Here is how you found yourself bobbing about on a handmade canoe in the choppy waters of debt. You are alone on this canoe. Marooned. Frightened. Without bearing. You are so far out into sea that you can’t spot the shoreline anymore.
Maybe you had a real emergency. Think medical emergency, family emergency, school fees, car trouble… But you had gradually been eating into your emergency kitty, this large cake you’ve been layering over time. You ate into it for non-emergencies. What you have left of this cake is crumbs that fell off the table, they couldn’t address the real emergency. Life twisted your arm into debt.
Or you took a loan to spend the money on something you couldn’t afford. Say, a trip with your girls to Bali. Ride on that swing that everyone who goes to Bali does and posts it on Instagram. (Can we please not see another video of another Kenyan on that swing in 2020? I’m tired of it already.)
Or, you borrowed the money to go into business. The business was pulling a steady income monthly, it wasn’t too shabby. You spent so much of this income that there was little left to settle with the good folk who had lent you the money to get your idea off the ground.
Then, as these things are wont to go, you were probably axed from your job. Maybe your business tanked. Or you took ill and couldn’t work off the loan. Maybe you already have a regular income but it was already strained from your obligations. Either way, you somehow found yourself stranded on that handmade canoe.
Your debtors came knocking at your door. You turned them away, promising to get your house in order and settle with them as soon as you can. They returned the next month. And the next. And next. Your promises became as credible as a politician’s. You soon ignored their reminders and buried your head in the sand.
This denial birthed more negative emotions – fear, frustration, self-pity, withdrawal, embarrassment and shame. You are stressed out of your eyeballs.
Everyone has a different tolerance to debt. While someone may be losing sleep over a Sh30,000 no-guarantee loan they borrowed from mobile-lending app, others may be more concerned about a Sh500,000 from their Sacco. For others, anxiety creeps in when they cross the Sh5 million mark of a bank loan whose collateral is their home.
Question is how does one get herself out of such a hole without burrowing deeper? The first thing is to get the emotion out of the debt. Emotion clouds sober judgment and practical solutions – you can’t see the road ahead when your eyes are blurred with emotion. So get your head out of the sand and formulate a plan of action.
List down all what you owe and ask yourself, ‘Where am I getting the extra money to settle these debts?’
Speak to your lenders to renegotiate the debt terms. I’ve come to learn that these terms are never cast in stone – they can extend the repayment period and lower what you owe per month. You could also negotiate for a moratorium for a few months. Don’t borrow Peter to pay Paul – that would be a foolish move.
Then you start small, with what you already have in your hands. Revisit your budget. Slash your expenditure for the negotiable expenses. Cut down on the drinking and travel, wardrobe shopping, makeup, eating out, impulse buying…. Automate the debt repayments so that as soon as your income checks in, these budget savings go straight to your debtors.
Also apply for jobs that pay better. A bigger salary gives you more breathing room. Be smart to how you breathe in this new air.
The other option is to partner with someone running a profitable venture. Offer to exchange your time and your professional skills (not your money, because you don’t have any), for some supplemental income.
Any money you make here should go directly into settling your debt. It doesn’t matter how little it is. That Sh500 may seem immaterial but it’ll go a long way in easing the burden off your collapsing shoulders.
A final resort would be liquidating your assets to settle the debt. Only consider this if you have no more straws to draw. Someone wise once told me that your life will become a liability if you sell your assets.
Bett Kinyatti is a certified accountant with ACCA and a former financial auditor.
