Debt is not a place one would love to visit and stay. Debt can
have such a grip on your life such that movement is nearly impossible. I
have been there and have come out. You enter into debt as soon as you
receive someone's goods and services without paying. You become a
debtor. Most people have been debtors at some point or the other in life
and in business. What differs is the speed of paying up the owing
(debt). Some will do it within days of delivery of goods and services
while others will choose to delay and pay at a later stage.
This can however become a way of life where one accumulates debt while enjoying the services and goods being ordered. In some parts of the world, it is easy to buy goods and access services on credit terms. They will entice you to believe that is better cash flow management to get products and not pay for them instantly but over a period of time. Hidden in that agreement is the fact that you end up paying more for the item than you would have paid if you used cash due to interest charges. It is very tempting to be in debt. You can get this imagination that "I can get all I want now and not even pay a dollar for it". The truth is you will still pay for the items regardless of the fact that by the time the demand is placed for the payment you probably have thrown away the clothes you got or the items are now so outdated you actually want to replace them with more debt. It can be an endless cycle where one will simply live and work to reduce debt. Just how does one move out of this frenzy. Here are a few steps that worked for me
The Moves
1. Identify why you are in debt - Causes - Until you identify how and why you are in debt you will either not come out or when you come out someday, you will quickly dive back into it. Are you there because you are impulsive; are you there because you have an image to protect? Why are you in debt? To know the cause of a disease is more important in the cure of the disease than administering pain killers which are merely temporary hits on symptoms not on the root cause. Take responsibility and ownership of your situation. or else you will be a full time blame-shifter full of debt.
2. Live within your means - sometimes you look around at people in the same industry or title or former college mates and you just want to catch up really fast. That will cause you to want to own what you cannot afford just because you want to appear to be making progress. The truth is when you go home and you are now with your family, it's you who faces the heat of a loan or debt you have attracted to yourself. You may occupy a good place in the hearts of your friends and yet your own family sees a great amount of pain from your irresponsible moves. The interesting thing is this: when you are in debt and you cover up, you even help your friends who may be in financial crisis with money just because you want good ratings while you actually deprive the one you genuinely owe. This is real, I have done it and I know I may not be the only one. You can own anything you want to own to the degree of your financial discipline and consistency in handling finances.
3. Own all you have - The hook of credit is covered neatly by the imminent convenience and benefits of "staggered payments". If you can afford the repayments and you are consistent with your repayments then you are not the debtor I am discussing in this article. There is peace that comes with knowing that the house you live in and cars your have are actually in your name and not the bank's name. I have watched with great sadness the effects of the recent global crisis in our neighboring nation of South Africa where owning a car or house was easy as long as you were employed. Repossessions became the core business of banks as people failed to repay loans. People ran away from their own houses in America due to the crunch. But not in Zimbabwe and other parts of the world where you needed the full payment in cash before you were deemed the owner. This crunch was not felt as much even though the economy had been sliding for over 10 years. Principle is that you do not call yourself the owner until the item is in your name. Before that you are merely a steward.
4. Come up with a well thought and well researched plan very fast - Follow it closely - Sometimes the person in debt may have a good plan on what would get him/her out. A bankable plan which can work anytime of the day. However, pride and fear of how people will perceive you can cause you to throw away every plan you creatively create. Since you are in debt there is no need to try and maintain a false impression. Your reputation is already at stake anyway. It is better for colleagues to laugh at you for a season while you actively sort your mess out than to remain perpetually in bondage while having to find creative cover up strategies. Be real, face your debt with a plan and work on it. People can only assist someone who is doing something about their situation.
5. Choose not to be comfortable with debt - Refuse it and make the relevant strides out. It is easy to give up and condemn yourself. It is even worse when you then find coping mechanisms to be comfortable with debt. You are not meant to be subject to the lender. You deserve freedom too. Throw away the very sharpened skills of avoiding those you owe. It will certainly catch up with you. When you are thrown in a pit, the optimistic person will find a way out of the pit, e.g. shout for help, find roots to hold on to etc while a pessimist looks around for cushions to make the pit a permanent dwelling place. It boils down to a decision to quit the debt mode. Until you feel the need to get out you can never make it a priority. If it itches so much then you will choose to find a solution very fast.
6. Don't withhold what you don't need - you can only watch one television at a time. What's with TVs in every hallway and in the bathroom too? Your garage is full of cars and yet you are in debt. Get your priorities right and convert some assets into cash. When your head comes out from under the waters, you can still buy newer, modern versions of the same items you are holding onto. Sell off extra assets which you do not necessarily and critically need. Items you can do without or items that can certainly cover a large chunk of the debt you have. What good is there in having many assets and yet losing a good name. Your assets can help buy back the credibility your name needs.
7. Keep communication lines open with those you owe - Sometimes if you are in debt you add stress to yourself, extra effort and work of avoiding and dodging the people you owe. Answer their calls and be transparent about your financial position. There is nothing more disarming than not running away but answering that call and saying "Mr. Davids, I do acknowledge that I am indebted to you to the tune of xx, I have the desire to pay this off as soon as I get my funds. I appreciate your patience with my situation but this is my plan..." The moment you run away you are increasing your own stress level and with stress you are depriving yourself the ability to make enough money to repay. Stress limits capacity to think straight.
8. Create a "cash cow" now - A cash cow is a project that generates cash continually. You may need to increase your streams of income if you are to get out of debt. You can easily start certain projects small enough not to require bank loans and then grow them from there. Reliance on the same salary or project may not get you out of your situation. With more projects you get the leverage when one is not performing well. If ever you have to do some additional borrowing for stocks, be very careful to go for the items you have seen to move off the shelves very fast or only order based on a valid order from your customer. Get customers to pay a deposit so that you won't use much of your own money to finance the order. Tighter cash flow management is necessary when these projects bear fruit. Focus on ensuring that with each day or month that goes, you are sacrificing your comfort to fulfill your debt obligations or promises you have made to the one you owe.
9. Monitor your spending habits - what is taking money away from you? Do you have a budget that you follow? Check on your budget and see what you can afford. Concentrate on things you cannot do without. Remove all unnecessary luxuries. Find means a ways to cut costs. E.g. Ladies, have hair-does that lasts long instead of changing weekly, buy perfume that last you months instead of buying every month-end (remember cheap can be expensive), have family meals and cut down eat out to something you do occasionally, wash your own car - there is nothing special about car wash and vacuum, plan your trips to save fuel, employ only the necessary staff to get the job done not pride in numbers, save electricity by switching on the necessary gadgets only.
10. Get a Financial Advisor - People find family doctors, family lawyers and think less of family financial advisor. It does not cost much but the advice you get is invaluable. We are not all finance or money savvy. There are people who went to school to focus just on financial advisory services. You will save yourself having to wonder in the desert wondering what to do with your seemingly insurmountable debt.
This can however become a way of life where one accumulates debt while enjoying the services and goods being ordered. In some parts of the world, it is easy to buy goods and access services on credit terms. They will entice you to believe that is better cash flow management to get products and not pay for them instantly but over a period of time. Hidden in that agreement is the fact that you end up paying more for the item than you would have paid if you used cash due to interest charges. It is very tempting to be in debt. You can get this imagination that "I can get all I want now and not even pay a dollar for it". The truth is you will still pay for the items regardless of the fact that by the time the demand is placed for the payment you probably have thrown away the clothes you got or the items are now so outdated you actually want to replace them with more debt. It can be an endless cycle where one will simply live and work to reduce debt. Just how does one move out of this frenzy. Here are a few steps that worked for me
The Moves
1. Identify why you are in debt - Causes - Until you identify how and why you are in debt you will either not come out or when you come out someday, you will quickly dive back into it. Are you there because you are impulsive; are you there because you have an image to protect? Why are you in debt? To know the cause of a disease is more important in the cure of the disease than administering pain killers which are merely temporary hits on symptoms not on the root cause. Take responsibility and ownership of your situation. or else you will be a full time blame-shifter full of debt.
2. Live within your means - sometimes you look around at people in the same industry or title or former college mates and you just want to catch up really fast. That will cause you to want to own what you cannot afford just because you want to appear to be making progress. The truth is when you go home and you are now with your family, it's you who faces the heat of a loan or debt you have attracted to yourself. You may occupy a good place in the hearts of your friends and yet your own family sees a great amount of pain from your irresponsible moves. The interesting thing is this: when you are in debt and you cover up, you even help your friends who may be in financial crisis with money just because you want good ratings while you actually deprive the one you genuinely owe. This is real, I have done it and I know I may not be the only one. You can own anything you want to own to the degree of your financial discipline and consistency in handling finances.
3. Own all you have - The hook of credit is covered neatly by the imminent convenience and benefits of "staggered payments". If you can afford the repayments and you are consistent with your repayments then you are not the debtor I am discussing in this article. There is peace that comes with knowing that the house you live in and cars your have are actually in your name and not the bank's name. I have watched with great sadness the effects of the recent global crisis in our neighboring nation of South Africa where owning a car or house was easy as long as you were employed. Repossessions became the core business of banks as people failed to repay loans. People ran away from their own houses in America due to the crunch. But not in Zimbabwe and other parts of the world where you needed the full payment in cash before you were deemed the owner. This crunch was not felt as much even though the economy had been sliding for over 10 years. Principle is that you do not call yourself the owner until the item is in your name. Before that you are merely a steward.
4. Come up with a well thought and well researched plan very fast - Follow it closely - Sometimes the person in debt may have a good plan on what would get him/her out. A bankable plan which can work anytime of the day. However, pride and fear of how people will perceive you can cause you to throw away every plan you creatively create. Since you are in debt there is no need to try and maintain a false impression. Your reputation is already at stake anyway. It is better for colleagues to laugh at you for a season while you actively sort your mess out than to remain perpetually in bondage while having to find creative cover up strategies. Be real, face your debt with a plan and work on it. People can only assist someone who is doing something about their situation.
5. Choose not to be comfortable with debt - Refuse it and make the relevant strides out. It is easy to give up and condemn yourself. It is even worse when you then find coping mechanisms to be comfortable with debt. You are not meant to be subject to the lender. You deserve freedom too. Throw away the very sharpened skills of avoiding those you owe. It will certainly catch up with you. When you are thrown in a pit, the optimistic person will find a way out of the pit, e.g. shout for help, find roots to hold on to etc while a pessimist looks around for cushions to make the pit a permanent dwelling place. It boils down to a decision to quit the debt mode. Until you feel the need to get out you can never make it a priority. If it itches so much then you will choose to find a solution very fast.
6. Don't withhold what you don't need - you can only watch one television at a time. What's with TVs in every hallway and in the bathroom too? Your garage is full of cars and yet you are in debt. Get your priorities right and convert some assets into cash. When your head comes out from under the waters, you can still buy newer, modern versions of the same items you are holding onto. Sell off extra assets which you do not necessarily and critically need. Items you can do without or items that can certainly cover a large chunk of the debt you have. What good is there in having many assets and yet losing a good name. Your assets can help buy back the credibility your name needs.
7. Keep communication lines open with those you owe - Sometimes if you are in debt you add stress to yourself, extra effort and work of avoiding and dodging the people you owe. Answer their calls and be transparent about your financial position. There is nothing more disarming than not running away but answering that call and saying "Mr. Davids, I do acknowledge that I am indebted to you to the tune of xx, I have the desire to pay this off as soon as I get my funds. I appreciate your patience with my situation but this is my plan..." The moment you run away you are increasing your own stress level and with stress you are depriving yourself the ability to make enough money to repay. Stress limits capacity to think straight.
8. Create a "cash cow" now - A cash cow is a project that generates cash continually. You may need to increase your streams of income if you are to get out of debt. You can easily start certain projects small enough not to require bank loans and then grow them from there. Reliance on the same salary or project may not get you out of your situation. With more projects you get the leverage when one is not performing well. If ever you have to do some additional borrowing for stocks, be very careful to go for the items you have seen to move off the shelves very fast or only order based on a valid order from your customer. Get customers to pay a deposit so that you won't use much of your own money to finance the order. Tighter cash flow management is necessary when these projects bear fruit. Focus on ensuring that with each day or month that goes, you are sacrificing your comfort to fulfill your debt obligations or promises you have made to the one you owe.
9. Monitor your spending habits - what is taking money away from you? Do you have a budget that you follow? Check on your budget and see what you can afford. Concentrate on things you cannot do without. Remove all unnecessary luxuries. Find means a ways to cut costs. E.g. Ladies, have hair-does that lasts long instead of changing weekly, buy perfume that last you months instead of buying every month-end (remember cheap can be expensive), have family meals and cut down eat out to something you do occasionally, wash your own car - there is nothing special about car wash and vacuum, plan your trips to save fuel, employ only the necessary staff to get the job done not pride in numbers, save electricity by switching on the necessary gadgets only.
10. Get a Financial Advisor - People find family doctors, family lawyers and think less of family financial advisor. It does not cost much but the advice you get is invaluable. We are not all finance or money savvy. There are people who went to school to focus just on financial advisory services. You will save yourself having to wonder in the desert wondering what to do with your seemingly insurmountable debt.
Rabison Shumba is a young African entrepreneur who has interests
in Information and Communication Technology, Agriculture and Mining. He
is also a motivational speaker, trainer and author. His book, The
Greatness Manual and various online articles are tools for personal and
professional development. Together with 100 other Career Experts,
Rabison co-authored the 101 Great Ways to Enhance your Career.
Rabison has a personal vision of impacting the lives of children in marginalized communities by creating platforms for career counsel and guidance, information empowerment and capacity building through the Greatness Factory Trust, where he currently holds the position of Chairman of the Board of Trustees and Acting Executive Director. He is actively involved in the organization of career enhancement and guidance colloquiums to propel and inspire both young and mature professionals to greatness. His areas of expertise include strategy, leadership, personal and professional development. Rabison is married to Jackie, and they have two daughters. They reside in Harare, Zimbabwe. [http://www.greatnessmanual.com] or http://www.lulu.com/spotlight/rshumba
Rabison has a personal vision of impacting the lives of children in marginalized communities by creating platforms for career counsel and guidance, information empowerment and capacity building through the Greatness Factory Trust, where he currently holds the position of Chairman of the Board of Trustees and Acting Executive Director. He is actively involved in the organization of career enhancement and guidance colloquiums to propel and inspire both young and mature professionals to greatness. His areas of expertise include strategy, leadership, personal and professional development. Rabison is married to Jackie, and they have two daughters. They reside in Harare, Zimbabwe. [http://www.greatnessmanual.com] or http://www.lulu.com/spotlight/rshumba
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