Watch out for money traps

By Simon

You have just landed a job with this blue chip company, a prestigious firm or a bank. If I knew you personally, I would buy you a drink to welcome you into the world of money.

In my time, there were not so many opportunities. In my line of work (consulting), we had to work pro-bono, give up intellectual property rights to studies we carried out, share apartments to make ends meet and sometimes walk to and from work just to get that overrated item — experience. Things have changed and some of those entry-level packs I see young guys taking home were middle level management terms in our time.

Today, I tell you about some traps you should avoid like the plague to remain on top of your money.

Borrowing to finance utilities

When high-level firms net strong personnel, they want to lock them in for a long time. This is because recruitment is a hectic task and these days organisations are committing numerous resources to build the capacity of staff. Since they may not always match what the competition is giving, they have devised effective ways of locking you in by enticing you to borrow.

As part of the entry package, most organisations offer to finance a wardrobe make-over, usually in excess of Sh100,000. After your probation, you are entitled to a credit card, a car loan and other benefits. Within two years, even before you clear these loans, your line manager tells you some interesting things about how you can access a company mortgage so you can start living in your own house.

You may be left wondering what you did to deserve such good terms, but I tell you the only thing you did was to become a good employee to the company. These are ways of locking you in.

Your wardrobe, car loans and mortgages are all utilities. When you borrow to finance utilities, you make yourself poorer. Maintaining a good corporate image is important, but you can do this without necessarily getting into debt. For instance, you may not need ten designer suits at once. You can purpose to buy one every month and you will have all of them in ten months without any debt in your name.

About the car; I know that craving, how important cars are to us ‘guys’, but I tell you, there are many ways of getting a car other than through company loans. When your employer provides this facility, it comes with terms that normally depict a car that is beyond your means.

This ensures that you take up debt exceeding your current capability, thereby locking you in for many years. Most second hand cars cost half as much as newly imported cars and perform just as well as new ones.

Beautiful girls

Have you realised how easily the girls are taking up to you? It is not that you are getting better at your game; they have only realised you have something they want — money. A regular date today will cost you in excess of Sh5,000 a night, which is not inclusive of the Sh1,000 to Sh2,000 you will give as ‘fare’.

Therefore, every week you take out one of those girls, who are smiling excessively at you, your monthly dating bill will be not be less than Sh30,000, which translates to Sh360,000 per year. This is money that can be put into productive use, such as investments.