DEALING WITH DEBT - 7. FINANCIAL SOLUTIONS

In our third article in this series, we saw some NATURAL reasons why people get trapped by debt. I emphasized the truth that life sometimes throws some curve balls at us and our inability to catch the balls sends us and our finances the wrong way into debt. I also want to be clear on it that some life events could be so hard that it could wipe off all we have ever tried to gather. But my point is this, it is better to have an initial financial backup to confront the attack first. If there comes any reason why further financial resources that are above your capacity will be required, you can then source for help from other sources like friends and family, associations, etc (But by then, it would have been clear to all that you didn’t go down without a fight).  And there are proven principles that are guaranteed to guide just anyone who cares to build a financial backup.

1. Understand the laws that guide money.

“My people perish for lack of knowledge.” Hosea 4:6. “...and with all your getting, get understanding.” Prov 4:7. Life I say again was created on principles. To maximize life in any area and also avoid the pitfalls in any area of life, you must seek to understand the principles that work in that area of life. Money is not left out. Failure to adhere to those laws automatically causes money to leave you as soon as it enters your hands. Even if you have all the money today, without proper knowledge of the laws of money, someone with the understanding will soon whisk the money away from you LEGALLY. Let us look at some of these principles.

Having a financial goal

Some people are just living by the day without any definite plan(s) for their money. They just get it, and spend. No projections whatsoever. They are waiting to hit big money before they take on any meaningful project in life, misquoting the bible where Jesus said that we should "allow tomorrow to worry for itself..." To win in the area of finance, it must be made a goal. I am not much of a long term goal(s) person for certain personal beliefs, but I am all in for short and medium term goals, with the options for rolling them over as the years progress, and to successfully meander through life and ensure that I hit those targets, I set goals and money management can't be treated with laxity if indeed I am serious about meeting those goals. This is because money is very instrumental in getting most of them done and for now, I do not have all the money I need to achieve them (only a few people do anyway). Therefore in the face of 'scarce' financial resources, wisdom demands that I sit down, write out my goals, calculate my annual income and expenses and use that to make projections as to how best to allocate my financial resources to ensure that the world doesn't leave me behind in the scheme of things. You must have a goal. It will determine how much you will have to save and spend. It will also show you if you have enough disposable and discretionary income, or if you will have to get an additional source of income among other things. Get a plan today.

Building savings and reserves.

Saving money is a principle that has prevailed over centuries and is a guaranteed method of preserving your earnings. What you spend is gone, but what you save is still with you. I do not know of any genuinely wealthy individual who has not mastered the act of saving.  You must save up at least 3-6 months of your monthly expenditure either in cash or in the money market where it is not easily accessible on regular basis but can be gotten quickly on demand. This will help you to attack any eventuality that comes up without becoming instantly disorganized immediately the problem hits you. You must learn to save money. Develop the discipline of watching your money grow overtime without touching it. One simple way that is recommended is to save at least 10-20% of your income every month. And please if you lack discipline, save in places where the money is not within your reach. Eg. Save in banks that you do not have everyday access to. You can still save the money in using Bonds & Mutual funds.

Build reserves

This is needed even while you are paying off your debts. Figure out a way to save even small amounts of money over time. This will enable you attack any other issue that will come up during your debt repayment period so that you will not start accumulating fresh debts while you are working to be debt free.

Budgeting

As hard as this seems, it only requires discipline which any serious individual is supposed to posses in the first place. You should be able to sit down before money enters your hands to draw up where the money is supposed to go. Most people spend money on impulse and this has cost them more than they were willing to pay. In line with your financial goals, allocate your resources, and please follow your budget as the money comes, be it in bulk or in trickles. Remember that it takes discipline. This is so important because your life and future might be dependent on how well you managed your resources when you had it streaming into your hands. When preparing your budget, build in the amounts you wish to pay off from the debts you owe.

Investing

While saving means to keep money aside for use at a later time or period, investing is a process of growing your money by committing it into a venture(s) that guarantees returns (profits, interests etc) overtime. Money in itself does not have the ability to multiply. If you keep a million naira safely locked up in a box over a period of time, say 10 years, the money will remain the same without any addition to it( on the face value though, because the purchasing power  would have diminished because of inflation over those years), but if you buy assets like Land or invest in the capital market (with wisdom) or better still in a business, chances are that the money would have multiplied in tens or even in hundreds as the case may be.  

Pray

There indeed a God and he answers prayers. He only is the one that has the ability to keep bad situations far from you and your family. He can guide and protect you. You really have to know him first if you have not. You can’t really go through this life without God, you will barely make it through life safe and sound. A lot is dependent on prayers to go through life safely. I am an unapologetic Christian and I strongly believe in the existence of the devil and bad spirits that can cause harm sometimes to good people. Prayer is one guaranteed way to fight off those spirits. Can you pray?

And finally

Celebrate God for every dime you pay off your debt.

No matter how small, praise works wonders. Appreciate God for his help to enable you bring down your debts no matter the amount you paid off. Whenever you thank God for something, he blesses you with grace and favour to achieve more of that. Never ignore this principle. It is the MOST IMPORTANT of all.

To be continued...

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