15/06/2022
Note For Civil Servants in Debt
How Civil Servants Can Get out of Debt
Like we said one time, banks, Saccos and financial institutions are capitalistic firms that have a way of ensuring you work for them. And while they offer credit facilities that we all need, sometimes, their predatory lending ways, hard selling and lenient selling ways put many in debt.
Before we proceed, there's a clear difference between servicing a loan comfortably and being in debt. For instance, if Mary has a loan of 2million and she invested in a business which gives her good returns such that the 200k she pays is pocket change, then Mary is not in debt. She's simply serving a loan. On the other hand, if Jane has a loan of 2 million which was invested in a business that doesn't bring returns and she is struggling to pay 30k installment, then Jane is in debt.
Another way to look at it, if more than half of your income pays debts and your net worth(Assets less liabilities) is less than half of what you earn for a period of let's say five years, then you are also in debt. Of course, many people refuse to admit that they are in debt or they made bad financial calculations. They take comfort in things like, there's good debt and mine is one of them. But let's leave them alone for now.
So, what are practical ways to get out of debt.
1. Stop Further Borrowing
Now that you are in debt, chances are, you are always short of cash. For civil servants, banks have you on speed dial. They will always be calling you for top ups and small small expensive products. If you listen to their marketing and how they dangle goodies your way, you will remain in that rat hole. Just stop borrowing.
2.Freeze Big Investments that Require Huge Capital
No one is walking around with a cane hitting those who do not have huge investments. Sometimes, civil servants put themselves under lots of pressure. My friend ana rentals, pia ana matatu, waah! he's into farming. Without looking into your finances, you stress yourself out to invest and be like them. For what? For more borrowing and lots and lots of debts.
3.Purpose to Pay off Debts
Long term loans with flexible repayment schedules offered to civil servants are not candy. They have a huge impact on your overall net-worth and mental health. Remember the number of teachers who have committed su***de due to debts? Yah it's that bad. So, make an actual plan on how to repay that debt.
4.Improve your financial Literacy
Sometimes, I want to cry and roll on the floor when I listen to how ignorant guys are on finances. Simple issues like interest, ways of investing and how to save or cut costs elude many. For instance, if you asked randomly, what is the best investment, 8 out of ten guys Will tell you the same thing. An indicator that they don't read, interact with business people or those who have made wealth. So, make things better for yourself and read financial books. Rich dad poor dad, and cash flow Quadrant by Kiyosaki are good places to start. Have an understanding of money that is not pedestrian or what loan agents tell you.
5. Have a low risk, low income stream
One of the ways to avoid further borrowing and sinking deep into debt is to have a small income stream. Many times, guys are told to dream big and do great things. But if your financial muscles don't allow, why torture yourself? Have a small investment that will give you something small but sustainable over time. When you avoid borrowing over time, you will be relieved of debt as time goes by. Your small income stream will keep you afloat.
