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The problem could be as a result of poor personal financial practices which would be discussed later in the article.

Having the issue of debt could cause unnecessary stress and not only this, but it can also cause problems in relationships if repayment of the debt is delayed or cannot be met.

According to reports, nothing less than 150 loan apps have been approved by the federal government of Nigeria.

This shows the high demand for loans from as many Nigerians, not even caring about the high interest

These loan apps offer loans of any amount and may charge interest rates of more than 20% per month!

Taking Loans is not really a bad thing but what reason was the loan collected for. Would the loan be used to generate revenue? Is there a solid repayment plan in place? These are questions to ask yourself before taking loan

What are the reasons why people take loans and how to deal with it

CIRCUMSTANCE:

Due to some unforeseen circumstances, life may throw tantrums at us when we don’t expect. For instance, we may fall ill and we may need to go take loan for medical care cause the medical bills might be more than what we have in the bank account

Another such occurrence is a layoff. Job security is gradually becoming a myth as even the traditionally safe occupations like giant tech companies have seen massive retrenchment especially post-pandemic.

Another one is a layoff of your job, In the wake of the pandemic, job security is diminishing, challenging the notion even in traditionally secure fields such as giant tech companies, where significant layoffs have occurred.

Dealing with unforeseen circumstances

Financial experts recommend establishing an emergency savings account, even in times of prosperity and apparent stability. This dedicated fund serves as a financial safety net for unexpected situations that demand swift access to funds. By maintaining a substantial emergency fund, you may avoid the need for borrowing, or at the very least, only a small percentage would be necessary to address unforeseen circumstances.

Insufficient management of personal finances

The Nigerian Bureau of Statistics says that in May, prices in Nigeria went up a lot – by 22.41%. They figure this out using something called the Consumer Price Index, which looks at how much things regular people buy cost.

A lot of folks in Nigeria might not notice how tough things are economically right now. Just keeping up with how you spent money in past years might not be a good idea – it could harm yourself financially.

People who end up owing money often don’t adjust to what’s happening in the economy right now. It’s important to understand and adapt to the current situation to avoid financial problems.

How to Get your finances in order

Fixing your finances can indeed be challenging, especially if you’ve been trying to match the spending habits of others without considering the impact on your own money. If you find yourself in this situation, here are some steps to consider:

Reassess Your Lifestyle: If keeping up with others has strained your finances, it’s time to reassess your lifestyle choices. Going back to the drawing board means reevaluating what truly matters to you and what you can realistically afford.
Create a Budget: Establishing a budget is crucial. Track your income and list all your expenses. Clearly define your priorities and allocate funds accordingly. This helps you see where your money is going and identify areas where you can cut back.
Cut Unnecessary Expenses: Trim down on non-essential spending. This might involve reducing outings, reconsidering expensive hobbies, or cutting back on multiple vehicles. By distinguishing between needs and wants, you can focus on essential expenses.
Prioritize Debt Repayment: If you have accumulated debt, prioritize paying it off. High-interest debts should be tackled first. Consider negotiating with creditors or seeking professional advice to manage and reduce your debt.
Emergency Fund: Establish or replenish your emergency fund. Having a financial safety net helps cover unexpected expenses without resorting to borrowing or credit cards.
Live Within Your Means: Adjust your lifestyle to match your financial reality. Avoid unnecessary loans or credit that can lead to more financial stress. Living within your means ensures financial stability.
Reevaluate Luxuries: Luxurious spending, such as frequent outings or extravagant occasions, may need to be scaled back. Find enjoyment in more cost-effective alternatives while you work on improving your financial situation.
Seek Financial Guidance: If you’re struggling, consider seeking advice from financial experts or counselors. They can provide personalized guidance based on your specific circumstances.

Remember, it’s okay to take a step back and make changes to achieve financial well-being. Developing healthy financial habits and making mindful choices can lead to a more secure financial future.

Business Financing

If you find yourself drowning in debt while trying to support your business, you’re not alone, especially given the challenging global economic conditions. While it might not be entirely your fault, it’s crucial to address the situation to prevent creditors from seizing your assets

How To Deal With Business Debts

When facing business debts, it’s crucial to assess and manage your internal operations to improve financial stability. Here are some strategies to consider:

1. Cost Cutting: Review your business expenses meticulously. Consider reducing staffing, eliminating unnecessary costs, and plugging financial leaks. Redirect the saved funds towards debt financing.

2. Equipment Leasing or Renting: Temporarily leasing or renting equipment can provide an injection of capital. This can help you address immediate financial needs without committing to long-term ownership costs.

3. Equity Financing and Investors: Explore the possibility of equity financing by bringing in investors. Selling a share of your business or seeking external investment can inject fresh capital and alleviate immediate financial pressures.

4. Debt as a Last Resort: While debts can be a tool, they should be a last resort. Exhaust other options before accumulating more debt. Evaluate the feasibility of cost-cutting and alternative financing methods first.

5. Understanding Loan Terms: Before taking on any debt, thoroughly understand the terms and conditions. Beware of high-interest rates and unfavorable repayment terms. Choose loans with conditions that align with your business’s financial capabilities.