How To Come Out of Debt Trap

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Tom, a young lad in his early 30’s has a good job with a good take-home Salary. Before Tom, could start enjoying his hard-earned money, he was already in a cycle of debt. A few times he borrowed to enjoy certain pleasures of life like going out to the beach or to upcountry resorts to have fun with his buddies but that cycle continued. Tom banked on some money from his employers to sort out a few of his debts and before the money could come, he still had to borrow to manage his life, pay rent, transport, and eat.

Tom’s getting into debt wasn’t necessarily intentional but one of them was circumstantial. However, a big gaping hole has been left in his life as he sorts out his debt problems. I encouraged him by telling him that one good thing is, he still has a good job and that he should work with what he has while cutting out big expenses that could dent his financial purse.

One of the biggest traps in this world isn’t just going to jail, one of the biggest traps is debt itself. Financial enterprises like banks, microfinance keep selling their debt products, many of them are consumer debt. The debt is often marketed as a big-time solution to a lifestyle that people want now, and impulsive buyers surely fall into this trap with their eyes wide open. The marketing done by these companies is so well thought out that an attractive image of a beautiful woman with her sleek car or a couple smiling with their state of the art bungalow or apartments in the background is used. Surely who wouldn’t want that kind of lifestyle, the message settles in your mind and you start thinking maybe the easiest way to get that house, car, land, etc, is a loan.

From his book “How to Secure a Financial Future”, Dr. Sunday Adelaja in regards to Ad companies associated with banks or credit services says, “They use the power of subliminal messaging to associate the credit card with those things. A lot of people do not think there is anything wrong with credit cards or consumer loans; it affords them the lifestyle they want. But if you have to borrow to afford your lifestyle, isn’t that a trap? It’s just a matter of time before the house of card crumbles.

Before yours truly, had started work, the talk around money that came from every person I talked too was, “You need to get a loan”. That is the type of financial education I was getting introduced too. However, they wouldn’t say get a loan to develop, it would be man, we earn so little, so just get a loan. Loans can only be good when invested, but you surely do need a clear plan or goal for that money and you need to know that getting it is the easy part but paying back is the real deal. There is a need for proper financial education, people need to learn about saving, investing, debt, taxes, business, entrepreneurship, etc. All this is missed throughout our years of education yet learning them would make strides in grooming people who understand money and how it works from infancy.

Anyways while talking to this friend of mine, I told him that it is good that he is open about his situation and that that is the first step to coming out of a debt cycle. I told him that he needs to: -

1.       Have a debt payment plan and be as open to the people or institutions he owes.

2.       Increase his income by using his extra time (meet a need by providing a service, product, exchange time for value, etc) to make money that can be used to pay off his debt, For the small loans they can be kicked off one by one as a big chunk of the money goes to clearing the bigger debt.

3.       He needs to stick to basic spending and that will include rent, food, and transport. He will need to sacrifice events that take out a lot of money, such money can be channeled to clearing the debt.

4.       For any increment in his pay, the increment can be channeled to investment because we all know salary can do as much and that he needs to grow his money to have financial peace going forward.

What Decisions Are You Going To Make With Your Money Post Covid.

Photo by Sharon McCutcheon on Unsplash

Proverbs 21:20 NLT "The wise have wealth and luxury but fools spend whatever they get" 
Prov 21:20 TLB version. "The wise man saves for the future,[d] but the foolish man spends whatever he gets."

I don't want to continue being a FOOL. This is my post COVID decision.

Are you the type who earns very good monthly, daily, quarterly, and still finds themselves broke. You live from paycheck to paycheck. Yeah, you aren't alone, so many of us are in this bracket, we aren't poor but in the long run, our money decisions will lead us to poverty.

One of the surest ways to poverty that is well known is to try and please people, who don't care and even know how you hustle to get that dime.

Poverty isn't necessarily a lack of money, it involves many things like lack of skill, not having the mind to see opportunities, always waiting to be shown the way instead of using the knowledge out there and within us to craft the way. There people who are so poor all they have is money, however, most times the money is consumer debt that they keep paying to rescue themselves.

During this Covid19 period, many people who have very good jobs or businesses have been caught on the wrong side of their financial decisions. 

You will find 90% have been operating without emergency funds, it's probably because we think hard times won't come, yet history teaches us to rather be prepared other than just being there waiting for someone else to prepare us, you know even for the return of Jesus, we have to prepare lest we are caught on the side like the five virgins who had no oil left in their lamps. 

In this time many of us have looked back and said, hey, "I wasted so much money on luxuries, I wasted so much money on trying to live the good life, now I am here and the vendor on the street who from her little earnings has made some savings or investment is doing so much better than me".

Don't be shocked when we get back to the new normal, and we see many of us indulge in getting quick loans to fix temporary problems. This COVID period should teach many of us, to manage finances well and be good stewards of it. We also won't be shocked to see people selling off land to fix a temporary problem, many times our problems are consumption in nature and not investment. This is an uphill battle that can be fixed but it will require a lot of learning and unlearning.

It would be good to sit and reflect on how you and I are going to get better. The first thing to do is to start getting financial education. You know education that starts with you desiring to solve a problem you have is the most liberating.

Elinor Sauerwein was a teacher and a cook. Her story is one of uniqueness, she did not have a high-income paying job, but at the time of her death, she had almost 2 million USD. A big chunk of her money was given by her estate to the SALVATION ARMY. One of the key things I have learned from her story is that she was taught never to waste anything, her levels of being frugal were quite extreme to a point where her neighbors thought she and her husband were poor but their sole goal was to be a blessing to the salvation army. 

Many of us know what salvation army does if you don't look it up on the internet. So while we won't waste going forward, have a clear goal for your finances just like this lady I have written about. God bless.

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