I woke up this morning thinking about money choices I had made in the last ten years. Some fantastic, others outright ludicrous. I had a good laugh looking at my records and pondering over what state of mind I was in when making some choices.
Ten years ago I met an insurance salesman. I had no understanding whatsoever of what he was offering. His explanation, in retrospect made no sense. He succeeded in planting and appealing to my hitherto non-existent dream of saving money for my unborn babies.
“Lorna, If you sign up for this product with me, in ten years, your first born should be joining primary school. This savings plan will mature right in time for first term. Won’t that make it a lot easier for you to get your child admitted to a good school?”
I did not do the math. The vision of a mini me in a brightly coloured uniform going to a good school got the better of me. Just like that I got stuck with a ‘small debt’ to the insurance company for ten years. Did I mention that failure to make payments would have meant losing out on all the money saved? I did not know that. That wasn’t all bad really as I learnt how to set aside money monthly. The returns however were not worth the effort. Inflation eroded all the benefits that would have accrued had I been more keen on something that brought better returns.
I had no idea that I could literally sign off my savings to another person without coercion. It began all too simply. You see, on the first day of joining this organization, I was told about the firm’s SACCO (Savings and Credit Co-operative Society). I could save and borrow money, which sounded like ‘adulting’ to my twenty- something year old mind. I actually had no goal for saving, just thought it would be a good idea to have something set aside somewhere.
As a member of the SACCO,I would be eligible for a loan worth three times the value of my contributions in six months .That prospect of free money excited me. I just jumped in on day one of employment. I did not read the fine print.
I came to find out that co-signing or being a guarantor for other people’s loans was sort of the norm with SACCOs. So, in the spirit of being a team player and all round lovely human being, I co-signed for two ladies who forfeited on their loans. Being a guarantor, my savings paid off their loans. The good book says it is unwise to guarantee other people’s loans. Wise words right there
My ability to throw money at ‘seemingly lucrative’ ideas floated by friends , colleagues and a popular media personality converged at one point -buying land. This land according to these ‘local experts’ would miraculously appreciate in value one day and make me wealthy. All these stories of how so and so bought a piece of land 20 years ago and sold it for a handsome profit several years later got to me. Granted, real estate has over the years proven to be one of the most profitable investments, but I did not quite understand the Kenyan scene .I should have done a little more research. The run arounds I have been taken through pursuing a piece of land I now objectively view as a semi-arid wasteland is epic. I still persist though.
Knowledge on how the stock market works is power. As part of the reward programme at work, we were awarded ESOPs – Employee Share Option Plan- for good performance. Basically ESOPs are almost like promissory notes, except instead of money,you get the company’s shares at a super low price redeemable in the future for a better price. All I had to do was complete the paper work, get the money to buy the shares which were dirt cheap and sell them at almost three times the amount I had bought them for in future. That would have been the easiest money I would have EVER made in my twenties…but no, I took the letter, filed it neatly and only saw it the other day as I was decluttering. I really wanted to raise my hand and slap myself. Ignorance is expensive.
Still on shares, there was a time when jumping onto the IPOs – Initial Public Offers -bandwagon for new companies getting listed on the Nairobi Stock Exchange was the thing. I jumped in, very blindly. The particular stock I chose was absolutely ill advised. Several years on that particular stock continues to perform dismally. I sold my shares a while back, I lost money, I lived. Such is life. Single stocks remain my least favourite investment option.
Nothing beats the feeling the suggestion that ‘free money’ brings. Of course there isn’t such a thing as ‘free money’ as I have come to learn over time. Introduce a credit card, mobile loans and an unsecured loan at ‘low interest rates’ to a twenty something year old with a love for travel, books and bags and you have a disaster. I once took a loan first, then figured out what I wanted the money for after the loan was disbursed. I cannot remember exactly how that money was spent. I look at this couch in my living room and suspect I used the money on it. But how? Money quickly moves from those who do not know how to use it to those who do.
Until fairly recently, It hadn’t really sunk in that interest on loans is an expense. Even with a downward interest rate adjustment on a loan I had taken, I excitedly requested for the monthly repayments to be reduced so that I could have more cash in hand. I would have paid less interest had I kept paying the initial amount. Focus on the short term small wins instead of the long term gains, I guess. I refuse to believe the amount of interest on loans paid in the last ten years…Way too much interest.
I made a couple of good choices too, very good choices…but who loves a good money story? Hmmmm.🙂