MONEY TALKS: Living wealthily ever after off an old repaid debt

First thing I do with all my debts is, I budget for it way before it hits my M-Pesa. PHOTO | FILE| NATION MEDIA GROUP

What you need to know:

  • What sets you apart from the next guy isn’t this budget, though.
  • You must be disciplined enough to spend it as you’ve budgeted.

Here’s a truth I always take to the bank: if you have the extra money to lend someone who’s asked you for it, then it’s money you can survive the month without. Because you wouldn’t help someone unless you could, right? Right.

I think of debts as money for investments and savings. Only difference is, it’s money that’s temporarily in someone else’s pocket, not yours.

First thing I do with all my debts is, I budget for it way before it hits my M-Pesa: What sets you apart from the next guy isn’t this budget, though. You must be disciplined enough to spend it as you’ve budgeted.

You budget for it, you spend it wisely and you won’t feel bad about squandering money. I don’t know about you but I feel terrible after spending money on things I don’t need. I’ll suffer buyer’s remorse. A bad one.

This debt I’m telling you about right now hit my M-Pesa after many months of follows-ups. This is what I immediately did with the money, which was Sh80,000 in total:

I sent Sh20,000 to my money market account: I save with the money market account because the cash there is not easily accessible to me – I’d need to apply for it then wait 72 hours before it gets to me. I don’t save with them to earn an income on interest. Money market rates are horrible. You make like, what, six per cent annual interest? That’s negligible. My money market account is for emergencies. It’s my rainy day kitty.

I sent Sh15,000 to my main Sacco:I save with two Saccos. I’ve been saving in this Sacco since 2008, when I had my first job. I’ve saved quite a bit here. The annual dividends are handsome, it takes care of quite a few items. I get them every May.

This Sacco lends you five times what you’ve saved. No other Sacco I know of lends like this. What I don’t like about this Sacco is, unless you’ve applied for an emergency loan, there’s a lengthy processing time for a regular loan. And your loan forms have to be submitted before the 15-th of the month. I know. Last time I applied for a loan, the funds hit my account at the end of the month. I don’t know if it still operates like this.

What’s more, it’s a tad difficult getting guarantors because the members are my ex-colleagues. I haven’t spoken to some in years.

Anyway, the money here went into my deposits.

I sent Sh15,000 to my secondary Sacco:I have a loan running here. It’s a small loan. I took it to finance a small side-hustle I was getting into. (Small loans for small side-hustles, aye?) I like this Sacco because they have a front office, which means I can get cash from them over the counter. They also come through when I need cash at the snap of finger, like this.

Take this small side-hustle loan I’m telling you about – I remember submitting the completed forms in the morning, before 10 am, and by 4 pm that same day, the funds were in my M-pesa. I’m not kidding you. The members here are my colleagues so it’s easy to collect their signatures for guarantorship.

The Sh15,000 I put in here was for early loan repayment.

I sent Sh10,000 to the expense account of my online brand:I started an online brand called Craft It, where we tell the ‘Stories of Kenyans in their Craft’. We turned one last September. The brand is not making any money – yet – but I’m building it so it does someday. The 10K I sent to its expense account is for wages, sponsored ads on Facebook and Instagram, and for Uber on the days I have interviews.

I splurged on the Sh10,000 that remained:I bought myself some lovely dresses and sexy shoes. I can’t say I needed them, I just needed to spoil myself a bit. Wipe some sweat off my brow, you feel me?

What you must understand is that this splurging came in as the last line item on my budget, after I’d dutifully completed my savings and investments. It would have been foolish, short-sighted and irresponsible of me to have it as the first line. Budgeting for and splurging this cash on things that make me feel good didn’t leave me with buyer’s remorse.