A couple of years ago, I borrowed a few millions. That was before rebasing. Going by my earning power then, it was a small amount I knew I would repay with no problems. Then things changed and I simply couldn’t honour my debt. I am done paying now but suffice to say I have paid more than double the original amount due to late charges and other penalties…Ouch… Today, I am grateful for the experience because it has taught me a few things I share now.
1. Stop, just stop it
You are already in a hole, why are you still digging? Or more correctly, why are you digging another hole to cover this hole? Borrowing money to pay back the other money you borrowed? No, no!
2. They are just human
I know you promised you would pay back this amount by this or that time but you know now that you can’t. How hard will it be for them to understand? Talk to your debtors, whether its an individual, a company or a bank, they are also human. Explain your situation, apologize for the inconvenience and make an arrangement that you can actually manage. No they won’t be happy and it will probably be embarrassing for you but don’t run away. For me, it was a bank. I managed to negotiate a smaller repayment amount after suffering sufficient penalties which made me realise this won’t end until I act. The last thing you want are bailiffs following you, which is what will happen if you don’t show commitment to repay.
3. Tell her to get a life!
You know that young man who is about to marry his dream wife, you know, the one he met at the university? He gets K8,000 per month which isn’t bad right? Well here are his expenses:
Kitchen party presents –K10,000.
Honey moon –K8,000.
He has no savings. His parents and extended family look to him for support. Did I mention he still has his own rent ,bills and food to spend on every month?
In what universe my dear sir will he manage this without debt?
This is just an example but the point is sometimes we get into debt due to the excess financial demands from those around us. Be open with them about your limitations and encourage realistic compromise.
4. Its Ok To Start Over
Sometimes a business venture will be consuming more money than it is producing thereby pushing the owner into debt. While this is normal and sometimes necessary at certain stages of business, if there isn’t enough cashflow to manage the debt and the situation is causing misery and stress, it might be time to close your business. Its a painful step I should know. But sometimes what you really need is a fresh start.
5. You’ve Gat This
You will manage. I know it may seem overwhelming but there is always a way out. It may not be easy but there is always a solution. The bonus is at the end of it, you will be wiser, much wiser.
I guess there is more to write on this topic but I am in the mood to keep things short. I hope these points are helpful to you or someone you know. I recommend reading the book ‘The Richest Man in Babylon’. Its a very good book, teaching debt and financial management.