Debt is one of the greatest sources of stress for living human beings today. Debt, which ought to be an enabler has suddenly become a pain for many; especially those who view debts as a short avenue of getting cash. The love for money and shortcuts has made many people in the modern society to forget the difference between earning and borrowing. The dangers of this myopic view continue to be felt by many who have plunged into the sea of bad debts. In fact, many have gotten an addiction to debt; always wanting to borrow at the slightest provocation to ease pressure here and there. Talk of treatment by infection!
In the last Focus Talk, I talked about the importance of considering why you need to borrow and why you must borrow. Indeed both powerful and tragic decisions in the world of debts are made on account of the purpose for borrowing. I gave the analogy of debts being like loaded guns; the direction they are pointed, determines how powerful or destroyed the gun bearers become. Those who borrow for the right reasons continue to leverage on the power of debt and keep scaling the progressive heights; those who do it for the wrong reasons have continued to scratch the hair off their heads due to pressure from lenders. The focus in today’s Focus Talk is on one of the most cited reasons by borrowers when borrowing – emergencies.
Emergencies are unforeseen situations that pose immediate risk to one’s health, property, relationships, life and general environment. In most cases, they require urgent intervention to mitigate the risks thereof or to reduce chances of a situation worsening. Most life puzzles have a financial implication one way or the other. Emergencies present such puzzles and a good number of them require money to be addressed.
Take for instance a parent who injures her leg while working on the farm and is bleeding profusely. She needs urgent medical attention and the need for money begins to come up. The taxi/ambulance to transport her to the nearest health facility requires money and so is the medical bill if she does not have an insurance plan. When natural calamities such as floods strike, the situation is the same and money is usually required to sort out/prevent damages courtesy of the floods. So is the case for many other emergencies.
In most cases, when these emergencies strike, people are caught flat footed, matters money. Due to the urgent nature of emergencies, people find it necessary to borrow money from friends and family as well as other financial entities.
What I have found interesting are those who cite emergencies as the reason for borrowing when actually, they have no emergency on their hands. Many borrowers have referred to rent, shopping, fuel, farm inputs and school fees as emergencies. This is misleading! Even though the lender will advance you the funds on account of emergencies, the real damage of the debt falls on you. One key characteristic of emergencies is their unforeseen nature. We all know when house rent will fall due, when shopping and fuel are likely to be depleted. Likewise, when we have children or ourselves in school, it has never been rocket science that school fees will fall due when schools reopen or a new academic calendar/semester begins. The same is the case for farm inputs. Referring to these reasons as emergencies is farfetched.
I’m not by any stretch of imagination insinuating that you should never borrow to pay rent, to go for shopping, to buy fuel or farm inputs or to pay school fees. All these things may be important. However, maturity is the day you come to terms with the reality that all these reasons can be foreseen and something done about them to mitigate against the likelihood of incurring costs and debts to finance them. Many people have plunged into the sea of bad debts because they created many emergencies around them to justify borrowing. Suddenly, everything in their life became an emergency including repayment of existing debts! If you can prevent incurring costs associated with debts, why not?
Plan for your foreseen expenses in advance, have a savings plan, consider education and health policies, invest to widen and deepen your income streams. When you do these and look for ways of creating an extra coin, you begin to reduce the number of future emergencies that are not real emergencies. Even when the actual emergencies come, they find you better prepared and you stand a better chance of avoiding to incur debt related costs. Be wise….YOU CAN DO BETTER!
Roy Okonji,
Personal Development Coach, Motivational Speaker and Author.
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Write to roy@focusuniversal.co.ke
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