Dangers Of Debt

credit cardsShe was excited when her friend told her about the opportunity to start a ‘side-hassle’. It seemed such a sure thing! So she applied for a bank loan and invested it all in the business. That was six months ago. Today, she’s full of regrets. The business proved to be a lot more work than she had been led to believe and has picked up very slowly. Worse still, her company is going through an unexpected financial crunch and she’s not been paid for the last two months. She even ended up borrowing from a loan shark just to pay last month’s rent. And she’s terrified at the thought of what will happen if this month’s salary doesn’t come through on time!

Welcome to the realities behind ‘easy credit’!

Some people get into debt because of reasons beyond their control; a major illness or accident, or somebody died and they inherited a debt. But most people get there because they don’t know any better! The conventional wisdom today is that debt is leverage: That it’s normal to live in debt and that you will never succeed unless you borrow; whether it’s to start a business, buy shares, pay school fees or pay for some new dresses from the lady who comes round at the office.

debt1Even though the good book doesn’t call debt a sin, it repeatedly points out the dangers of debt. Debt is enslaving. As the richest man of his time, King Solomon, wrote in the book of Proverbs, ‘The rich rule over the poor and the borrower is a servant to the lender’. Once you borrow, the lender literally ‘owns’ you! Their actions affect your mental health and how well you sleep. For example, when banks revise their interest rates upwards, you might get a note in the mail informing you about the new rate. But they certainly won’t ask what you think about it!

Debt is also expensive. Again, Solomon counsels, ‘Do not be a person who strikes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you’. When you’re in debt, the principle of compound interest works against you and you end up paying far more for the things you buy than if you saved up and paid for them.

debt burden 2And as our friend found out, debt is presumptuous. It’s based on the assumption that we can control our ability to pay in the future. Solomon warned, ‘Do not boast about tomorrow for you do not know what a day may bring forth’.

Ultimately, easy access to credit can promote a culture of consumption rather than a culture of savings. It can destroy the ability to learn to live and invest within our means. Paradoxically, that’s an almost sure path not to quick wealth but to poverty!

This week, Pst Oscar continues the awesome series at Mavuno Church – The 4 Horsemen Of Financial Ruin.

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Created For More!

profit

The sole purpose of business?

I had a delightful dinner recently with two business executives who work for one of the largest food companies in the world. Through their very influential positions, they have pioneered an alternative economics model that challenges the prevailing global paradigm that the sole purpose of business is to maximize shareholder profit.

‘The economics of mutuality’ as they’ve dubbed it, is based on the biblical Jubilee concept in Leviticus 25 and sees the three-fold purpose of business as being to provide for ‘people, planet and profits’. In other words, the company’s managers in their numerous units across the world will only be considered successful if their business adds real value to all the people involved (farmers, buyers, factory workers, distributors and consumers), leaves a positive environmental impact and also brings reasonable profit to shareholders. This humongous multinational with turnover larger than Kenya’s GDP is seeking to implement this revolutionary model across the board so that the company’s success is measured from all three bottom lines!

triplebottomlineWith the blessing and funding of their company, my friends are also working with one of the world’s most prestigious universities to design an alternative MBA to educate the next generation of business majors differently. Their goal is to change how we all think about business. There is much openness to their work, especially after the global economic crisis revealed the brokenness in our prevailing individualism-driven, greed-based capitalistic approach to business.

I really enjoyed the meeting with the two gentlemen. Apart from my obvious fascination with their work, it was fun watching them in conversation. Their eyes lit up and it was clear that this was more than just a job to them. It seemed to me that they would have done what they were doing even if their company wasn’t paying for it!

thankgoditsmondayAfterwards, I reflected on how many people today are trapped in jobs that they don’t enjoy and that don’t have any meaning for them other than their monthly paycheck. So many dread Mondays and thank God when it’s Friday! And many people I know are miserably waiting for the day when they eventually make enough money so that they will be able to do more meaningful things that will give them joy.

The good book says that God pre-designed each one of us for a unique purpose. None of us is here by coincidence or by accident. None of us was designed to simply be born, go to school, get a job, make money, get married, have children, retire and die. There is a much bigger reason for your existence! When like my two friends we discover and begin to live out that purpose, we understand that our natural talents, passions, personality and even our life experiences (whether positive or negative) are all gifts to help us excel in the thing that we were created for!

You owe it to yourself to discover and pursue your purpose. Your family, friends, neighborhood, workplace, industry, nation, continent and even the entire world could end up being dramatically impacted for the better when you do!

Excellence From The Inside Out

runninglateHe was practically sprinting because of how late he was for the important meeting. He mind was on overdrive, striving to come up with an acceptable excuse. Finally, he opened the door to the boardroom. To his great relief, most of the other attenders had not yet arrived. Only the company secretary was there, and everyone knew she was always on time. After greeting her happily, he said, ‘Phew, I thought I was late!’

Okay, that’s a fictional story. But it’s one that is replayed many times every day in our city where we often run on AMT (African Mean Time)! The thinking is that if everyone else came later than me, then obviously I can’t be late. But this just a symptom of the fact that our standards of excellence are not based on an internal frame of reference but on what others around us are doing.

imitationSo guess what happens in Nairobi when you start an innovative business? Some sharp Kenyans will ‘copy paste’ it and soon everyone else will be doing it! This practice is not just the preserve of small ‘jua kali’ businesses. A few years ago, a local bank developed the innovative idea that they could lend to the ‘un-bankable’. After years of backbreaking labor, it finally began to pay off. So every other bank quickly rushed to copy what they were doing! ‘Copy and paste’ seems to be a national value. Have you ever noticed how identical most of our news programs are on TV, including the intro clock at a certain time? If you watch in black and white and ignore the company logo, it’s impossible to know what channel you’re watching!

Now I need to say at this point that there’s nothing wrong with doing market research or with adopting what is obviously working elsewhere! But we need to be careful that we’re not just following the herd, dependent on what others are doing. The inevitable result is inconsistency and mediocrity.

The good book has a great story about a civil servant named Daniel who regularly got promoted regardless of which government was in charge. After sixty years of public service, his envious opponents commissioned an audit of his work to try and get him fired. But it was futile! As the story goes, ‘Finally these men said, “We will never find any basis for charges against this man Daniel unless it has something to do with the law of his God.”’

excellence3Daniel’s excellence was not based on who was watching or on what the competition was doing. It came out of knowing who he was and what God expected of him. You see, excellence is not something you put on for show. It’s not something you do for money or promotion. If you develop a lifestyle of excellence, you don’t come to meetings late because you know no one else keeps time. You don’t change your game plan every time the competition changes theirs. And you don’t need someone to look over your shoulders to get your work done well!

Do You Work Hard Or Smart?

muddy roadOne of our greatest strengths as Kenyans is that we are very adaptable. When the going get tough, we adapt! If the potholed road outside your house is muddy, you buy gumboots and pray for the day you’ll own a car! But this adaptability can also be a great weakness. It keeps us from constantly questioning the way things are and from building systems to help us change our reality.

As a child, I remember my dad remarking after a trip to the US that he thought Americans were very lazy. The reason was that they were always creating machines and systems to keep them from working hard! His background had taught him the value of working hard but not of working smart.  Not to be too had on my old man though because my own generation is not that different! A while back, I visited a German friend who lives on the outskirts of Nairobi. I was fascinated to discover that he had created his own electricity supply from damming a nearby river and created solar panels from local materials. In addition, his water supply was entirely from trapping all the rainwater from his roof into huge tanks!

rainwater harvestingThe reality is that none of that is rocket science. But while many of us pray for rain; we have little ability to store it when it comes. As a result, while my friend’s home city of Berlin only gets sixty five percent of Nairobi’s rainfall, no one worries about rain there; they never have droughts or power shortages because they have systems to use the little they get efficiently!

One of the reasons why we adapt to difficulty rather than create systems is because we feel we don’t have the time. I mean who has time to find out where the ward office is or how much CDF money has been set aside for roads in our area? But by creating our little private solutions, we fail to provide effective solutions for ourselves and those around us.

A second reason we prefer to adapt to difficulty is because of the benefits of inefficiency. If you write down your current job into manuals so that anyone can do it, people may no longer think you’re a genius! If you train others to run your company, people might no longer think you’re indispensable! Many working moms don’t have systems to help them manage their housework and kids. As a result, they’re always tired and even the time they spend with their kids is not pleasant. But the result is a martyr feeling – ‘I’m suffering for my kids’. Not having systems carries it’s own subtle reward!

The good book in Hosea 4:6 says ‘my people perish for lack of knowledge’. Note that it says knowledge not prayer! Investing in systems means that we stop bothering God with things we can do for ourselves and turn our prayers to the things that really count. As a friend once told me, God gave us a brain so that we can give Him a break!

What are the areas in your life that are sorely lacking in systems? What can you do this week to start working smart?

lack of knowledge