I am doing very badly in life. I live upcountry and I am currently not employed. I have zero capital for investment and have no savings. However, I own a piece of land worth Sh500,000. My highest monthly expense is rent at Sh3,300.
I am cornered on what to do to meet this expense as well as daily living needs. What do I do with my piece of land? Should I sell it to start a business?
If selling is a bad idea, how can I build room on this land and move in to cut off this rent expense? Please help me. Allan
Chacha Nyaigoti Bichang’a, a financial coach at Chachanomics Consulting Firm .
Allan, it does not mean that you are completely finished, even though you feel that you are in a tight corner. There is light at the end of your financial tunnel. To address your financial challenges, adopt these seven strategies: appreciate your financial situation, do not prioritise selling your plot, consider ways of building an affordable single mabati room, explore options of raising money without selling your plot, start a side hustle and learn the basics of personal financial management.
1). Appreciate your current financial position
It is important to acknowledge the fact that you have a plot worth Sh500,000, your rent is low, you live upcountry where the cost of living is low, you are in good health and able to think clearly. Do not let hopelessness get the better of you but count your blessings one by one. Look inwards, into the survive strategies that you have been relying on to get by as these will come in handy as you navigate your way out of your current predicament.
2). Do not sell your only valuable asset (land)
It is not in your best interests to sell your only dependable asset due to various reasons. One, as a fixed asset, land is very difficult to dispose of as soon as possible at current market rates unless you sell it at a throw away price. Due to your predicament, and the urgency with which you need financial resolution, there is a high risk that you would not get the true value for the land if you were to dispose it.
Two, selling to raise capital for a fresh business is a risky move that has higher chances of failure as opposed to success. Many start-up businesses fail when started out of desperation instead of being fuelled by passion, skills and experience.
Three, the proceeds of the sale are likely to disappear quickly without a stable flow of income. For example, if you sell your land at Sh500,000, a small capital-intensive business may consume Sh200,000 to Sh400,000 to start. Rent, food and other basics may deplete the remaining amount. This kind of scenario will make you landless within six to twelve months. You will be landless, financially broke, and in a worse situation than you are currently in. Selling land, therefore, should be the very last option.
3). Do away with rent of Sh3,300
Rent presents you with the biggest challenge so far. It is critical that you find a way of doing away with this expense as soon as is possible. For example, if you had been saving Sh3,300 monthly instead of spending it on rent, you would be saving around Sh39,000 annually. To do away with this expense, put up a simple structure at your land where you can start living rent free. Let us explore further how you can do this.
4). Consider ways of building an affordable simple structure
You do not necessarily need a permanent house. You can start with a simple mabati or mud-walled structure. The option of a simple mabati structure will require materials with the following cost estimates: timber poles Sh6,000, mabati/iron sheets Sh10,000, nails and fittings Sh2,000, labour Sh5,000, door Sh3,000.
The estimated total amount ranges from Sh26,000 to Sh40,000. This amount is sufficient for one room, bed space and a small cooking area. The construction work will take you two to three months, building slowly. If the capital were ready, this would take a week to a maximum of two weeks to complete and move in. This cost can be slashed downwards if you go for a simple and temporary mud-house that will only require poles, a door, a window and iron sheets.
5). Explore options of raising building money without selling land
Option one: consider selling a small portion of the plot instead of disposing of the whole parcel. The fact that your land is located upcountry implies that it is not a 50 by 100 plot. For example, if the land is an acre, cut a small piece such as 50 by 100. This small piece can fetch Sh80,000 to Sh100,000. Use this amount to build the single mabati room suggested above and to meet basic needs like food and personal effects. This option is much safer as it helps you retain part of land.
Option two, do temporary casual work. Look for manual jobs like farm work, being a layman at a construction site, boda boda assistant, loading and offloading luggage, cart-pulling, and running small errands. This will enable you to make Sh200 to Sh400 daily. Don’t be too selective when it comes to choosing work.
If you have parents in the area you currently live, you may consider moving back home. This is not defeat and it will give you a breathing space to start working your way up again. Also, depending on your skill set and passion, you can engage in online gigs in your areas of interest.
Option three, seek support from your family members. Ask for building materials like poles, timber, old mabati, door, window and even some money for construction. Some members may be willing to help you.
6). Start a side hustle after moving in
Once you start to get a breathing space, think about small income-generating activities that you can start within your township. As suggested above, drop your ego and take whatever hustles come your way. Create networks and build on them. You can start selling vegetables, firewood, charcoal, chicken, eggs, fetching or supplying water at a fee, being a broker of farm produce.
7). Learn the basics of personal financial management
To avoid falling into a similar predicament in future, acquire basic financial literacy skills like budgeting, tracking your money, saving and investing, using debt wisely (differentiating between good and bad debt), and taking calculated risks. Such knowledge and skills will help you plan and manage your money better. Remember, no money is valueless.
Account for every coin that you make. Do not sell your plot and open a big business immediately. Prioritise eliminating rent expense, stabilise, and build your income gradually. Keep the plot for long-term plans as it appreciates around Sh1 million in the near future.
