I earn Sh38,000 monthly and I am stuck in mobile loans, black tax

I'm forced to borrow mobile loans from a bank payable every month.  Kindly assist me to achieve financial freedom.

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My name is Joyce. I am employed on a contractual basis. I will renew my contract annually for a 3 year engagement with my employer.

I earn monthly Sh28,000 and allowances of Sh10,000 per month. My expenditures go to: family Sh6,000, siblings’ fees Sh15,000 (3 are in high school and one in college), rent and utilities a total of Sh6,000, Helb loan repayment Sh5,000 per month, and merry go round Sh5,000.

I'm forced to borrow mobile loans from a bank payable every month.

Kindly assist me to achieve financial freedom as I also want to build a house and go for my Master’s degree.


Rhina Namsia, founder and chief executive officer of The Acemt Consulting, a training and consultancy firm on financial planning and investment advisory

You have a net cash inflow of Sh38, 000 and a net cash outflow of Sh37, 000. This is a recipe for disaster for a contractual job.

Your current cash flow balance cannot support your dreams. Your monthly mobile bank loans are based on the convenience of satisfying your month to month deficits. These are very costly for you.

You lose more money by taking them than you’d gain in interest were you to lock the same amount you borrow in a bank savings account.

Here are strategies to apply:

Increase your income: This is the brutal reality that you may not want to hear but without increasing your income level and/or streams it may be impossible to achieve your goals in the near term.

Look at what skills you have outside your job or even within the line of your work that you can put to use to earn more money besides your job.

Start a small business, if possible, as well to support the stream you have, especially since it is contractual. Taking care of yourself and your siblings and parents is hectic on your current income. Black tax is taking Sh21,000 out of your total earnings of Sh38,000. Get creative to lower this amount and free up some income for saving and investment.

For example, are there people in your immediate or extended family that can chip in and ease the burden you solely carry? Have you utilised county and ward bursaries available for both secondary and college students?

Automate your savings: The first thing to do is to pay yourself first. By this I mean, opening a pension account and an emergency fund. It’s wise to have an automatic withdrawal into these accounts, an emergency fund can be tapped for unexpected expenses, as well as an automatic contribution to a brokerage account.

Tax-advantaged retirement accounts come with rules that make it difficult to get your hands on your cash should you suddenly need it. Saving alone will not grow your money. One way of increasing your income is to invest what you already have.

Move Sh5,000 from merry-go-round to an interest-earning or dividend account such as a Sacco (annual dividends of at least 10 per cent) and MMF (compounding interest of 9 per cent).

Your goals vs reality: Your immediate concern should be to secure your immediate and near term financial future against any outcome from your contract.

By creating extra income streams and hiving off some additional funds from your current expenditures, you might be able to save significant emergency funds that can be your stepping stone to more concrete investment options such as treasury bonds with staggered passive incomes.

For example, by increasing your current savings three fold to Sh15,000 down the line, you will have Sh180,000 (minus interest) for investment startup funds.


If you have any money problems, send us an email at [email protected] and leave your number for contact. Money questions will be answered on this column.

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