Help! My Sh36,000 salary only lasts 15 days, and I have to borrow to survive. Photo | Photosearch

|

Money: Help! My Sh36,000 salary only lasts 15 days, and I have to borrow to survive

What you need to know:

To come out of the vicious cycle you need to;

Set clear financial goals with a plan on how to get out of debt, start saving and investing.

Acquire personal financial education.

My name is Kevin. I earn a gross salary of Sh46,200. My net salary after deductions is Sh36,000. Out of this amount, my budget is as follows:

Rent: Sh13,000 for a 1-bedroom house

Bus fare: Sh3,500

Electricity: Sh500 monthly

Water: Sh700

Waste collection: Sh200

Food: Sh4,000

I have been employed for the last three years. However, I don’t have any savings. If I was to lose my job today, I wouldn’t survive for a month in Nairobi with what I have. 75 per cent of my salary every month is slashed by my bank. Consequently, every month I repay and take another loan. That's my trend. My spouse is a recent graduate. But she is jobless. I am stretched by family expectations, because they assume I earn lots of money since I am employed by an airline. Things are so bad that by mid-month, I turn to my friends to borrow fare. There are times I sleep at my workplace to cut on expenses such as fare. This year, I want to change. Please help me get my money in order.


Chacha Nyaigoti Bichang’a, a financial coach at Chachanomics Consulting Firm and the author of Mastering Your Money

Chacha Nyaigoti Bichang'a, a Financial Coach at Chachanomics Consulting Firm and the author of Mastering Your Money. Photo | Pool

It is clear that you live beyond your means and are highly indebted. Your debt repayment translates to about Sh27,300, which leaves you with a small balance of Sh9,000. This is insufficient to cater for all your monthly expenses totaling Sh21,900. Since you haven’t invested or saved anything, the debts you take are purely for consumption, black tax, and social status. This means you’re building other people's wealth at the expense of your own. To come out of the vicious cycle, you need to take the following drastic measures:

i)Set clear financial goals with a plan on how to get out of debt, start saving and investing. The short-term goal will be to work out ways of repaying the loan and stop the habit of getting loans to fund your lifestyle. Medium term goal (2-5 years), aim to save for investment in a Sacco', Chama, Unit trust, buying a plot and building rental houses for low income earners. Your long term goals may include saving for retirement, taking education policies for children and acquiring a home.

ii). Create a crisis budget to get yourself out of the financial mess. You need to reduce rent from Sh13,000 (consuming 28 percent of salary) to around Sh5,000 by moving to an affordable house. This will save you Sh8,000 that can be channeled to savings once your debt is cleared. To cut down on transport costs, travel off peak to and from your place of work and save about Sh1,000. To repay your huge debts, you can opt to stop going for an overdraft or salary advance and try to work with the savings from your minimised expenditures. 

iii). Have a candid conversation with your wife, friends and relatives, particularly those who depend on you. This will correct the wrong impression that you earn a lot of money.

iv). Acquire personal financial education. The root cause of your financial problems is the lack of financial literacy on how to set financial goals, budget, save, invest and use debt wisely. Get the services of a financial coach who will act as your accountability partner to help you formulate a financial plan on how to get out of debt, save and invest.

v). Get a side hustle you can engage in during your spare time in order to earn another stream of income. Relying on a salary alone will not help you meet all your financial expectations. 

vi). Start to track and monitor your expenses. Get a small notebook or use a downloadable online expenses tracker to record your daily expenses. This will help you to know where every shilling goes, cut down on costs, and save more. 


Rhina Namsia, the founder and chief executive officer of The Acemt Consulting, a training and consultation company that provides financial planning and investment advisory.


Rhina Namsia, the founder and chief executive officer of The Acemt Consulting, a training and consultation company that provides financial planning and investment advisory. Photo | Pool
 

You are living way beyond your means. The problem started when you took up the loan that takes away the biggest chunk of your net pay. The actions you need to take first are:

1). Move to an affordable house. From your budget your salary cannot afford a Sh10,000 house, let alone Sh13,000 one. If possible, move closer to your workplace where the bus fare you use could be much lower.

2). Approach your lender and negotiate the terms of the loan and reduce the amount of deductions taken from your net pay.

3). Find another stream of income to help you cover your basic needs because currently Sh9,000 that is set aside for this is not enough.

4). Urge your spouse to try and start a small business or a hustle that can help bring in more income. As a graduate, there are multiple income-generating ventures and tasks she can do online or businesses she can set up. 

5). You also need to talk to your family members about your real situation in order to stop the pressure.

6). There are various ways you can use to save up something including the 52 weeks’ savings challenges and by the end of the year, you might be surprised how much you would have saved. Be intentional on stashing up some money for a rainy season. 

If you have any money problem, send us an email via: [email protected]


 For feedback to the editor write to [email protected]