One particular morning, I was pleasantly surprised when my dear wife called telling me she had sent me an e-mail. Curiosity, as expected, got the better of me and I dished all I was doing to open the e-mail box.
What did I see? She had written a personal finance article on my behalf. She had noticed that the previous week the column carried a recycled article. So, below is the article she didâ€”all credit is due to her but to preserve my marriage, all shortfalls are mine.
Driving or walking in the streets of Malawi, you come across different types, makes and models of cars. Itâ€™s actually a nightmare for someone who has just got a driving licence officially or unofficially to think of driving during peak hours. Going in the residential areas is something else when you consider the type, height and shape of houses people are buildingâ€”some within a period of less than 12 months. You look at the structure and tend to wonder which bank has recently been robbed since we know the salaries most people get are mostly hand-to-mouth. Not to further the purchasing power erosion by the recent devaluation.
Most people will have debt running their entire lifetimes. There are the few that will only have a mortgage debt and that is itâ€”good for them. However, the majority of people are in debt of one form or another. Actually, so scaring amounts for others.
Truthfully, no one ever takes out a loan with the intent to become overwhelmed by debt. But that is the nature of debt. It innocently builds while you enjoy the perks. So, many people are living a future lifestyle on todayâ€™s income. They are thinking about the 13th cheque at work or that raise that is expected. So, they charge a few things thinking that they will pay them off later. No problem. Today it doesnâ€™t seem so bad. You get to go ahead and have what you want now. But eventually you will have to pay for it.
Newlyweds, college graduates, those who have just landed themselves lucrative jobs or businesses, people just coming from the diaspora etc fall into this trap all the time. People stretch to build houses and buy new cars and clothesâ€”often for pleasure and not necessity, not realising the true cost over time. When life changes, they find that they are unable to meet their previous obligation for their money. They lose their valuables.
Part of being an adult is understanding how credit really works. You have to know how it sneaks up on you. Even people that know are often surprised with lifeâ€™s turns and how it affects their debt. You have to consider your overall debt picture, and not just your current monthly budget when making credit decisions. Get the debt to finance your needs and not the wants.
Make it an ongoing goal to pay off your debts. Imagine how much money you would have each month if you had none of those debt payments. Keep that in mind. The freedom you would have. You could work at something you like, not just something that brings in the money. You could save more and be able to retire earlier.
Debt is a tricky thing. Everyone is bound to face it in this day and age. But the difference is that some people will learn from their experience and of others to use debt for financing needsâ€”for example, spending on assets that appreciate in value like buildings. This is debt you can be proud of. Fools on the other hand accumulate debt financing wantsâ€”like having holidays at the lake when they donâ€™t even have a house. Which one are you?
Have a blessed weekend!