Escape The Debt Trap

For a lot of Nigerians, life is aspirational. We all aim to live better than we did yesterday, so we put our energies into acquiring wealth (or, at the very least, reasonable comfort) and status. At its best, this quest for self-improvement drives hard work and discipline. But at its worst, it leads to excessive borrowing and massive debts.

And getting trapped in a cycle of borrowing and paying debts is dangerous because, among other things, money will never last in your account, you won’t be able to save, you may even have to borrow to pay back some debts (leading to more debt) and your peace of mind will be constantly threatened.

If you’re looking for ways to escape perpetually owing money, these are some things you should do:

1. Stop borrowing for the wrong things.

Some people borrow to start a business, grow a business or to cover basic needs during emergencies.

Others go into debt to impress other people or because they don’t want to feel left out, making excuses for a lifestyle of borrowing with statements such as “I just had to have it” and “All my friends were buying it.”

While it is true that the pressure to fit in and appear wealthy can be very great, this is also true:

Not everything you want to own justifies borrowing.

Going into debt just because you want something (note: not a need) is unwise by all standards. So, unless your survival is at risk, you can safely delay owning certain things till you can afford them comfortably (with your own money).

PS. For some help with making better financial decisions, see these questions.

2. Start saving.

You already know how obsessed we are with saving, so obsessed that we’ll pay you up to 10% interest on your savings goals. What you may not know however is that having a culture of saving is a good way to avoid going into debt. Saving for the things you want not only keeps you from a life of owing, it gives you a strong sense of achievement and responsibility. You can literally be proud of yourself when you save successfully. The savings goals feature on ALAT is working for many people and it can work for you as well. Look for Goals on the ALAT app menu and save your way to a life free of debt.

3. Make a plan to pay back what you already owe.

If you’ve already borrowed money, we have something for you as well. The fact is, the earlier you start paying back what you owe, the better for you (especially when there’s interest on the debt). Having a repayment plan, when not automatically put in place by your lender, is important to help you manage your money.

Based on your income, work out a percentage of the debt you can afford to pay per monthly, quarterly or yearly with money left over to cover your needs and to save (so you’re not forced to borrow more). When you’ve done this, use the ALAT app to make your first payment, then set up a recurrent payment of the same amount with the app. This way, as long as you have money coming in regularly, you will gradually pay back your debt without putting yourself under pressure.

This post is part of Free Yourself, our personal independence series. Catch up on the previous installments here and here, and contribute to the #FreeYourself conversation on Twitter and Instagram. You can also tell us how what you’re doing to live a life free of debt in the comments section below.

Free yourself How to avoid debt How to pay debt Independence Day 2017 
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