“But everyone is doing it!”
That was my plaintive cry to my mum as a child. I wanted to be like all the other children at school, in the neighbourhood and within the family. By now I believe you know my mum well enough to guess what her answer would be. It ranged from:
- “You are not everyone” to
- “My child is not doing it” to the famous
- “Because I said so/no” to
- A look that my mind correctly interpreted as “If you continue whining and embarrass me in public, you will regret it when we get home”
Needless to say, I never got my way in these situations. It never occurred to me to reason with her logically. At that point in time, it was whining and tears. Never worked on my mother then. She was a tough one – still is as her grandkids would attest. I suppose it is the teacher in her.
Credit cards used to be the purview of the wealthy who could afford to pay for them. Nowadays they are marketed to everyone including students who still rely on their parents for pocket money. Spend money you do not have now and repay it later in inconsequential amounts. At a negligible fee – or so it seems at first glance.
Mobile banking has also made credit readily available to anyone with a phone. No muss, no fuss. You can request for a loan by a few clicks or swipe of your phone. Less than five minutes later, your loan is approved and loaded into your mobile phone wallet ready for you to spend. You can do this while literally sitting on your sofa.
It is so easy and commonplace to get loans that we forget about the loan interest and repayment. Just because everyone and their grandmother are getting a loan does not mean you MUST join the bandwagon. It is just a fad that will pass. Hopefully sooner rather than later. Have you noticed how partial to debt the government has become of late? They too, like you and I, have been infected with the easy debt bug.
Like any other service offered by a business, there is a cost. A fee that profits the service provider. Otherwise, they would never engage in the business. What is negligible when you look at it as a stand-alone charge, adds up to a lot when you cumulate it. Review your bank or m-pesa statement. How much have you paid as transaction fees from January up to date? Are you willing to pay the same amount for the remainder of the year?
Take the example of M-Shwari. You borrow Kshs.16,000 and you are expected to repay the loan with interest in 30 days. The interest is a modest amount of Kshs.1,200. Which is 7.5% interest per month. Now if a bank offered you a loan at 50% interest per annum, you would protest very loudly. However, that works out to a modest 4.17% per month! How is that for perspective 🤔?
Unless my maths is wrong…
Author of this article, Susan Nyakiamo is a personal finance coach.
