I am 31, single with one child and a baby mama I support. I live in Migori and deeply love the soft life, but I feel I have lost control of my finances. I earn Sh97,000 net salary per month. My expenses are as follows: School fees Sh6,500, Child support Sh10,000, Bank loan Sh11,600 (13 remaining monthly instalments), mobile loan one Sh7,000, mobile loan two Sh8,300, mobile loan three Sh100,000, mobile loan four Sh60,000 (all one year in default), Loans from various friends Sh70,000. Rent Sh15,000, clothing and shoes Sh10,000, weekend entertainment Sh12,000, two girlfriends’ support Sh25,000, Internet, power and water Sh5,000, mum Sh1,500. How do I get out of these debts and still live my soft life?
Dominic Karanja, a financial planning and investments consultant
An examination of your monthly expenses (Sh96,600) in comparison to your net salary (Sh97,000) indicates that nearly your entire income is allocated to regular bills, excluding the significant outstanding and defaulted loans.
Begin by addressing outstanding debts. Defaulted loans not only negatively affect your credit score but also accumulate penalties that can further hinder repayment efforts. Promptly contact both your mobile loan providers and any friends to whom you owe money. Clearly outline your circumstances, demonstrate your commitment to repaying the debt, and negotiate feasible repayment arrangements, as many lenders are amenable to such discussions.
Once revised terms are agreed upon, adopt the "debt avalanche method," targeting repayment of debts with the highest interest rates or penalties first to achieve long-term savings. This is particularly important for defaulted mobile loans. Concurrently, maintain consistent payments on your bank loan. With only 13 months remaining, full repayment will release Sh11,600 each month, offering significant financial relief.
Significantly reduce non-essential expenditures. The Sh25,000 allocated for partners support may not be sustainable under your current circumstances. While personal relationships are important, ensuring your financial stability is crucial for both your well-being and that of your child. Have an open and honest discussion regarding your financial challenges and consider either substantially decreasing or temporarily suspending this support.
Significantly reduce or temporarily suspend the monthly entertainment budget of Sh12,000, and instead seek out free or low-cost social opportunities. Withhold expenditure of the Sh10,000 allocated for clothing and footwear unless there is a clear necessity for work-related items, as your existing wardrobe is likely adequate at present. Finally, review your Sh15,000 rent expenditure. Although this amount may be reasonable for the Migori area, evaluating more affordable housing could provide valuable financial relief at this time.
Establish a detailed budget aligned with your revised expenditure. With a net salary of Sh97,000 and projected essential monthly expenses totalling Sh49,600, a balance of Sh47,400 remains. A considerable portion of these funds should be allocated toward the repayment of defaulted debts. By designating Sh15,000 for food by emphasising home-prepared meals and Sh5,000 for transportation by utilising public transport options, you can reserve Sh27,400 each month specifically for loan repayment. Maintaining this disciplined approach will help in reducing outstanding debt.
Seek opportunities to increase your income. Even modest supplementary earnings can have a significant impact. Consider leveraging your existing skills through freelance work, selling unused items to generate additional funds, or pursuing part-time employment for a few hours each week. Incremental efforts in these areas can collectively yield meaningful financial progress.
It may be necessary to reconsider your definition of "the soft life" for the near future. Although leisure and recreation remain important, attention should now be directed toward achieving financial security and reducing debt. Consider engaging in free or low-cost activities such as spending quality time with your child, visiting local parks, enjoying nature, reading, listening to informative podcasts, exercising, or acquiring new skills online.
Emphasise experiences rather than expenditures, choosing activities like picnics or walks over costly outings. Keep in mind that these adjustments are temporary; the discipline demonstrated during this period will contribute to attaining a more authentic and stress-free "soft life" in the long term.
After eliminating outstanding debts, the subsequent priority should be to establish an emergency fund sufficient to cover a minimum of six months’ living expenses. This financial buffer will serve to protect against unforeseen circumstances and help prevent a recurrence of indebtedness.
Once this foundation is in place, focus on investing to secure both your future and that of your child. As your financial situation strengthens, carefully reintroduce discretionary expenditures such as entertainment and personal spending, while ensuring these remain within a budget that supports ongoing savings and investment objectives.
While this process presents challenges, it remains entirely attainable. It requires discipline, transparent communication, and a temporary reordering of priorities. By proactively addressing debts and making informed financial decisions, you can establish a solid foundation for lasting financial independence and long-term well-being for yourself and your family.
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