I have a friend called James whom we met in
Campus and shared a room for four years. James has a sharp mind and actually
studied at Alliance High School. He was extremely good in anything science and
was quite a fountain of knowledge. I remember one time he made me understand
Schrödinger equation; some crazy equation in quantum mechanics. He also was a
local grandmaster in chess and taught me how to play the game. I only beat him
once in the four years we played numerous matches; and I guess he was sleepy.
He was lucky to get a job as a systems developer a month after clearing our
undergraduate. His employer wanted some more developers and James invited me
over and soon we were crunching codes together for a meagre 20k pay. Back then
we had loads of passion for the job and we could work overnight and on weekends
in the name of making the codes work mostly at the expense of our social lives.
Despite his sharp mind in as far as
formal education is concerned, I had started noticing some fundamental flaws in
how he was dealing with money issues. He used to borrow me cash and rarely
would we reach month end before he asked for a few coins. I once advised him
that we join a Sacco but he said whatever we were earning then was too little.
One day I convinced him that we go view some plots that were being sold in
Syokimau by a land buying company. Back then the area was sparsely populated
and you could even see some gazelles and antelopes and the plots were going for
a paltry 100k, approximately 2 km from Mombasa road. He returned a verdict that
the area is too remote and in any case we could easily get conned by the
sellers. I bought one which I later resold for 600k. After 8 months of
developing software, I got another job with a bigger corporate and soon after
we lost contact with James.
Fast forward: The next time I saw James
was 5 years later (2009) when we met at a house warming bash for a former
classmate in Campus. When I saw him he looked much older and with a small pot
belly. He was now a married man with two kids. While we were enjoying the meat,
drinks were served and I noted he was happily taking some Tusker. That was
quite strange because the James I knew was a CU member and he never used to
partake of the Ruaraka waters. When I asked him what happened, he coyly said
that problems engulfed him and he normally drowns his sorrows by partaking of
that stuff; that way he forgets his problems a little bit. I was curious to
know what his problems were and I knew after taking several bottles, he would
open up. I long stopped taking beer and James would never stop teasing me that
the reason I stopped was to get rich. By the end of the evening, I had noted
that James was in deep financial crisis and a mountain of debts (his own words)
had engulfed him. I knew that this long lost friend needed help. I therefore,
proposed to him that we meet over coffee in a few days since he was already drunk
and soon after he was not even coherent in his speech. When guests started leaving,
I jokingly told him to stop taking more beer because he needed to drive himself to
his place. He laughed aloud and informed me that his jalopy let him down and
refused to start so he had used a matatu. I offered to drop him at his place
and my parting words were we link up three days after and discuss his crisis
further.
We finally met over coffee and he set
the ball rolling. In front of me was a dear friend, who had never moved from
his first job, was extremely frustrated by his boss and was no longer enjoying
what he does. He recounted how he has had numerous pay rises to take him from
the 20k as a fresh graduate to 80k, within a period of 6 years. And so I asked
him in his own words what his problem was.
He said “Joshua (the boss) has given me those pay rises but interestingly I did
not feel them as the cost of living seemed to have consumed them. In fact am
living worse off than I did when I first got employed. An analysis of my pay
check is quite interesting. I earn a gross pay of 80k. The obvious deduction is
PAYE (pay as you eat of 22,000), then of course the statutory deductions (NSSF
and NHIF), they also deduct HELB loan (5k), car loan(6k), a deduction of 7k of
an unsecured loan that I took and attempted a side business that collapsed soon
as after starting. The loan balance stands at 150k. This leaves me with a net
income of 39,400 which is approx. 50% of the gross pay. Once I receive the net
pay in my account I immediately pay my rent (13,000) & electricity &
water (1000), school fees for my kid (3000 per month), then we do family
shopping (8,000). The rest I fuel my car, repay some soft loans from friends
and deal with any miscellaneous expenses within the month. Of late even fuelling my car has been a burden so I am forced to use it occasionally on weekends. As
you realize, I have no allocation for entertainment because there is simply no
money. I also have to deal with relatives who keep asking me for money (they
educated me) as well as my in-laws who are not doing so well financially.
Neither do I save any coin, in fact am forced to borrow before end of the month
sometimes to deal with basic expenses. I wish I’d be able to save some money
maybe in a Sacco and I’d want to do my masters. I also would wish to buy a plot
for future development of the family home. I also need to have some cash for
future school fees for my kids (one is already in school and the other is
almost).My wife would have assisted me but she is not employed. How do I get
out of my predicament and achieve financial freedom?? Please help me”
A careful analysis of this fellow
indicated that he was clearly in the rat race though he was willing to get out
of the mess. This is an above average Kenyan going by his earnings. He failed
to catch the little foxes, and they
have ended up ruining his vineyard (Songs of Solomon 2:15). With a little bit
of adjustments here and there, this fellow can get out of the mess and progress
up to a point where he achieves financial freedom. Some if not most of us can
identify with him and his shortcomings.
I probed James a little bit and I found
out that he had the following glaring flaws:
1. He
never had a clear budget and he had no grip of his expenses beyond the obvious
ones. Like I noted he even forgot they buy gas, the have a house help, he eats
lunch while at work, he takes beer that he buys etc.
2. He
was certainly living beyond his means evidenced by growing mountain of debts.
3. He
had no financial goals and plans.
4. He
was not saving / investing even a dime.
5. He
was no longer enjoying his job. Lost all passion.
6. He
was escaping from realities and drinking himself silly.
7. His
expenses kept rising with higher pay, so he had a bigger problem than money.
So we agreed we will embark on a road to
financial freedom and he was willing to play his part. We agreed that the
easiest thing he must first do is to understand his spending, because therein
was one of the little fox that he had to deal with. A very simple exercise we
identified was to religiously jot down his expenses at the end of each day
irrespective of how small they were. The exercise was to be done for two
months. The importance of the exercise was to identify the holes in his pocket that he thought he had.
The next lesson will focus on what the expenses tracking for the twomonths revealed. It was quite a discovery for him.
