“I am highly indebted” said one of my friends ”I have a debt with a family member, friends, colleagues at work and I also got into mobile app loans. Even right now, I have a debt with the mobile operators, I prefer for you to initiate and I withdraw from an agent. I am in a total mess, How can I get out of this?”

Photo From Jaspreet Singh Mail

By Arthur Moses Opio 

"This recent surge in global debt (since the pandemic)," says Jaspreet Singh, "is the largest, fastest, and most widespread increase since World War II."

Debt might be inevitable but we can avoid the debt trap.

“I am highly indebted” said one of my friends ”I have a debt with a family member, friends, colleagues at work and I also got into mobile app loans. Even right now, I have a debt with the mobile operators, I prefer for you to initiate and I withdraw from an agent. I am in a total mess, How can I get out of this?”

You are a target and how is this happening. They put it in your face, they message you to tell you need it, they give you offers of increased loan limits. Yes, that is the debt trap we are in. As a man, debt might be inevitable but you need next level discipline on how to manage it. 

I borrowed some money before, it’s easy getting it but it’s never nice paying back but yes a responsible person must pay his debt to ensure he or she is credit worthy with friends, family and different institutions.

Statistics:

We all know that our public debt has risen and it’s not quite good but I might be wrong, at least what I have seen reported in the papers that children not born already owe 1 million Uganda shillings all stem to an issue of debt management. 

On Monday, April 26, 2021 an article came out on Daily Monitor saying, "Each Ugandan now owes Shs1.5m as national debt hits Shs65trn."

On Monday, April 19, 2021, a headline came out in Daily Monitor saying, "MTN clients borrowed Shs435b  in mobile money loans in 2020"  - The writer said, there was, "Increased appetite for short term credit." Another wrote on, Tuesday, April 11, 2023, "MTN lending grows to Shs401b, moving to within some commercial bank levels." 

On March 04, 2024 Another article came out, "MTN targets to lend Shs1 trillion in mobile money users with business loans”The reporter further mentioned, "The target is double the Shs550b, which MTN at the weekend indicated had been advanced to customers in the period ending December 2023.".

Now, enough of the statistics, the question I have is, "Who is being targeted?" Your guess is as good as mine. I get a lot of unsolicited messages from the operators to get a mobile loan, even when I have never, they increased my loan limit. 

You see the more I market something, the more it becomes normal and that’s part of the strategy any influential entity will employ. What we do today stems down to what we heard, what we have seen and the specific incidents we have been in. 

I have seen how due to huge debt, someone’s life savings got wiped

Now, you can do this to get out of debt, they are suggestions, but you might have more tricks:

1. Make a list of all your creditors.
2. Prioritise debt owed to employees or subordinates.
3. Pay off the debt with the highest interest.
4. Take the initiative to pay off your debt or at least to negotiate with your creditors: “Do not wait until they are looking for you, have a plan detailing your circumstances, when and how much you will pay them.” says DSA.

On top of that, ensure you have an emergency fund (at least UGX 1,000,000), try and build it before so that incase of any issues while tackling the debt, you have a fall back position. You can use the debt snowball method or Avalanche.

UGX 1,000,000 Emergency Fund Challenge:

You can join my challenge of building an emergency fund of UGX 1,000,000. You can use the bank, money market fund like @Xeno, UAP, Sanlam, Britam, etc.

• If we are to divide that money by 12 months, we will need UGX 83,333.33 per month (We can easily spend this kind of money on a woman every month.)
• Divide 83,333.33 by 30 days , we will need UGX 2,777.77. When it’s broken down this way, 1m can’t be compared to UGX 2,777.77 - now that’s easy to deal with.
• Now that amount of money is what many of us spend on Kikomando(Chapati & beans), airtime, rolex, gonja and this means, the UGX 1,000,000 Emergency Fund can be hit in the shortest time possible. We normally do lunch of 5k, 10k, 15k - Some even do CJs, or KFS of 45k and 50k weekly, so why not build this financial base today so that we can have cushion capital. Your emergency fund is like your Insurance , look at it that way. 
• We only need a mental shift. Instead of Rolex(Chapati & Eggs), breakfast or lunch of 10k, put that in the emergency fund, remember you only need close to 3k everyday to reach the UGX 1,000,000 challenge . This is possible. Let’s do it. It’s not enough to know, You must start.
• You can start by packing lunch, eating one or two meals a day. Balancing from your shopping can also go into your emergency pot.

Debt holds back a lot of money that can be used to build your wealth. 

"A booming economy means consumers are spending money, businesses are seeing growing revenues, and investors are getting bigger profits." Jaspreet said, "In fact, it benefits the economic system (in the short term) when consumers go deep into debt to spend money." He further mentioned, "Please note, it is not your patriotic duty to be broke to stimulate the economy."

You could be someone who has used debt well to build yourself, I cheer you on. But for many who are stuck, the best thing is to stop being a slave, you can’t owe everyone(family, friends, colleagues, neighbours) and institutions. You could either lose your reputation, life, property or get jailed. Be on top of this money thing.

Remember personal finance is 80% behaviour and 20% head knowledge. 

Don’t try and solve behavioural issues in a mathematical way, start by fixing your behaviour.