Escaping The Debt Trap

repossessionThe grim faced men stormed past our front door and up the stairs. I heard them knocking loudly. After a few minutes, they descended again, this time carrying household items; fridge, TV, microwave and sofa sets. ‘I didn’t know our upstairs neighbors were moving!’ I remarked to my next-door neighbor. ‘I don’t think they are’, he replied. ‘Those are not movers, they’re auctioneers!’

Being repossessed or otherwise harassed because of failure to pay a debt is one of the most humiliating experiences you can ever go through! Many people discover too late that debt is often a path not to quick wealth but to humiliation and poverty. Debt is also one of the surest ways the enemy uses to destroy people’s  purpose and destiny today!

So what if you’re already heavily in debt? How can you escape the debt trap?

gazelleThe richest man of his time once gave this advice to people in debt – “Free yourself like a gazelle from the hand of the hunter” (Proverbs 6:5). This is not a cute little metaphor! When a gazelle catches wind of a predator, it takes off with all its might. . Even a cheetah, the fastest animal in the world, has a kill rate of only 5% when it comes to gazelles. Is it because the gazelle is faster? No! It’s because it is focused. The lesson from King Solomon is that you’ll only escape the debt trap if you have gazelle-like intensity!

In my book ‘Financial Fitness’, I explain the following four steps to get out of debt. STEP ONE is to take a deep hard look inside to discover what led to your situation. Constant indebtedness is often a symptom of underlying fear, pride, or a get-rich-quick mentality.  You need to be able to face the truth and ask God’s help to think and act differently. You need to ‘be transformed by the renewing of your mind’ (Romans 12:2). This may also mean forgiving others who may have let you down. True repentance may mean cutting up your credit cards and making a commitment; ‘I will never borrow again’. As the saying goes, if you find yourself in a hole, the first thing you want to do is stop digging! Then ask God for wisdom to build wealth the right way (see James 1:5)

pay debtSTEP TWO is to create a survivor budget, which includes only absolute necessities; basic food, shelter, utilities, clothing and transport. You may need to sell your furniture or car, move back to your parent’s home or cheaper house, or look for a second job. I know it sounds crazy but when you’re on a cheetah’s breakfast menu, only gazelle-focused intensity will save you!

Remember, if all the Joneses (the cool looking broke people) still think you’re cool, you’re probably not focused enough. You have to get passionate about it. Your destiny is at stake… This is war!

no debtSTEP THREE is to make a plan to pay off all your creditors, starting with the smallest debt first. Paying off the smallest first creates quick wins, which increases your motivation. Plan to negotiate with the rest of your creditors to make a minimum payment on each of your debts except the smallest. Every extra shilling you can squeeze from your survival budget goes towards the smallest debt until it’s paid. Once done, turn attention to the next smallest one and then the next. Every time you pay off one, the amount available for payments gets larger and your momentum increases.

STEP FOUR is talk to all your creditors. Show them that you have a plan and intend to pay something each month until you do. The worst thing you can do is go quiet on them. Ask God to help them see your sincerity and extend grace to you.

All this is certainly not easy and it may take several months or even years, but the result is freedom to start again. So are you ready to start? Remember, it will take gazelle-like focus and intensity to escape the debt trap!

God and debt

This weekend, catch Pst Oscar at Mavuno Church as he continues with the counter-cultural and transformative series, ‘The Four Horsemen Of Financial Ruin’

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.

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!