Sitting at her dining table, April stares at the pile of bills spread across the table with a downtrodden look. Being a single mother living in Nairobi, she is staring at unpaid utility bills, medical bills expenses, overdue car loan, mortgage, and her child’s school fees.
Just like April’s dilemma (although fictional), many Kenyans have been walloped by inflation that has skyrocketed the prices of commodities and utilities, coupled with increased loan interest rates. This has left many relying more and more on credit cards and loans to cover basic expenses that have become a burden. According to CBK (October 4, 2023), Kenyan borrowers have now defaulted on more than Sh 596 billion in loans as rising interest rates wreak havoc, setting many households and businesses on the road to auction
When debt hangs over you and casts a shadow over your financial future, it might feel like a monster. But this this does not have to be the case, do not fear the dragon! With the right tools and strategies, taking control of your debt in 2024 can be as easy as A.B.C. Before embarking on a debt repayment plan, it is important to note that not all debt is bad and loans some help you achieve your goals e.g. mortgage. Too much, however, or the wrong kind, such as high-interest credit card debt, can hamper your ability to pursue other financial goals.
If you are just like April, you can tame the financial dragon by first making a list of all your outstanding debts and interest rates of each, to determine which ones are causing you the most financial pain. With this done, it’s worth taking an honest look at what you’re spending each month. Are there expenses you can cut back on or eliminate? Part of reducing your debt is limiting the additional debt you take on.
If you have multiple loans, can you consolidate them into one loan with a lower interest rate? Do you have access to a low-interest personal or sacco loan that you could take out to pay off high-interest credit card balances? This helps reduce the interest rates incurred from multiple loans. Once you’ve consolidated, determine how much you have to pay each month by noting the minimum payments and including them in your monthly budget.
With a monthly baseline set of how much you will repay each month and repayment period. It is key to also put into consideration the strategies that will enable you to live a debt-free life, with the key consideration being living within your means and budgeting for all your expenses. To further this, consider having a financial advisor to walk with you through this journey.
However long and arduous the journey may be, resilience always prevails. Through discipline, sacrifice, and a commitment to financial responsibility, you can slowly but steadily climb out of any debt pit wiser and more cautious about your financial decisions.
Remember, resilience always wins no matter how difficult or drawn out the journey maybe to financial freedom. You can gradually but surely emerge from any debt abyss with self-control, sacrifice, and a dedication to fiscal management.