From today and for the next couple of weeks or so, Focus Talk takes a slightly different turn as I begin to share a series of insights on one of my pet subjects, The Art Of Borrowing (Personal Debt Management). The number of inquiries on this subject, which I have previously handled in restricted settings, have prompted me to share valuable portions publicly. The subject is wide but at the end of the series, I shall advice how you can access the detailed lessons. For specific questions, please hit any of my various inboxes.
That most, if not all of us, have incurred debt before is not a farfetched allegation. Once in a while, you have fallen short of funds for one thing or the other and you have called on your friends, relatives, sharks or formal financial institutions to bail you out. It is likely that you have once approached your local shop for a packet of maize flour to be repaid as soon as your pay day comes; or the mama mboga (green grocer) for vegetables on credit; or your local pub for a drink when you felt your throat was cracking and they scribbled your name in a credit book. Maybe you requested for airtime advance from your service provider or acquired a mobile phone based loan; or maybe you engaged a private tutor for your child and promised to pay him at the end of the month. Whichever way, you incurred debt. In this work, I restrict these lessons to debts that have a financial repayment implication.
The world of debts is wide and multifaceted. Some debts are for real cash repayable with real cash while others are repayable in kind; some debts are for valuable items borrowed to be returned with some monetary fee or to be repaid in monetary terms altogether; some debts come at a cost while others do not; some debts have left people smiling while others have left people cursing; some debts have given life while others have caused death. Debt is like a loaded gun, the direction you point the nozzle determines whether you become powerful or nothing; if you use debt, you smile but if you misuse and abuse it, you frown.
Whether you smile whenever debt is mentioned due to how you have benefited from it before or you experience chills down your spine due to where it has landed you, the hard truth is that debt is here to stay. Those who master its usage leverage on it and grow exponentially, matters wealth. I’m a strong believer in the argument that while the poor trade carefully, avoid debts and become super savers, the wealthy scramble to borrow the savings of the poor to multiply their wealth. That aside, my main concern is and has always been to demystify prudent ways of handling debt to reap maximally from it and to avoid it getting you into trouble. Debt of whichever magnitude, of whatever nature and whichever source has both the potential of building you and causing you trouble; it depends on where the gun is pointed.
There are certain factors that many people fail to put into account before getting into debt. In most cases, at that time the only thing that matters is how to get the money; everything else is usually relegated to the rear. This is detrimental to say the least. One of the most important factors to consider before borrowing is why you want to borrow. Prudent borrowing is guided by purpose. The reason for your borrowing determines a lot of things; some reasons leave you a better person while others, otherwise. You need to always analyze why you need to borrow.
Personal borrowing is a personal decision; only you know why you are borrowing. Many people have found themselves in a debt crisis because their reasons for borrowing were not right or were not adhered to. Many borrowers cite borrowing reasons for the sake of compliance with the lenders conditions when deep within them, they know why they are borrowing. Some of the reasons often cited include: home improvement, education, medical emergency, investment and house construction. Some of the reasons that become actual and which are rarely cited include: betting, partying, payment of another loan or its interest and flossing.
The reason for borrowing determines how much to borrow. A lot of people are in trouble because they borrow on ability instead of purpose. They borrow Ksh.10,000.00 even if their need is for Ksh.5,000.00 just because they qualify for Ksh.10,000.00. Avoid this pitfall! The reason for borrowing also determines when to borrow; if it is an emergency, the borrowing will be now! Other reasons may allow for some time. The same reason determines where to borrow from; if you are borrowing to purchase a home, it will be hilarious to borrow from a shylock. Next time you want to borrow, take a moment to analyze why you are borrowing and why you must borrow…..to be continued. With this, YOU CAN DO BETTER!
Personal Development Coach, Motivational Speaker and Author.
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