Liability is defined by Merriam-Webster as the amount of money owned by an individual or entity. Debt burden can be a huge problem for individuals and businesses in Nigeria as it can lead to financial hardship and even bankruptcy. In recent years, as the popularity of electronic payment systems has grown, more lending platforms have emerged. It also made it easier for moneylenders to obtain loans without collateral and increased the borrowing of many young people. But as experts explain the pros and cons of lending and how it affects people psychologically and financially, they attribute the growing burden of excessive debt to bad financial decisions.
Temiremi Igboamagh, senior financial education instructor at Yang Temi, says the reality of finance is that “money alone is not enough.”
Comparing the lives of people with high incomes, he said that even rich people need good financial planning because no amount of money can buy everything. Igboama focuses on the plight of business owners. “Imagine adding an interest rate hike to your expenses. Everything goes up, including borrowing costs. In my opinion, the only way to get out of debt is to plan. And I don’t mean business strategy,” he said. I mean plan. .
For a business, you need goals that define what you want to achieve. You then create a budget and long-term plan with estimates of how much you will earn (income) and how much you will spend (costs).
“After you do that, take off your clothes,” she said. “The truth is that people or businesses that owe money, even debt or loans, are at risk because of rising interest rates. Borrowers.” This is a problem that people face. having. I’m not talking about loan sharks calling from the city to threaten your grandfather. I’m talking about well-structured bank debt.”
Igboamagh, a certified planner at the Institute of Corporate Finance, says people should “let go” of everything they can’t afford, even after proper financial planning. Unfortunately, this is the only way. Personal finance coach and board advisor Kelechi Godfrey highlights the importance of today’s lending rates. He said that the interest rate of 17.5% made it difficult to repay the loan. Godfrey encourages people to decide for themselves why they should take out a loan now. “There are many reasons why people are borrowing money or getting into debt right now,” he said. We see health and there are diseases for which people can take out a loan.
Another aspect is lifestyle inflation. Because you are a celebrity, an influencer and you want everyone to know that you are here. You want to borrow money to be proud of. “One of the most important things that affects credit and debt is that people don’t act on purpose. Some people don’t even know why they borrow money. They said I didn’t have money. Please tell me where I can borrow money. If you borrow or owe money, forget that this is more of an additional payment for the future. Borrow money now so you can pay extra interest in the future. Godfrey says people have no excuse if they don’t borrow money to acquire assets or increase their income.
He said, “The bank wants to see your application. You want to know what you do for a living. They check your income statement, regular salary and frequency. But students with no job, job or source of income take out loans of 40,000, 30,000 naira.” do it, you don’t do it to yourself,” he says.
“The problem is not getting a loan, but repaying it,” he said. Divide payments into at least 4-5 categories. If you can’t get it back through work, you can get it back through this or that. So we have to take this into account. Thus, it seems that banks are always one step ahead. When you plan to take out a loan, they pay attention to how often the money is credited to your account so that you can withdraw it when it arrives.
Godfrey added that a big problem people face is not having the right financial plan to pay off loans. He notes that important financial decisions beyond lending require organization and planning to mitigate any contingencies or risks that may arise. “The honest truth is that anyone can repay a loan. Now the question is when? I get a loan and I can repay it in 100 years. Thrive Financial Olaiemi Olukayode also offers bad credit advice. Already heavily in debt.