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Trapped in Mobile Loan Debt? Here’s How to Get Out

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When you get in debt, you become a slave- Andrew Jackson. Click To Tweet

Unlike traditional money lenders whose loans come with stringent conditions, mobile loan apps are easily accessible to anyone with a mobile phone. They offer convenience, require no paperwork and provide instant results.

Many young people are sold on this factor and that is one of the reasons why the appetite for loans is in the hundreds of billions of shillings.

Today, many people in Kenya burdened with mobile loan debt. Repaying these debts becomes so difficult that many will join another mobile loan application to take a loan to repay a different loan. It becomes a cycle, and before one knows it they are stuck in crushing debt.

The worst thing is that many times, these loans are not taken to advance a business or make an investment. Rather, they are taken to fund social wants or to plug personal budget deficits.

Poor money management skills contribute to financial stress and tackling this can help one to steer themselves to a position of stability.

A conversation with a colleague led me to explore the reasons that make youth take these mobile loans and how they can overcome them.

Budget

Ensure that you have a budget before payday comes.  A realistic budget makes it so that you do not spend on what you have not planned for. Plan and budget for fun things to do as well.

Savings strategy

Allocate a certain percentage of your income towards a savings account and emergency account if you can. This will prevent you from resorting to mobile loans whenever you encounter financial distress. Doing this takes time and a lot of discipline. The best way to go about it would be to have a savings account where you can place a standing order from your main or current account, which deducts a certain amount of money at set intervals. Most banks provide savings accounts, so it is easier to just open a savings account under the bank where you hold your current account.

Lending

Many times we find friends and family coming to us for financial help. At times these end up being bad loans and getting repaid becomes a hassle. The best way to navigate this issue is to have a limit you can never go past when lending. For example, you can decide to lend no more than 500 shillings a month. So if a friend asks for 1000 shillings, you will already have established that you cannot lend more than your set limit.

Ultimately, your financial situation is your sole responsibility. Do not get into debt trying to save others. Take charge and be the lead in designing and developing your financial position. Do not be a victim of circumstances.

For those already in debt, getting an extra source of income would be helpful in offsetting the debt. Cutting down on your budget and allocating the freed-up cash to settling the debt is also another strategy one can use to help clear debts.  And whatever you do, do not get into more debt as you clear the existing ones as well.

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4 responses to “Trapped in Mobile Loan Debt? Here’s How to Get Out”

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  3. Andrew says:

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