HOW TO GET OUT OF DEBT IN THE MIDST NO JOB AND JOB LOSS

We will be sharing experiences on how to deal with a debt load, especially in situations where a job loss has just been suffered.

According to the National Bureau of Statistics (NBS), about 710,698 Nigerian workers have lost their jobs during the last one year. From the manufacturing, tourism, service industry, aviation, oil sector to the banking sector, job losses have continued unabated .
The banking industry appears to be the worst hit by the economic crisis, so also has retrenchment been more severed in the sector.
Now ITS BAD ENOUGH WHEN you feel as though you are being crushed by the weight of your debt. Even worse is when you lose your job on top of it!
What can you do if you have debt and have just become unemployed? This situation calls for some serious planning – and up front communication with your creditors.
We will discuss FOUR (4) KEY STEPS to take, and then explore some AREAS of opportunities that have been thrown up as a result of Government strategic focus.

Step 1: CREATE A SURVIVAL BUDGET

• When you lose your job, the first thing to do is evaluate your finances and create a SURVIVAL BUDGET. Hopefully, you planned ahead for lean times and have some savings. Add to this any other sources of income, and any part-time employment you can acquire.
• Next comes a financial diet. The goal: eliminate all unnecessary bills. The point is to lower as many costs as you can so that you have resources to cover your real needs, like food and shelter. Other tips: Reduce any services you can live without for a while – DSTV Premium subscription, newspaper or magazine subscriptions, eating at expensive restaurants etc.

Step 2: PRIORITIZE YOUR DEBTS
       

• To be able to prioritize your debts, you must first know what all your debts are! Make a list of all your debts. Mortgage, car loan, credit cards, cooperative loans or other loans. List ALL of your debts, including the ones you’d like to conveniently forget about. They’ll all need to be tackled at some stage, so you need to start off with a clear picture of where you stand. However, as much as you would like to be able to make each of your payments during this time, the reality is that some might have to slide. Figure out which debts are most important for you to keep up to date on.

 Step 3: NEGOTIATE WITH YOUR CREDITORS
        

• Contact your creditors and let them know about your current situation. In some cases, you might be able to make certain arrangements to delay payments, or create a new payment plan.
• It’s very important to always know the Principal element and Interest element of the loan balance. You can seek negotiation of terms (waiver/reduction/suspension) on the Interest element. There is usually no negotiation on the Principal element. However, on the Principal element, you can seek a restructure – extension of tenor etc.
• In some cases, if you really can’t make your payments, you might be able to negotiate forbearance with your lender. This means you make a partial payment, or even no payment, for a set period of time. At the end of your forbearance, you start making larger catch-up payments, or your payments are tacked on to the end of your loan, lengthening the term.
• Don’t ignore or run away from your loans. Interest would only keep growing and soon balloon it out of proportion. Also, you get marked on the credit bureau as having bad credit, and no bank would be willing to extend a loan until you resolve it. Note that to get a contract, LPO or to pursue a career in public office, credit checks are conducted as part of the due diligence.
• A key attitude you must have is – a genuine willingness to repay.

 Step 4: DO WHAT YOU CAN TO GET BACK ON TOP
          

• Now is not the time to sit idle. You need a plan to get back on top of your financial situation.
• Ask family and friends for help, whether it’s financial, or non-financial, such as watching your kids while you look for a job. This saves you nanny costs.
• Consider starting a side gig while you look for employment. You might be able to make a little money on the side as a freelancer, doing odd jobs, or with some other self-employment option.
• Look around, what do you have (could be a skill, car, property etc.) that can be turned into a revenue-generating asset?
• Your car can be used for car-pooling services or on the uber platform (if it meets the criteria). You could look for teaching/coaching opportunities. If you were a banker, you could help clients put together bankable business proposals/plans, tax accounting or debt collection. Talk/liaise with social media savvy friends to help ‘package’ you/your skills to have more appeal and reach. For women, cosmetics & nail care businesses traditionally boom in depressed economies as women look for inexpensive ways to pamper themselves.
• Other opportunities are in the areas of internet marketing, food & beverages, laundry services, organic beauty/healthcare, baby products, liquor, tech start-ups/businesses that keep abreast with technological and social trends etc.
• DO NOT BE ASHAMED TO CALL IN FAVORS! This is the time to utilize all the goodwill in your account to get patronage from your friends/contacts. People will likely be willing to help/patronize you as long as you are not just begging them for money.
• While waiting for the big breakthrough, start with the small things. It all adds up.
• JUST START! JUST START! No matter how small. Doing is a habit! Sometimes we need practice getting into the groove.
• Don’t be afraid to get into new debt! The only difference being, any new debt must be to acquire assets that would generate revenue.

 
AREAS OF OPPORTUNITIES

• Now, despite all the seeming eco-gloom, there are areas of opportunities being thrown up. For instance, the restriction of forex availability for importation of 41 items has thrown up opportunities in local production of these items. Some of these items include Poultry (Chicken, Turkey, Eggs), Kitchen utensils, Tomatoes and Tomato paste, Soap and cosmetics.
• There are also opportunities in the agriculture value-chain in light of government support in this area. On a lighter note, in response to the recent scarcity of tomatoes, I have actually started planting tomatoes in a small unused patch of land that I have. I can’t carry last!
• Other identified growth areas include: Trade, Agriculture, Entertainment, Building & Construction, Power, Mining/Solid Minerals, Exports, Manufacturing.
• There are several Intervention Funds that can be accessed in the sectors mentioned above. Conditions, though stringent, can be met. I have a number of friends/clients who have successfully accessed the SME Fund for laundry business, agriculture (farm), ice block and party planning business, paper packaging, and hospital. There are also some Grants available from private/institutional sources. One of the several good places to seek more information would be the Lagos Business School Entrepreneurial Development Center (EDC). There are Grants for women entrepreneurs, SMEs, fashion industry etc.
• In rounding up, I will acknowledge that when one has just lost his/her job, feelings of anger, hurt, betrayal, panic, depression etc. are the first to kick in. But it’s important not to remain in this state in perpetuity.
• It’s very tough, I won’t deny, but you need to refocus and maintain the new focus. Self-pity will not get you back on the track you need to be.
• DO NOT allow yourself to remain the VICTIM! Whatever the situation. Channel that anger into a determination to SURVIVE and WIN!

 Culled from  Michael Uche Obazeh