How do I get out of my ₦4 million debt with a ₦400,000 monthly salary?
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Question
How do I get out of debt? I have a ₦4 million debt to pay off. I earn ₦400,000 per month, and I live alone. I care for myself, my parents and some siblings or distant cousins.
So far, it has been like a maze. I work, save, take care of my expenses, handle debt servicing, and then the savings look like nothing and the debts are still there.
Answer
Handling debt can be overwhelming and could impact one’s finances. However, it is not impossible to overcome. To handle your debt situation, here are some tips that might be of help to you:
As earlier said, seeing this through to the end will be undoubtedly tough. You therefore need to brace up. Treat your debt as you would your feeding expenses. It is of high priority. Your living expenses will most likely be affected and you would need to cut down on certain unnecessary expenses.
Determine how much you owe, and how long it would take you to pay off. You mentioned that you owe ₦4 million. If there are interest payments attached, also put this into consideration. If we work with the assumption that ₦4 million is the total you owe including all interest payments, you can decide that you’re able to pay ₦150,000 per month towards paying up your debt. This will take you a total of approximately 27 months (or 2 years and 3 months) to completely pay up. If you would like to complete the payment earlier, it invariably means you need to decide to pay more than ₦150,000 per month.
It’s also possible that your debt is owed to more than one creditor. If this is the case, you can consider discussing with your creditor(s) to get an interest payment waiver in exchange for an immediate payment if you're able to afford it.
While you’re paying up per month, you may also want to seek a pay raise or a higher paying job. This way, you would be able to make a higher monthly contribution.
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Question
I recently heard about the S&P 500 Index Fund.
As a young person in my 20s looking to invest small amounts monthly, do you think this is a good idea?
Is it open to non-citizens as I'm not based in the US?
Answer
To clarify, the S&P 500 is a stock market index. A stock market index is a measure of performance of certain stocks. An index fund is a form of investment that mimics the performance of an index. While you cannot invest in an index, you can invest in an index fund. Some index funds that mimic the performance of the S&P 500 include the VOO, the SPY, etc. (Please note, these are not investment recommendations.)
Index funds are usually a preferred investment option because they offer easy diversification. Buying one unit of a stock market index fund, translates to you buying smaller units of other stocks included in the fund. Diversification is often advised while investing because it helps to spread risks. For this reason, it is advisable to include index funds in one’s investment portfolio. An investment portfolio is a combination of different assets owned by an individual or entity. Your portfolio should ideally be diversified across different asset classes.
Also, just like one can access foreign assets from other countries by using certain apps/brokerage firms, one can also invest in US index funds without being based in the country.
Question
How can I join the MoneyAfrica community? Is the fee negotiable?
Answer
Well done to you for taking the bold step towards fixing your finances. MoneyAfrica is happy to welcome you. To join the MoneyAfrica community, you can either join as:
A subscription based community member: Here, you gain access to a community of like minded people who are on the same journey as you are, to build your finances. Financial experts from the MoneyAfrica team are also involved in the community to answer questions that you might have. In addition to this, there are weekly webinars where we break down the seemingly difficult financial concepts, for you to fully understand how to take charge of your finances. The fee is ₦20,000. However, we’re giving a 50% discount starting from November 27th through the entire week. Meaning you get to pay only ₦10,000.
One-on-one consultation: Here, you gain access to a one-on-one session with a financial expert, where you get a personalized investment plan drawn out for you. Once you subscribe during the week starting from November 27th, you also get to pay a 20% discount. Meaning, you pay ₦40,000 only (₦
50,000)A premium member: As a premium member, you gain access to all what the subscription based community members benefit from, including a one-on-one consultation. A 25% discount also applies here, where you pay ₦75,000 only (₦
100,000)
All you need to do is register via our website, www.themoneyafrica.com. If you have difficulties registering, simply hit us up on social media, or send a mail to us at sales@themoneyafrica.com. We have an active team ready to assist you.
We look forward to bringing you on board!
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We often get questions regarding how to plan your finances to align with your relocation plans, especially for students seeking to further their studies. As always, we have heard you, and we have put together an e-book to help you navigate this. Simply follow this link, to get your FREE copy of the e-book: The Japa Encyclopedia.
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