When it comes to debt according to Steve Down, the following rules apply;
There are two kinds of people;
- Those who are in debt.
- Those who will be in debt
Carrying a debt load throughout life is similar to running a marathon with extra pounds around your waist. While it is possible to run a marathon with few extra pounds, it is unsustainable in the long run. It burdens you, slows you down, and affects your running pace. This is similar to debt. Debt burdens your financial health, it limits any strides you make in becoming financially fit and has a lasting dent on your journey towards financial freedom.
Most people visualize at the mention of debt; car debt, home loan debt, credit card debt, and business debt. Debt is a lever, it allows us to execute what we cannot in a short period of time but its consequences are in consolidating a pile-up that would take time to pay.
What you need to know about debt
- Not all debt is bad.
The aim of borrowing should be to channel resources to productive use in order to transform our financial lives. If you are in debt to finance recurrent expenditures as opposed to investment and production chances are you are on the Financial treadmill.
Good debt allows you to generate more income and build your net-worth
- Pay off the highest interest debt first
List all loan balances with the highest interests, pay them down as you tackle the rest.
- Avoid Digital lending apps.
A step towards financial freedom is ensuring you live below your means. Spending more than what you make will have you on a constant borrowing cycle that digital platforms provide easily. On enrolling in our Financially Fit For Life program, our Cause champions first get rid of all digital lending applications to ensure they stay on track on their allocated budget.
- Have 6 months emergency savings.
Most people are a health scare away from poverty. Borrowing to settle hospital bills puts you back on the financial treadmill. 6-month emergency savings on your M-pesa can make a difference in your financial health. Saving a given amount over a period of time can make a big difference.
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