Rédaction Africa Links 24 with Daily Nation
Published on 2024-02-03 07:00:00
Sammie, a 38-year-old single individual without children, finds herself in a financial predicament with debts amounting to Sh950,000. The breakdown of the debts includes Sh300,000 owed to family and friends, Sh86,000 from mobile phone apps, Sh400,000 from a Sacco loan, and Sh160,000 from two table banking groups. Sammie works as a broker in the informal sector, earning a monthly income of approximately Sh50,000. Despite her earnings, her monthly expenses exceed her income, leaving her with between Sh5,000 and Sh8,000 unaccounted for. She spends Sh16,000 on rent, Sh8,000 on fuel, Sh3,500 on Pay TV, Sh2,500 on airtime and data, Sh5,000 on black tax, and Sh8,000 on food. Sammie also used part of her loan money to pay college fees for her siblings and to improve her mother’s furniture in the village. Sammie seeks guidance on how to repay her debts quickly and whether she should consider seeking employment despite her lack of enthusiasm for it.
According to Alex Kibebe, the founder of Rubiani Wealth Management Ltd and an investment consultant and business development coach, Sammie needs to take actionable steps to get out of debt as soon as possible. He recommends that Sammie prioritize her debts by listing them from the most expensive to the least. In Sammie’s case, the Sh86,000 mobile debts should top the list, followed by the Sh400,000 owed to the Sacco, the Sh160,000 from table banking, and finally the Sh300,000 owed to family and friends.
To settle the loans, Sammie can consider selling off some of her assets, as she is able to save about Sh8,000 a month. Kibebe suggests selling her car to pay for part of her loans, especially if the proceeds can settle her mobile app loans, Sacco loan, and part of her table banking loans. This would help reduce her overall debt burden. Additionally, Sammie can explore other asset-selling options to further decrease her debt. Kibebe emphasizes that these sacrifices are temporary and that Sammie can recover financially once she is out of debt.
Furthermore, Sammie can raise funds by reducing her expenses. Kibebe recommends cutting her Black Tax contributions and eliminating Pay TV to save an extra Sh3,500. He also suggests using public transportation to save on fuel expenses and increase her monthly savings. Creating and adhering to a strict budget is essential to managing expenses and achieving these savings. Kibebe advises seeking help from a debt counselor or a trusted friend for accountability if sticking to a budget is challenging for Sammie.
While Sammie expressed her lack of enthusiasm for employment, Kibebe suggests that if the option is available with better remuneration, she should consider it. If she still prefers to be self-employed, she can resign after settling her debts and convert her brokerage activities into a side hustle if she finds alternative employment that offers better pay.
Once out of debt, Kibebe encourages Sammie to continue living by a budget and to invest the extra money saved each month in a Sacco, Money Market Fund (MMF), or other investment products to build her wealth. These investments can then be used for emergencies and to fulfill future goals.
In conclusion, Sammie is advised to take proactive steps to prioritize and settle her debts, reduce her expenses, and consider employment options with better remuneration. With careful financial planning and budgeting, she can regain financial stability and work towards building her wealth in the future. If anyone has money problems, they can send an email to [email protected] and leave their contact number for assistance. Money questions will be addressed in this column.
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