“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.

70% Ugandans survive on borrowing - FSD Uganda Study

Photo by Towfiqu barbhuiya on Unsplash

By Arthur Moses Opio

We all read that statement that was screaming on the Daily Monitor news paper on 15 April, 2024. The report is based on a study by FSD Uganda and it said, "Seven out of every 10 Ugandans were operating a personal budget deficit(needing more money to than they are earning to cover their personal budget" Now, 70% is huge. What are the 30% doing that the 70% aren’t doing? The report continued to say, "More Ugandans are relying on their family and friends, personal savings, and borrowing to manage their budget deficits than was the case in 2018."

What’s notable in this, is that Ugandan’s have personal savings and compared to 2018, 60% of Ugandans are now saving which is a good thing. In their 2017 SDG report, Afro Barometer said, "Ugandan’s saving rate was at 12% compared to Kenya(23%), Rwanda (18%) and Tanzania (13%)" Generally we have been doing badly. I need to find out what our stand is currently but an improvement of 60% should be applauded. 

But saving is not enough, it is the first step. Even if savings is up. Finscope report says, "Most Ugandans are not managing their budgets well." and failure to manage picks into things like extensive borrowing to meet a budgeting deficit as stated above. If you are lucky to have personal savings that is good, then the only worry is that you are probably eating into your wealth building tool. Savings should be categorised, emergency savings and investment savings. 

You can make and save money, but if you are having more months than money, the problem is not the income. It's your money management. We have to develop high income skills levels to enable us manage this money resource well. 

Paul Busharizi once wrote an article titled, "Perpetuating the poverty among the elite" and said, "There is the Urban legend of the manager who cannot make his salary stretch to the end of the month, while his driver who earns a fraction of his salary, not only gets to the end of the month, but has enough left over to invest in his growing empire of mizigo rentals." He further said, "The difference between the two men is that the boss is focused on consumption lifestyle while the driver is focused on investing. And that is the crux of the matter. There are only two ways to spend your money, you either “eat” it or invest it."

There is no doubt economic times are hard but we have to be smarter. Money management is a skill that we all must harness. Even if we are doing fairly well, we must keep learning to avoid slipping back. So manage whatever little  money you have well. It's a much needed skill. We are all victims of poor financial management but we can be better.

So these are some of the things the 30% are doing:

1. They have financial goals.
2. They have a financial plan.
3. They have a budget.
4. They track their expenses
5. They live below and within their means
6. They are investing in appreciating assets like Bonds, Treasury Bills, Fixed Deposits, Unit Trusts that offer at least 10%. They know there is a limit to how much they can cut their expenses, so they focus on increasing their means.
7. They are involved in producing goods and services. If they aren’t directly producing, they own shares of companies that are producing goods and services.

So once again, I remind us, let us build that emergency fund. UGX 1,000,000 is a good target to begin with. In case of a challenge, you will have that as your first rescue point. It is your fire extinguisher, you need it badly, I badly need it. 

Don’t ignore the power of putting 10,000 UGX aside, if you do it for 7 days, that’s already 70,000 in your emergency pot. XENO CIS allows you to save as low as 10,000 UGX, you can dial *165*5*7# my referral code is XENO84105. 

For more information about XENO click this link.

How To Come Out of Debt Trap

Image by Clker-Free-Vector-Images from Pixabay

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.

Unfortunately We Are All Trapped

I have been following a discussion on a forum where some one got so agitated and shared a message from their BANK (I will not mention the bank) Titled "CHANGE OF INTEREST RATES ON YOUR PERSONAL LOAN".

The person wrote to the bank and told them, "Please stop cheating/exploiting customers". The person wrote that and brought out the fact that the Central Banking Rate (CBR) issued by Bank Of Uganda had gone down to 11-13%. They wondered why the Banks rate hadn't gone down and they called that predicament names like, "DAY TIME ROBBERY" .

In response to the discussion, one person wrote and said, "Banks are here to cheat us and that is how they make their profits." So this brought many questions to my mind, Are Banks really in for the development of people or they are here to trap people? When you look at television adverts from Banks, they rush to tell you how easy it is to get a loan and that mind control of making it look like you can purchase your dream very fast has become a phenomenon. 

People are getting loans to wed, loans to consume and have luxuries (cars, mansions etc), very few are getting loans to invest in already existing businesses that could be probably 3% of wealthy Ugandans who get to invest, this basically means that control of money is taken away from you because some one else has chosen to control your finances. 

Each time you get paid, instead of investing first, you have to pay off your debt, (DEBT IS A TRAP), remember what the bible teaches, it says that a borrower is a slave to the lender (Proverbs 22:7) and it doesn't have to be your portion .

Some one then wrote and said that, "May be we should organize a strong SACCO and lend to ourselves, they said SACCOs give out good loans at about 14% per annum. Then he exclaimed by saying, UNFORTUNATELY MANY OF US ARE TRAPPED SO IT DOESN'T HAVE TO SOUND LIKE A QUICK FIX".

A good number of people have bank loans and because of inflation and the unstable economy the prime lending rate keeps changing and at times they say it affects even old loans. The reason the guy said that they are all trapped it is because, somehow everyone has a loan and they have to first clear that before they can borrow from other sources that would have been relatively flexible with their interest rates.

This brings us to a place where we need to ask ourselves, if it is sustainable to keep going to the bank or to form investment groups/SACCOs. May be it is high time people came together to form groups with proper guidelines and lend to one another. The group must be a team of committed, trustworthy, hardworking, and people willing to see others develop.

I have read about and heard testimonies of SACCOs that have helped people develop with less stress and such stories are true. They will tell you how they are able to pay back because of flexibility and the aim of the SACCO is really to empower but not destroy.

However, we all need to know that we should owe no one a debt except the debt of love, always think before you get a loan or start changing your mindset by saying let me SAVE a certain portion of my income for a certain period of time, if you need to beef up the money to do something mega then that's where you start analyzing whether you need it or not.

Financial discipline is important to the quest for financial freedom. Invest the money you get, use it wisely. One of the laws of money is that money must be increased otherwise it diminishes (The parable of the Talents is a good pointer Mathew 25:14-30).

We can not live on one source of income and the scriptures tell us that we should diversify our investments, you can read the whole of Ecclesiastes chapter 11. Use your skills, Do you have land that is idle, maybe its time you think of planting the food you buy from the market everyday, We also need to cut off expenses that aren't important, this means budgeting must become a part of your everyday life.

Debt can be beaten with such knowledge applied everyday. No one has to be trapped. People perish because of a lack of knowledge, when you get knowledge, it is like light or insight to a prevailing situation, then don't just get the knowledge make use of it by APPLYING IT.

Debt Doesn't Have To Be Your Portion

According to Merriam Webster Dictionary DEBT is  "a state of being under obligation to pay or repay someone or something in return for something received : a state of owing"

No one on this earth wants to be under the spell of debt, the scourge of being taunted all the time that you owe this or that. One of the greatest forms of slavery in this modern day and era is financial slavery which comes through borrowing. This is coming about because people have a big appetite for luxuries, they want to own 5 fleets of cars, yet they can only drive one at a time, they want to build many homes to stay in yet they can stay in one instead of building for rentals so that they can make income out of it. The good debt would be the one you get to put in an income generating asset but normally we get debt to consume, buy luxuries etc.

We live in a fast paced world where people want things in an instant, talk about quick money (Proverbs 13:11), students have ended up betting their tuition fees with the hope that they will make more money and pay later, it hasn't always been the case that money will be made, in fact it has gone the other way round. A lot of lack is needed to do gambling (betting), it is a real fight against the odds, you make it one time and win and you start feeling like you can do this over and over forgetting that in life, a point comes where things won't work the way you want. This even kills the desire and value for work. Check out my blog on how Work Is Profitable https://arthurkmo.blogspot.ug/2017/06/work-is-profitable.html

We have reached a point where Financial Services Companies like Banks, Mobile Money have learnt that people love to consume, and consumers are easy targets for all kinds of things. These banks or service industries work with great advertising firms to do eye catching adverts that leave you wanting, If you look at adverts around from Banks, you will be told, you can get a loan for a car (instead of saying save for a car), you will be told you can get a loan for a wedding (instead of being told save for a wedding), This is a way of killing your patience and building on your drive and desire to want things on an instant. Some people have been saved a lot of trouble by exercising patience but it's a virtue build over time after failing and being hit many times. 

You will be told by telecom companies that you can borrow airtime or money when your charge is running out, as much as money is being made by these companies or organizations, we the consumers are turning out to be slaves to these schemes. Many times when your airtime is low, you will get a message telling you that you can borrow so that you can keep chatting, they already have power over us but we can choose to have power over our lives by planning and making the right decisions. The messages are becoming normal and we are becoming victims. But we can control our own space, money and time by managing ourselves.

Fight DEBT and bury it, give yourself the ability to to be a LENDER and not a BORROWER. We all know the consequences of racking up debt especially if it has not been put into something that generates income. Debt is something that takes a way your peace until it is dealt with, you can not do much since it consumes the whole of you. Buy your freedom back by fighting Debt.

If you are to get a loan, it has been said, only get it to improve what you are already doing. However if you can avoid it, please do and work on your personal finance journey, make sacrifices, be obedient with your budget, create avenues to give back to the world otherwise Debt is a trap used by the world system.

Proverbs 22:7– “The rich rules over the poor, and the borrower is slave to the lender”

"Most of us have heard this verse a million times, but most of us still use debt to fund our lives. 2/3 of all people, and 1/3 of high income earners are living paycheck to paycheck because of debt." - Jason Cabler

"Debt limits your freedom to live life the way you want to live it. As long as you have debt you are obligated to put much of your time and energy toward paying it off. Just think how your life would be different if you had the freedom and choices that come with having no debt."
- Jason Cabler

The bible says we should owe no one anything except the debt of love. If you want true financial freedom in your life, then commit yourself to getting out of debt. You will be amazed at the difference it makes in every aspect of your life.

Having debt undermines your ability to build wealth and puts your financial plan at risk. It’s simple. Steer clear of debt - Dave Ramsey Read more from this link on how to achieve financial freedom