For many individuals and business owners, financial concerns are ever-present. This is especially true in modern times, considering the uncertainties of the Kenyan economy and high inflation. Most individuals are having debts as a result of loans from lending institutions such as saccos, banks, online loan apps, and chamaas. Finding a way around debts can be a daunting task for any person. It is thus vital to find ways to overcome debts. The first step towards financial freedom is avoiding getting into debt in the first place. However, debts are part of life. When not managed properly, debts can overwhelm any individual or business.
Tips for better debt management
Overcoming debts can be stressful for any individual or business owner. Financial anxiety will weigh you down unless you come up with a proper strategy for handling the debts. Here are some useful ideas to guide you and help you overcome debt burdens.
1. Identify priority payments
There is a need to determine specific issues that keep you up at night and make them a priority when paying the debts. This will include loans, fines, rates, and taxes. This will help you avoid accruing more interest and even being against the law.
2. Have a monthly budget
The primary purpose of a budget is to help you plan your finances and stick to the plan. Determining all your expenses and ensuring that you have a budget in place helps you have control over your finances. It also helps you determine areas where you can save money and makes you more realistic about your finances.
3. Find alternatives to term loans
One of the reasons most people end up in debt is having term loans. The major downside of these loans is that the interest rates are not fixed, and they are likely to go up as a result of inflation. If you are looking to acquire assets for your home or business, finding alternatives to loans can be beneficial. One such alternative is hire purchase contracts.
Navigating Hire purchase towards financial freedom
There are plenty of benefits of utilizing hire purchase for asset financing. One such benefit is spreading the cost. You do not pay for assets up front, and this allows you to retain cash and utilize it in different expenses, thus avoiding a debt situation.
Another benefit of hire purchase is that items that one wants to purchase act as the security in the agreement. If you no longer require the items, you can cancel the agreement, and return the items to the hirer, and you will not be required to make any further payments.
Navigating hire purchase is also helpful when you need assets for your home, considering that it helps you create a budget. To ensure you do not end up behind the payment schedule, one creates a monthly budget for the installments and other expenses. This not only gives you control over the finances, but it also helps clear the way towards financial freedom.