Money Matters: Embracing Debt

“The poor put money in the bank for the rich to take out”



It seems difficult to think of money from the debtors perspective. Often, through my childhood, I knew debt was the ultimate measure of poverty.Many a time people say it is better to be at zero rather than at negative. Poverty then to me, was not poverty in the dire sense, that everyone could see it was much worse, poverty, that of the mind and of the soul. That psychological torture that not-so-poor people have when their status is threatened. And so we live our lives, guarding the little we may have so that we never risk loss. We never risk anything, and thus, we never change anything!

“Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows neither victory nor defeat.” Theodore Roosevelt, Strenuous Life

We are still the graduate architect, and by the time we do our BORAQS exams that is still all that we are professionally. We fear moving into the unknown, into our crazy mind of ideas of innovations! We have no money! Oh, if I can just get a pay rise significant enough next year! And we wait, and wait and we hop from job to job, try opening our own practice, but we spend so much and forget to pay our staff… Oh, if only I had connections like so and so! Oh if the government would give us projects! It’s a classic and it will go on and on, until…

Until we change our mindset, about money, banks, loans, debts, opportunities and actually take some risk! Until we ask our banks what debt can be good debt or invest in a personal finance course that helps us push our limits further.

Until only recently, I fully believed in the no-debt mentality, I believed in following the course that my little opportunities could accord me, and that was alright! But then now I crave more. Some years ago I was engulfed in one of my friend’s quarter-life crisis (at least that’s what she called it!) and this opened me up to a different world, one that I hadn’t even noticed but was alive in the closest person to me. I started reading books and following blogs that are money related, investment related, started admiring people such as Heshan De Silva, rather than say smugly that he was just from a well-off background. Having changed my mindset about money, I saw debt in a new light!


The best way to use debt is to create more income. You can do this by opening a business of your interest, however small. Investing in something that will bring in passive income like being a landlord. This will go a long way in sustaining you whether you have a job or not.

Don’t we all envy the people who knew this before they received their HELB(Higher Education Loans Board) loans, buying printers and photocopy machines instead of the laptops and clothes we bought…and by the end of the year, they had that laptop and those clothes too and still charged you 50-150 ksh for printing your final year project.

From the example above we can already deduce two good debts. A debt to pursue education is essential, because education places us in a greater pool of job opportunities. And the other good debt is that taken to start an income-generating venture.

Bad debt is simple, you borrow to spend! Kenya is indeed one of the greatest consumption markets! We borrow so that we can own luxury items and live an image that the society says an Architect should have.


So what options do you, a graduate architect have? We earn between 50,000ksh and 120,000ksh in our first year of practice. The following are the loan options Kenyan banks have for our income bracket;

  • Personal unsecured loan up to ksh 5million (this is subject to your Debt Income Ratio [D.I.R])
  • Overdraft– this is when you withdraw more than you have in your bank account, in a prior arrangement with your bank. You then repay the amount with interest. (for our income bracket we are allowed an amount equivalent to our net income.)
  • Credit card– we hear about this in American movies, but rarely know that we have access to such in our own country. (for our income bracket we are allowed 0.7 times our net income)
  • Auto loan– this I am sure is the most familiar loan in Kenya. this is subject to DIR
  • Mortgages– this is also familiar to Kenyans, though architects rarely would take one. This is also subject to your DIR

[DIR is the percentage of debt to gross income. The agreed ratios depends on the payment terms and employer(for example government workers have the highest DIR compared to non-government workers). The payment terms vary from Deducted at source meaning the employers debits your salary and remits the loan payment to the bank or auto-pay where the bank debits your account. DAS has a higher DIR as its more secure than auto-pay.]

This means you might get a higher loan limit if your employer and your bank have an earlier arrangement to  directly remit your payments before you get your cheque. Some firms also extend loans to their employees that may have a lower interest rate or none at all. Keep in mind that the prevailing interest rates are 16.9%-21.9%. Always visit your bank freely for information on the loans and rates they can offer you, the above is a small summary from just one bank in Kenya.


HELB! We can’t wait to hear it while we are in school yet we run when we hear it after school! This sets the tone for your debt mentality. We need to think of it as the first test in personal finance. We also need to be grateful that our credit rates(4%interest p.a) from HELB are manageable. Your HELB loan is factored in while calculating the debt burden ratio. The higher the HELB loan, the more the debt and the less room there is for additional debt.

Paying back your HELB loan is very important when considering taking a loan because credit checks nowadays reveal both positive and negative information on individuals. On positive information it shows all debts with other institution that are being paid and negative information reveals the loans the individuals has defaulted on. Negative information on a customer shows bad character and in most cases the banks refrains from issuing more debt to the individual until his name is cleared from the CRB report.

So, maybe, just maybe, its time we moved out of our box, buried our insecurities and fears and became best friends with our banks! We can do so much more!

So what do you think of debt? How have you overcome your fears about debt, if any? And what do you think are great ways to utilize your debt? Until next time, that’s my two cents!

*Information on types of loans and their requirements was from a local bank. Links to check out,


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