I took Sh1.95 million to buy matatu but wife now wants M-Pesa shop, what do I do?

My name is Lucas. My wife and I live in Kitui Town. We have one child in Grade Three. I am employed by the Teachers Service Commission and my total earnings are Sh68,336.

I recently took a loan of about Sh1.95 million whose repayment instalments will be around Sh26,000 a month.

Together with my spouse, we have some savings where I can access Sh800,000. My plan is to buy a locally used 16-seater matatu (KCU to KDB) to ply the Nairobi to Kitui route.

My total deductions including the loan installments are about Sh44,000. This leaves me with a net pay of Sh24,560.

My monthly expenses are as follows: Rent Sh12,000, Food Sh10,000, DSTv Sh2,000.

I don’t have a budget for transport as I live near my workplace. My wife is employed and earns about Sh35,000 a month, and is helping pay our children’s school fees of Sh15,000 per term.

She has a goal of starting a one-stop money transfer agency (MPesa, Equity Agent, KCB, Family, Co-op Bank Agents) side hustle.

She suggests we should start this business first before we buy the matatu.

Now that I am earning less, I feel like she wants to bulldoze her way and emasculate me. Am I right?

Should we start the business or buy the matatu? How best can we utilise the loan and the savings we have?

Rhina Namsia, founder of The Acemt Consulting

With a loan of Sh1.95 million and monthly payments of Sh26,000, you are probably going to pay the loan for more than five years.

Consider the possible changes in your life and expenses that may come with the changes in the five or so years with the same income.

A business is a venture that may not guarantee your capital back. Breaking even may take long as well.

With that in mind, build your bases as well and ensure you have covered your child's education that starts in a year’s time, and any emergency that may occur.

Before starting any of the two businesses, whether matatu or a money transfer agency, you two need to sit down and listen to each other and work towards a common goal without competing.

Maybe your wife feels that the matatu business is riskier and perhaps you don’t see her agency business as lucrative.

Determine the pros and cons of each business, consult with those already in the ventures and get to understand how each is run, and possible return on investment, and then make a decision.

A matatu business may be more capital intensive and carries more risk unlike the money transfer agency business.

You don’t have to put all your eggs in one basket. I’m referring to the Sh1.95 million plus Sh800,000 savings. Diversify the investments and do both businesses so that one may cover the other in times of decline.

This means that you might need to shop harder for a second hand, well-maintained van going for between Sh1.7 and Sh1.9 million, and leave the savings for capital for the money transfer agency.

Start small, and do not put all the money at once in a business. Come up with a proper business plan to forecast the cash flows of each business so that you get a glimpse of how and if the loan can repay itself.

That way you can run a healthy business and do more with the extra money.

Note that while the money transfer may require more daily operating capital, this capital is easily redeemable and could also grow daily as per the commissions of each financial services provider you enroll with.

Lastly, bringing in emotions of feeling bulldozed because you earn less could be the work of your own insecurities. Sit down and talk with your spouse and work towards a common goal. You’re not earning less, you just took a huge loan and want to do a business that will benefit both of you.

If you have any money problems, send us an email at [email protected] and leave your number for contact. Money questions will be answered on this column.