I lost my job and have no savings; do I sell my house to sustain my family lifestyle?

Dominic Karanja is a financial planning and investments consultant

Your current financial situation is unsustainable without a steady income. Monthly outflows for vehicle payments, household allowances and expenses alone are Sh150,000, excluding other essential expenses like fuel, vehicle maintenance, utilities, and school fees. You must address this deficit immediately.

The vehicle payment represents your largest ongoing expense and has a substantial impact on your financial stability, particularly when compared to the inherited land. By selling the vehicle, you can immediately eliminate a significant monthly obligation of Sh60,000 and also secure a lump sum to settle the outstanding loan balance. This step directly mitigates your principal financial burden and offers prompt financial relief. Conversely, the land is a valuable asset that holds considerable sentimental significance. Therefore, it should be regarded as a last resort for liquidation rather than an initial solution. It is advisable to use the proceeds from selling your vehicle judiciously. After settling the outstanding loan balance, consider the remaining funds as an essential resource for financial stability, ideally sufficient to sustain expenses for several months while seeking employment opportunities or developing alternative income streams. If a vehicle remains necessary, allocating a modest amount from the sale proceeds to purchase an economical, pre-owned automobile can help preserve mobility for interviews and family responsibilities while minimising ongoing expenses.

Following the sale of the car, collaborate with your family on a revised budget. Your home represents your greatest investment so far. I would not recommend selling it at the moment. At least one of you is earning, and without the expense of rent, your family can survive by readjusting your budget. Engage in an open and respectful discussion with your spouse as an equal partner to review your current financial situation. Her income, along with substantial reductions in household expenses, will be instrumental in achieving financial stability. This process should be viewed not as a matter of pride, but as a necessary step toward resilience and teamwork. Additionally, consider temporarily reducing or suspending allowances for your children and spouse, clearly communicating that this measure is intended to support the family's recovery and is only temporary.

Refrain from selling your inherited three-acre land in Narok County at this time, as it represents not only a significant asset valued at approximately Sh6 million but also an important family legacy. Given that property in Narok appreciates due to ongoing developments in agriculture, tourism, and infrastructure, retaining the land may allow you to benefit from long-term value growth. Consider liquidating this asset only as a last resort, if after six months or more you remain unemployed and require substantial financial support. In such circumstances, proceeds should be strategically invested.

Meanwhile, explore opportunities to generate passive income without selling the property, such as leasing parts of the land for grazing, small-scale farming, or eco-tourism initiatives. These options can provide annual returns ranging from Sh20,000 to Sh50,000 depending on market demand. Consult with local farmers or real estate professionals in Narok to assess feasible possibilities and facilitate prompt implementation.

If selling your inherited land is the most practical course of action, allocate the proceeds in a manner that supports your family's financial stability. Consider using a portion of the funds to settle any outstanding debts. Subsequently, establish a financial safety net by reserving a substantial amount, typically between Sh2 million and Sh3 million in a high-yield savings account or money market fund, which should provide for your family’s living expenses over a period of one to two years as you pursue new employment opportunities. The remainder of the capital should be invested with care to facilitate passive income generation and long-term financial growth. Potential avenues include diversification into Treasury Bills or Bonds, investment in a small-scale rental property, or initiating a business aligned with your skill set.

I strongly recommend that you seek guidance from a qualified financial advisor to ensure your strategy reflects your unique circumstances and long-term objectives. For instance, being jobless can result in desperate attempts at making money, some of which might not be very well thought out. Once you offload your vehicle, do not be quick to get into ventures that you have no expertise in, with whatever balance you have after clearing off your loan. With available assets and a supportive family structure, it is possible to resolve this issue and still save your house and land. Expand and tap into your social capital to get back into employment as soon as you can. Do not be overly choosy by maintaining that you can only take a job that will pay as high as your previous job. Instead, get one foot back in the game and the cards will soon fall into place.

Take your current predicament as a lesson and prioritise an emergency fund once you start earning again. Whereas it is good to have immovable assets, it is equally good to have liquid emergency funds tucked in interest-earning instruments that you can access with ease when the worst hits the fan. You will also need to revise your household budgeting process to ensure that you capture all your expenses, including school fees. This will give you a clear picture of where your money goes and what expenses need to be trimmed down or abandoned altogether.

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