That money is powerful, is not in contest. Sometimes I tend to imagine how money feels with all the power and attention accorded to it. Imagine how money feels when people fight and kill one another on its account. Imagine the smile of money with the knowledge that almost all things under the sun can be valued in its terms. When people sink into depression that is attributable to lack of money, I’m often left imagining how money feels. The way people guard their wallets more than their children, the way people take their sweet time arranging money in their wallets and counting and recounting it at the slightest provocation and the way people protect the notes from tearing and creasing…all these leave me wondering what goes on in the mind of money. Indeed, money is powerful!
The need for money too is powerful; so powerful that when it strikes, many people disregard all prudent considerations on the path of getting money. I have mentioned variously that money can either be earned, borrowed, begged or stolen. While sticking to my borrowing lane, I have mentioned before that borrowing was ideally designed to help ease and catalyze the earning process. People only blundered the day they began viewing it as an alternative to earning. When the powerful need for money strikes, many of those who choose to borrow disregard many factors, among them the impact of borrowing.
Ideally, good debt is meant to leave you better off that it found you; every debt has a way it affects your current wellbeing, it may improve it or deteriorate it depending on how wise you went about borrowing. In Focus Talk 11 and 12, I emphasized on the need to consider your reasons for borrowing. However, after rationalizing the reason for borrowing, many people fail to consider the impact of the proposed debt. You need to visualize where the planned debt will leave you financially; where it stands to leave you worse than you are now, it may as well not be that necessary. On this note, it is necessary to plan for debt before incurring it as it helps to avoid any undesired impact of the debt on your current wellbeing.
Consider a guy with an income of Ksh.50,000.00 which he often spends coin to coin every month. Assume this guy has decided to take a loan for whatever reason, to be repaid at say Ksh.10,000.00 per month. It is prudent (which rarely happens) to interrogate what the proposed repayment amount of Ksh.10,000.00 has been doing in his monthly budget. Most people get wild when borrowing; their eyes get fixed on the loan amount and anything else fails to make sense to them.
When our guy decides to borrow without planning, he meets with reality the moment monthly deductions are done from his monthly pay. He now earns Ksh.40,000.00 with a monthly budget of Ksh.50,000.00. That is the moment he realizes that an important need on his usual budget has a shortage of Ksh.10,000.00. This deficit is likely to be the genesis of a courtship between this guy and short term debts like salary advance, shylocks, credit cards among others. Since the monthly budget rarely shrinks on its own, this short term borrowing, for many people, becomes addictive and before long, they plunge into a debt crisis.
It is therefore important to have the conversation with yourself or your accountability partner on the impact of any proposed debt and plan for it before borrowing. Even where the proposed loan is for investment, there is need to plan for the period between borrowing and when the investment begins to bring returns. Usually, you may need to shake up your budget to fit in the resultant income after loan periodic deductions or wait until your financial status improves (through promotion, salary increment etc) before borrowing. Failure to plan may just be your entry point to a crisis whose affects you do not want to imagine. Now you know; be wise because YOU CAN DO BETTER!
Debt Management Consultant, Motivational Speaker and Author.
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