8 Oct 2014

DAY 14: ALL Debt Is Bad To You, If You Have No Financial Knowledge, Discipline And Goals

The aim of these debt series is to help you understand how to use OPM (other people’s money) to achieve your life and financial goals without ‘mortgaging’ your financial future.  You will need other people at different points and times in your life, and that definitely includes their money.

Yesterday, I defined a bad debt as any loan you take in order to buy a liability. A liability (in simple terms) is anything that takes money away from your pocket. If you borrow money to organise a party, buy a personal car, buy a new phone, a flat screen TV, pay medical bills,give as donation/gift, or to invest in a business you don't understand enough to explain to a six-year old, you have just acquired a bad debt.


Concerning this last example, I have a personal experience. I have been in serious debt at least two times in my young life due to business naivety.

 The first time was during the ‘Wonder bank’ era of 2006. I was in 300Level and mistakenly stumbled upon forex and started a ‘forex consultancy business’- wonder bank. Lol. I actually was lured into it by classmates of mine who suddenly brought money to me to trade for them without me requesting for it. (I still don’t know who told them I knew about forex, not to talk of whether I was a qualified/good trader). They asked me to trade with it and not worry even if I lost it, as they won’t mind. (Oh those days.)

Of course, I lost all of my capital (–their monies, including my school fees) as I was a complete forex novice. I got into debt of about N150,000 by default, and worse of all, ALL of them wanted their monies back.

 The 2nd time was around 2010. After I managed to pay some of my creditors back in 2007, I still had my tuition/school fees to pay. (By then,I had developed the gambler’s mentality). As at that time, I owed about three (3) years worth of school fees. And I was about to be demoted in Medical school unless I paid up all 3, including late payments before a specified period (it was a month’s deadline). I owed a total of about N200,000. Yet I didn’t want to tell my dad. I was hoping to make the money back quickly through forex. All I did was rack up more debts still due to the gambler's mentality I had acquired.
 What saved me then was that someone reported me to my dad and I had to apologise to him and ask his forgiveness. He paid off my debts for me, but I did not lose my gambler’s mentality and learnt little from the whole episode.

And many of us are like that. We are looking for quick fixes to financial troubles we brought on ourselves over time, mostly due to our lack of financial knowledge and discipline in handling our finances. I still continued trying to get rich quick only until recently.
If it is a mindset problem, you can only solve it by undergoing a paradigm shift, a sort of mental makeover. Trying to get-rich-quick, and the desire for instant gratification- ‘I want it NOW NOW mentality,’ will only give you bad debts faster than  thunder clap follows lightening.

As I promised yesterday, if you need loans without collateral in Nigeria, try the following links
·         LAPO (Lift above poverty organization) microfinance, this article helped too- http://www.ogbongeblog.com/2013/06/how-to-get-loan-in-nigeria-without.html
·         UBA No Wahala Loan (you must have a salary account with UBA to qualify)
·         Godwin Henry 08031579832 gives personal loans of between N50,000 to N100,000, and business loans of between N100,000 to N300, 000 at 5% interest over a 4 months period. You can call him for more info.
·         The website naijaloan.net (owned by Chukwubueze Micheal Obinna, +2348183522900) claims to give loans without collateral but I have not been able to reach him for confirmation.
·         There are cooperative societies/unions around that offer personal loans without collateral but you will need a guarantor in the form of someone who is a member of the society, or someone who is known to them as a trustworthy and responsible citizen, if you are not a member of the union.


·         I am still researching some others, will update this list as I get more info.

Update: I also found Renmoney MFB recently. Their Head office address is at 89, Awolowo Road, Ikoyi, Lagos. They give personal loans of up to N1 million.

The requirements are; you must b
e between ages 22 – 55 years, live and/or work in any part of Lagos, have a steady source of income that is verifiable subject to a minimum of N50k monthly deposited into a bank account, must be confirmed staff in their present employment, have a functional current account, and have valid means of identification – International Passport, Driver’s License, National ID Card.

So it is mainly for Lagosians.

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