. They will require you to sign certain documents as the principal lender. Still, it is best to raise this concern directly to your chosen lender to be sure.

3) What if we don’t have an asset we can use as a collateral, what can we do? 

Many lenders, especially banks, require any form of asset to guarantee the loan. It could be your land, house, car, or if allowed, the fruits of your existing business. By offering one of your assets as a collateral, it would give lenders a peace of mind, knowing that they can go after something in case you are unable to pay.

What if you don’t have any asset to offer? You can still avail of a loan by doing any of the two:

  • Apply with a co-maker. A co-maker is someone who can help you pay off your loan in case of default, even if he does neither receive nor benefit from the loan. Check this link to know more about the role of a co-maker.
  • Go for a non-collateral loan. This type of loan is not backed up by any form of security. Nonetheless, you might pay higher interest rate every month. Read this post  to learn more about this type of loan.

4) How much money can I borrow? 

This depends on your capacity to pay and the collateral you will offer. The higher your income and the higher the value of the assessed property, the higher the amount you can borrow.

Here’s the thing: many OFWs ask for more. For instance, if you are earning P50,000 every month and the assessed value of the property you are offering for collateral is only P300,000, then don’t expect you can get a P1 million loan. Be realistic with the loanable value, otherwise, your application can be rejected.

5) What are the requirements I need to submit? 

This one will depend on the lender. Each lender has its own set of requirements, which you need to comply with in order to proceed with your loan application. This includes:

  • Duly accomplished application form provided by the lender
  • At least one government-issued ID
  • Latest Employment Contract, Certificate of Employment, or POEA Contract for land-based workers or Seaman’s Book for seafarers, whichever is applicable
  • At least three months-worth of payslip or any other proof of income
  • Marriage contract, if married

Make sure to ask your chosen lender about the requirements needed for your loan application. Submit them completely to speed up the processing of your loan application.

6) Can I use the Business Loan for other purpose? 

Ideally, no. The purpose of business loan is to help you with working capital, in case you are just starting out, or to finance business expansion or to provide additional working capital for those with existing business.

There are specific loan products available according to your needs. Take advantage of those products since lenders treat them differently.

7) I have an existing business. Can I still apply for a business loan? 

Yes. In fact, business loans recognize the possibility of expansion or the need for additional working capital. Even if you have an existing business, you may still apply for a business loan as long as you meet the requirements.

Got more questions? Let us know in the comments section below.

6 Loan Repayment Tips for OFWs

Credit card. Personal loan. Salary loan. Housing loan. Car loan. 5-6. Whatever you want to call it, one way or another, you owe someone some money and you need to pay them ASAP. Since you are earning in dollars, it will be easier for you to pay off your family’s loans – or not.

If you happen to be swimming in debt or prevent yourself from taking a dip in the pool of loans and monthly amortizations, this one is for you. Check out these tips on how to repay your loan without being broke:

1) Start with a payment plan. 

Before anything else, you need to plan on how you will repay your debts. To do this, write down the lenders and the corresponding amount and interest rate you owe them. List the due dates as well to help you keep track of what loan needs to be prioritized.

Through listing, you will be able to determine what loan needs your attention and immediate payment. It could be the loan with the earliest deadline or the one with the higher interest rate. If you have the more than one loan under the same lender, consider consolidating them if possible to save on interest charges. You may also start paying the loan with the smallest amount since it will be easier to pay off it off, plus it’s one loan off your list.

2) Identify unnecessary expenses. 

Do you really need to buy a new pair of shoes for your son or send a balikbayan box full of goodies for your family back home even if you just sent one two months ago? Think about the money you can use to pay off your loan instead of spending it on things that won’t last.

To repay your loan, it is compulsory that you remove unnecessary expenses. The money you are able to save can be used to minimize your loan and save yourself from a massive headache. It’s a small sacrifice that is worth it.

3) Don’t think about savings – yet.

How can you save if you have debts to pay?

At this point, you need to prioritize loan repayment and getting out of debt first. You won’t be able to grow your money and maximize your earnings if there are lenders going after you every month. Use the money for savings to reduce your loan and once you are able to pay off most of them, that’s the time you can start with your savings.

4) Borrowing money to pay off your borrowed money is a big NO-NO. 

Admit it. You are tempted to go to loan sharks just to pay off your loans (and eventually avoid a stain on your credit score). Unfortunately, this won’t do you any good.

Regardless if it’s a loan shark, friends who agreed to lend you money, or another legitimate lender, borrowing money to pay your debts is a big no-no. It will only add another loan on your list and you’re not doing yourself any favors as well.

5) Get a sideline.

In a previous post, we shared about the different business ideas you can try even while working abroad. Why not try it and who knows, it could be a success.

It doesn’t matter how small the amount you will get from your sideline. The good news is you can use this additional income to help you pay your loans without borrowing money from other people. You’ll never know, but this could be a good start for something bigger too.

6) If you can pay bigger, then pay bigger. 

Lenders will give you a payment schedule showing the amount of payment you should make every month. Don’t just settle with the amount set forth on the plan. If possible, pay more. You will not only be able to reduce the interest rate charged on your loan but also it could make loan repayment faster.

At the end of the day, what matters most is you acknowledge your debts and you do something to repay them as soon as you can. Repaying your debt won’t happen overnight, but if you are consistent with your payment, you won’t notice that you are now down to the last centavo.