Finances: How You Deal With Debt Can Make You Or Break You! What Are Your Debt Habits?

Image credit Marco Goran Romano for TIME. Image from

I think of the first time I went into major debt a lot. It was not really the first time, because before then, we had taken out a big loan with a Sacco as part of a now-defunct chama. But this was the first time I was personally signing on the dotted line, not considering a HELB loan.

I was going through some life changes and I needed a couple of a hundred thousand shillings fast. I dropped by my bank to pick up the forms, got a gracious friend to act as a guarantor, submitted the application and had the money in my account in short order.  It was like instant gratification.

The loan wasn’t business financing or anything so impactful. It was for some personal stuff I needed to deal with. I wanted to be as conservative as possible and hence lowballed my application. I’m also naturally very antsy about debt and so I opted for an accelerated repayment plan, even though I had the choice of having smaller instalments for longer. Still, given that my income at that time was nothing to write home about (not that it is now), it would take me at least three years to clear the debt.

My personal project got attended to, and all was well and good until I started having persistent cash flow problems. The payments were coming off my payslip and were obviously bound to have an impact on my cashflows. Somehow, It still took me by surprise when it actually happened.

The thing is, when you were netting 100 shillings every month and you suddenly have only 70 shillings coming in, it is never a smooth adjustment. For one, your family was used to living on 100 shillings. Even that 100 shillings was strictly not enough and you often overshot the budget and made up for the deficit with mobile app loans and credit cards.

Even with a lower net of 70 shillings instead of the usual 100, you will have a hard time refusing to treat the kids to the Sunday afternoon ice cream they have always had. You will have a tough time cutting the monthly Mpesa you wire to your folks. After all, it will not always be at the top of your mind that you need to cut back on some of these expenses. You will keep spending money out of muscle memory until it hits you that you don’t have enough for the month’s rent.

In a few more months, the cashflow problems got murkier. Unfortunately for most people, the common response to debt problems is often more debt. I was no exception. I got a credit card that I had previously resisted from my bank. Mobile lending was not yet ubiquitous and Mshwari was the only game in town. I was one of their first customers and a good one at that. My limit was always maxed out as I fell into a vicious borrowing cycle. I always insisted on paying in time, a fact that apparently impressed Mshwari because they quickly doubled, tripled, quadrupled and kept on increasing my limit exponentially.

As cashflow problems bit, mental stress started building up. Because it’s hard to be all mellow and forbearing when you are struggling to stitch rent together, spats and temporary spikes of tension between me and the missus increased.

Image credit Marco Goran Romano for TIME. Image from

I have always had a deep dislike for debt. I believe much of it came from seeing my parents sink so deep into it to put us through school, pursue some not so successful ventures, build a home, meet medical bills, et cetera, that it somewhat became a subconscious goal of mine to steer clear of debt at all costs. All of the debt my parents took was necessary debt, and every last cent was prudently spent. Still, the constant pressure I observed debt putting them through became a huge deterrent to me.

I had also listened to horror stories of people who quit jobs, took out loans to go into business, went bankrupt and sank into depression. I did not hear a lot of success stories. I am sure there were some, just that people are more likely to talk about the failures of others than their successes. Horror stories make for prime time TV. They capture our imagination and overall make for better jokes.

If someone took out a loan and established a hugely successful cereals shop on Kirinyaga road, I didn’t hear about it.

In hindsight, I can see that the way I was socialized has significantly affected the way I look at debt today. I have passed up several good opportunities because after my first ordeal with debt, I realized I don’t have the stomach for it. I realized that there is just something in my nature that causes me inordinate scepticism of, and aversion to debt. There have been a few cases where some quite attractive deals came up but I let them slide, even when I could simply walk to my bank and have the money in hours.

I have learned that the unpleasant feeling I get from passing up such opportunities is much easier to deal with than having the proverbial ball and chain attached to my foot for as long as a loan is outstanding.

To conclude, I believe that debt is neither good nor bad. Debt is neutral. The principal reason I think debt causes so much angst for a section of people is that they get into it without thinking of their “debt personality”. For some of us, debt is not simply a matter of affordability of the repayments. It cuts deeper than that. It goes to the heart of how we were brought up and into our subliminal beliefs and experiences about debt. Until we can figure out a way to be exorcised of these benign yet deep-rooted notions, we shall have to stay out of the debtors’ bandwagon.

Debt is not for everybody. Also, the fact that you have access to cheap credit, doesn’t necessarily mean you should snap it up. You might end up hurting your mental health because you were too quick to accept the advice that “even all well-performing companies have debt on their balance sheets”.

Personally, even in times, I’ve had to quickly borrow some little money from a friend that I would absolutely have no problem repaying back in time, I’ve always found myself so restless about it. I will probably pay back well in advance of the agreed date just to get the weight off my back. I am always at a loss as to how some people are able to be in debt to others and be so nonchalant about it.

I also have friends who think I am crazy to decline their offers to chip in with quick interest-free loans whenever I am in a bind. I am intrigued by some friends and colleagues who are always in the middle of debt applications for this or that project even when I think they earn enough to fund the said projects out of their savings and incomes. I know someone who applies for loans for the heck of it. He just has the money sitting in his account for months as he scouts investments to put it in, while the bank debits his repayments from that same cash in the meantime. I cannot wrap my head around it, but hey, more power to him! He was probably not socialized in a culture pandering the debt bogeyman like I was.

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@TheSoww tweets about money and markets, with a particular interest in personal finance.