The Debt Code offers practical guides to struggling Nigerians
With personal incomes plummeting to frightening levels and survival buckling under spiralling inflation, borrowing to bridge the financial gap is more tempting for many households than any other time.
And with the proliferation of desperate loan sharks and digital lending services, structured loans are more accessible than at any other time in the country’s history. These make literature on how to avoid bad loans extremely relevant to the working class.
Indeed, there are dozens of pieces of literature on how to lead a debt-free life, albeit the majority contain textbook ideas. But Ololade Olayanju, a private wealth manager and former banker, in The Debt Code, employs a rather practical and story-telling approach in handling the extremely sensitive subject.
She combines her encounter with bad debts as a young employee and experiences from her role as a bank’s relationship manager in guiding individuals in dire situations; as well as others with a taste for ‘the good life’ on how to live a debt-free life.
The 11-chapter book proffers practical solutions to avoiding and climbing out of a debt trap, with life experiences relevant to African culture and communal lifestyle. She plays up scenarios that make borrowing unavoidable for some individuals in their life journey but plays up the importance of proper personal financial management as the major difference between those who fall into a debt trap and others.
Importantly, she views debt and indebtedness from her lens. A management trainee in Nigeria’s bank towards the close of the 2000s, young Olayanju was led into taking multiple debts, some of which were used for frivolities. The repayment left a wide hole in her finances, making it difficult for her to carry on with her responsibilities of supporting her struggling parents and siblings. Her experience and similar ones shared by contributors came in handy in the new book.
“Every month, I had to pay the credit card minimum balance. The repayment for the loan I took from the bank and the car loan from my meagre N110,000 salary. The repayment reduced my disposable income drastically. What worsened my already terrible financial situation was that I had to make money available in my account for the insurance of my ‘tear rubber’ car…
“By the end of the month, my eyes had cleared and the reality of the amount of debt I had gotten myself into dawned on me.
I knew I was in trouble. After the minimum monthly credit card deduction was made with an additional effort at repaying some of the principal amounts, I also had to make a monthly repayment of another loan I took from another bank and the car loan; as well as giving my family support when needed. I was rolling in a messy debt situation,” the author recalls.
Armed with youthful mistakes, she learnt useful lessons on discipline, financial management and avoiding bad debts, which she shares in the book. Some of the key guides include avoiding impulse buying, sticking to a budget, spending within one’s earnings, avoiding frivolities and staying away from pleasure buying.
Without taking a position against ‘aso ebi’, the ex-banker says it amounts to financial recklessness to borrow to buy one, just to please friends. She recalls showing up at parties looking different from others simply because she could not afford to ‘aso ebi’ for the events.
According to her, people borrow for the wrong reasons, ranging from ignorance to peer pressure, negative habits, desire to meet wants as against needs and the need to create an impression, warning that “ a high taste that comes without high income will only give you high blood pressure.
While individuals have different perspectives about debt, some go with the mentality that life must be enjoyed with other people’s money hence they fall into the debt circle. Some, she notices, see debt as a plague while another category (to which she belongs) has learnt the hard ways to avoid debt.
The book is not against debt but advises against borrowing when other options have not been fully exploited. Debt trap, it warns, comes with a lot of scars such as strained relationships, erosion of future income, stigmatization, lack of peace, health challenge, an extension of retirement, despair, bankruptcy and suicide.
But it admits some debts are good. Good debts, according to the author, are those used to acquire assets while bad debts are spent on liabilities – things that reduce one’s financial worth or increase exposure to financial obligations.
For those who are trapped in debt, she points out, the benefits include the inherent potential to check the individual’s spending habits. Such is an important gain those in debt should sustain even after they have cleared their debt, she advises.