My name is Jonah. I’m in a financial mess. I am married and we have no kids. We’re both employed. I earn Sh92,400 net every month. However, the actual amount that is left is only Sh12,500 because of loans. I took loans impulsively and misused the money because I had no plan for it. I now use Sh79,900 monthly to service the loans. My loan repayments are as follows: Bank Sh41,000, Microfinance A, Sh27,000, Microfinance B, Sh11,900. My wife earns Sh18,000 net every month. She has been sitting on me and refusing to contribute to household bills because I misused the loans. She has threatened to move out multiple times. We live in a bedsitter of Sh6,000 rent in Kitengela, and I pay Sh1,000 for water and electricity, Sh1050 for DSTv, and the remainder of Sh4,450 goes to food and my transport. This is never enough and has been forcing me to take more loans from friends and family. I have a Vitz that I hardly use because I can’t afford to fuel it. It is mostly used by my wife and I often hitchhike for work. Please help me get out of this mess.
Alex Kibebe, the founder of Rubiani Wealth Management Ltd and an investment consultant and business development coach
Getting out of debt may require some difficult decisions that will affect your family. I would therefore advice you to discuss your plan with your wife so that she can be part of these decisions. If you get a buy-in from her, she may also help you with some of your house bills.
Your current income and your expenses are quite conservative. I would advise you to keep them this way to clear the debt faster. Next, write a list all your debts – including those owed to your friends and relatives. Indicate the debt amount (balances), the duration of repayment and the interest rate of the loans. You then need to list all your sellable assets. From what you have shared, your major asset is your car.
Sell your car and hopefully, the proceeds from the sale will settle one of your loans. Give priority to the loans that have a higher interest as these loans are costing you more. I would advise you to put the money you save from paying any of the loans in a Money Market Fund as this ensures that your funds are growing.
Keep paying for the other loans until you have raised enough money to settle the second loan. Keep doing this until you have paid off all your loans including those owed to your friends and relatives. Once you have settled all your loans, you can adjust your budget to improve your lifestyle. However, I recommend that you maintain the habit of saving by setting apart 20-30 percent of your net income to invest in the Money Market Fund account.
Avoid taking new loans and only do so to purchase assets that add real value to your family such as purchase of a home or business capital. You should also ensure that when you get loans, the repayment does not exceed 30 percent of your disposable income. However, if you find that you are struggling to stay out of debt, consider getting help from a debt counselor.
The second plan would be to convert your car into an evening, early mornings, and weekend taxi to generate extra income and shore up disposable funds. These funds can be divided between offsetting your most expensive loans. You’ve disappointed once and you’ll need a strong plan and verifiable commitment to get your wife to come around. This means showing positive results from your plan.
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