ON DEBT:-

 Debt Management

 Debt is any money that you owe to anyone, and repayment is at a cost in the name of interest

Critical Reasons for Debt

1. To bridge the budget deficit for critical expenditures 

2. To take care of unforseen emergency expenditures like sickness.

3. To allow you to complete an investment for which an earning shall be obtained to repay that debt.

4. To complete business process that was stuck to initiate an Income from the same.

5. To improve expand and enable the business operations for an expanded income.

 Non Critical Reasons for Debt

6. Taking Debt to pay your recurrent expenses like rent , water bills, DSTv, Internet etc

7. Borrowing for food shopping and the related consumables

8. Taking Debt for a holiday program 

9. Borrowing for dowry payments and weddings

10. Borrowing on behalf of another person,  _Nichukulie pesa mahali unawezapata nitarudisha_ 

11. Borrowing because you are broke. 

You may find yourself stuck in Debt trap due to non sensitive Borrowing. Be careful to analyse the situation before taking any Borrowing. 

 Debt Trap 

This is a situation where one has borrowed alot of money, and repayment has become a problem to an extent that he  only have to keep borrowing or he feels he cannot do anything about the debts.

 Types of Borrowings that may Lead to Debt trap

1. Salary advances

2. Credit cards

3. Mobile loans

4. Shylock loans

5.Top up loans 

6. Social class loans(socialoans)

7. Crisis loans 

8. Lifestyle stabilisation loans

9. Non business asset financing loans

10. Sickness Borrowing

You   can analyse the reasons as to why you  borrowed to check what drove you to Debt trap. Debt trap causes anxiety and mental health issues. Stay safe. 

 10 Signs of Debt Trap

1. Delayed payments of bills for more than 1 month. E.g, rents, fees, etc

2. Multiple defaults to your current loans or debts. You have gone probably twice. You owe your lender arrears more than two instalments.

3. Your loan repayment amount is more equal or more than your disposable income. Y<D. 

4. When your debts outweigh your assets, meaning if today you are liquidated, what you have cannot completely repay your debts.

5. If you are perpetually in deficits anytime you are doing your budgets and you must finance the difference using a loan..

6. If you have to keep taking debts in order to survive.Especially small and short-term debts

7. If you are being denied debts from places, you used to take debts.

8. If you are adversely listed by the Credit Bureau companies.

9. When you begin to pay interest only as opposed to the principal.

10. When you  begin dodging calls from lenders and you also from new numbers.

 More Signs of Debt trap

1. If you borrow to pay another loan

2. If you borrow to offset a loan in order to borrow again

3. If you dodge new numbers fearing they might be your lenders.

4. When you have reached all your borrowing limits.

5. If you start selling functional house items in order to repay your debts.

6. If you cannot undertake very minor repairs either in your house, your car, your phone or your clothes.

7. If you cannot replace your under garments, you even put on torn underwares with hope that nobody will notice

8. When you have drained all your savings to pay the debts.

9. When your salary nolonger makes a difference in your financial journey.

10. When you feel like giving up on the solutions towards your debts.

 Debt Addiction

People become addicted to debt after some continued borrowing to a point where a person borrows even even when he doesn't need the money. You become addicted to debt that when you do not have debt, you feel like you are missing something.

Most people become addicted to debt because they are often made to believe that its the only available source of money to fund a lifestyle and to consume. 

What brings debt addiction are certain types of loans that when a person gets used to will drive you to addiction. Easy loans, mobile loans, shylock loans, and salary advances are some of the loans that can drive to addiction to debts.

As I normally say, debt is costly, and when you take it for consumption, you will have to feel the heat during the repayment. It appears to solve a problem in the short run, but ideally, it runs you into a costly affair of repayments. 

 Debt Addiction stages

_Stage 1. Introduction_

At this stage, you start to experience a delay in refunding your debts. You may think it's just normal to miss a repayment for your loans. People may not know at this stage that they are getting into addiction.

_

Stage 2. Storm begins_

At this moment, you are already starting to feel the storm, and you have missed a repayment for two or more cycles. You try to borrow to again from elsewhere to settle the matter.

 _Stage 3. Addiction  sets in_

At this moment, your borrowing increases, and you begin to fight the storm. It appears that your salary is spent way before you get it. All your monies do not make an impact as two or more loans fall due. The lenders are on your neck. It begins to become messy. 

_Stage 4. Failed Debt Systems_

This is the worst stage since all your borrowing systems have collapsed. Nobody wants to lend you. You are having mental health issues, and you can never live a normal life. It becomes very difficult to run your life. You have been adversely listed by the CRB, and the lenders are looking for you everywhere. This is where people do not have an idea of what to do, so they change phone numbers, and then they change residence.

The Journey Out of Debt

Debts weigh people down, and many are suffering as they wonder how they can get out of the debt situation.

Let us walk out of debt slavery. Let's walk out of Tala, Fuliza, mshwari, mobiloan, and any other online debts.

1. First, stop taking further debts and begin to strategize the way out. 

2. Write all your debts in order of amount from the highest to the lowest.

3. Budget for the debts to ensure that you initiate the heart of payment.

4.Shake your budget and exclude unnecessary items and expensive foods. 

5.Check some of your monthly subscriptions and evaluate whether they are necessary. 

6.Begin the journey of repayment. However, small it is, it will motivate you.

You could be in Debt today due to the following.

1.Failed business idea

2.Sickness

3.Improper planning

4.Financial indiscipline

5.Dead capital, Debt taken to buy a piece of plot you are not using.

6.Uncontrolled borrowing

7.Failure to pay and planning to do the same.

8. Taking Debt to be income

9. Pannkng your expenditure with Fuliza

10. Asset Finance that turns to be a liability I.e borrowing to buy a second phone to put your airtel line.

 How can we get out of debt?

As  I Earlier  said stop borrowing and start your journey towards repayment.

1. Debt consolidation

Combine all your debts and take one large borrowing to pay for all the debts then remain with one lender 

2. Avalanche method

Start the debt repayment with those debts attracting very high interest rates as move to cheaper ones

3. Renegotiate with your lenders for longer period and lower installment rates

4. Debt Buy Offs

You can approach saccos and ask them to buy off all your debts and then begin to pay them slowly by slowly

5. Sell the asset that had put you into debt if that asset is not involved into active productivity of cash flows

6. Reduce your expenditure and move to atleast cheaper rental, cheaper school for the kids, cheaper dstv rates and cheaper lifestyle. It will not ruin you it's only for a period of time.

7. Gradual Ceding

If you keep taking Fuliza or mshwari of 10k monthly 

start by reducing the loans by 2k on a monthly basis, that is, continue taking but take a smaller portion on a reducing rate.

8. Try increasing your income through1 side hustles it may give you reprief.

These are tried and tested methods for getting out of debt crisis. 

I also propose the following as part of the solution to this seemingly vicious cycle of debts (poverty):-

List all your debts and group them into two in terms of the amount and interest charged. 

 Now, mark these as part of the investments you would wish to finance using your disposable income.

Start paying these debts beginning with those with small figure and high interest.

At the same time; stop driving to work, stop going for evening coffee, stop drinking(if you do), stop impressing women(if you do; a chain of these city girls can terrorise Your  bank accounts tie you to fuliza, stawi,), stop frequenting eateries, stop wearing expensive designers and trademarks, Stop some subscriptions e.g DSTV, Netflix e.t.c

Now, do the following;

   1. Never spend your salary without a well-drafted budget

  2. Shop using a shopping list. Check where prices are affordable and buy your groceries there.

 3. Talk to your partner/wife about your debt trap and your mission to get out of it. *Explain the methodologies plainly and easily. Let her/him understand and if she/he cannot understand it force her/him, furthermore it is for your benefit as a couple

4. Relocate to an affordable estate. Lower down/reduce electricity and water bills.

5.Get some side hassles that are in alignment with your employer's policies and the country's laws.

6.Spent something on good deeds.Tithe or give zaka. You can't subtract God/Allah from your finances out of greed and expect money to behave decently in your wallet.