Please help, I owe several loan sharks. How do I pay back?

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Question

I would genuinely appreciate all the honest, brutal advice I can get at this point. I'm in a deep fix and lost on how to resolve this.?

To summarize: I currently owe over 20 loan sharks/apps. I wish these loans were to be paid monthly, but they're each 7 days apart. I banked on commissions and delayed salaries meant to be paid from work. But at the end of the day, I resorted to taking up more loans to cover up existing loans.?

Right now, no commissions have been paid, salaries are still delayed, and I have more loans unpaid and responsibilities on my shoulder as a first-born. I've never felt confused, helpless and weak. I don't know a lot of people and the ones I've reached out to could only help a little, which I am grateful for. I don't know if it's right to seek help from a financial institution that would lend me a huge sum in order to pay up the other loans, but I've searched and there's none. I don't know what else to do. This is no blackmail, but I've thought of ending it. One of the reasons holding me back is the person I squat with. I wouldn't want to put the person in trouble or make people think otherwise.?

Please, what can I do? I take the full blame for this and I'm willing to work for these payments.

What can I do, please?

Answer

It's really a tough situation having so many loans unpaid without having figured out a repayment plan. Although it is a tough situation, it definitely has a solution. The question then is 'how'? Your salary is not reliable, and so are your commissions. As a result, you might need to reach out to each of your creditors to work out a new repayment plan. If this works out, it’ll give you some flexibility and time to ease out of your debts.?

Now, on how to source the money to pay back, considering the unstable source of income, you will need to seek another source of income. It could be from a side hustle, or an extra employment that guarantees a steady income. Please, do not take up new loans to repay existing ones. It is going to lead to an endless cycle of indebtedness.

You mentioned that you have reached out to people in your network to raise some money. You might need to think of more people you can reach out to for help—family, friends, colleagues, and so on.?

As much as possible, you also need to cut your expenses as well. Whatever “little” money you can keep now is worth a lot.

You might also need to think up anything of value you own that can be sold to make some money and repay your creditors.

In the meantime, when you repay these loans, you need to brace up. You might face some embarrassment from your creditors. It will be challenging, but it is only a matter of time, and you will scale through. When you have scaled through this, it is also important to reflect and take your lessons from this experience. It is never advisable to take up loans without first having a repayment plan in place.?

Best of luck to you!

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Question

Thank you for the MoneyAfrica newsletters. I earn ?100,000 per month and I’m looking to move to my own place in April 2023. I’m capping the rent at ?300,000. I wanted to lock away funds in my savings account, but I don’t know about that????. I’m also considering saving in dollars.?

Please, what do you advise?

Answer

Great to know that you enjoy reading our newsletters.

Counting from this month (October), you have 6 months before April to gather your rent. Assuming you have no savings at hand it would mean that you will have to save at least ?50,000 per month in order to be able to afford your rent by April. This will take a bulk of your salary (50%), and seems a bit unrealistic. You might need to give yourself a longer period so you can save up.?

As regards whether saving in your savings account or saving in dollars, it’s always advisable to save in higher valued currencies. This gives you the opportunity to gain from exchange rate fluctuations. Alternatively, you can also save in a high-yield savings account (HYSA). A HYSA returns an interest rate more than traditional savings accounts. Ladda for example offers 10% interest per annum on your savings.

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