Debt Myths (23 Untruths About Debt in Kenya)

Last Updated on 8 April 2022 by Gertrude

Are you running away from Mama Mboga because you owe her?

Have you stopped answering your calls because you are in too much debt and don’t know how to answer creditors?

I see on TikTok people normalising debt and I go – IS IT A GOOD IDEA TO JOKE ABOUT DEBT?

I read of Jimmy Wanjigi getting shamed because of a 1M shilling coat.

Why do we stigmatise debt? Why do we owe each other?

Have you ever stopped to think that debt may be God telling us that we MUST TREAT EACH OTHER WELL BECAUSE WE CAN NOT LIVE ON AND BY OURSELVES?

I’m not saying that you MUST take debt from friends and family and refuse to pay them.

I’m saying, debt makes us know we cannot build our bridges without dependency no matter how much independence we fight for.

Don’t make debt a habit – YOU WILL LOSE FRIENDS AND FAMILY. They will give you a label, ”KAOMBI”.

We hate debt.

But, we take out loans and carry huge debts yet debt is one of the most appalling things to talk about or consider.

Can debt be that bad?

Society teaches us debt is bad – debtors are stigmatised on social media and disgraced by their friends through phone calls.

Your belief about debt is making life a living hell.

You can own money for your startup and repaying that money pleases your creditors thus increasing your creditors.

The problem is borrowing money to start a business but never doing the business.

The myths created about debt are what make debtors guilty about debt.

It is disheartening to say debt myths rule – there can never be a positive to debt.

You may know what some of these debt myths are or not.

In this article, we are going to look at these myths created about debt and debunk them so that we can have a better relationship with our finances.

What are Debt Myths?

Debt myths are just the misconceptions and false beliefs that you have about debt.

If you are not financially educated, you may hold on to certain beliefs that society has taught you about debt and take them as the gospel truth.

The thing about debt myths is that it impacts how we feel about money and debt.

Debt myths are potentially harmful to anyone who wants to be financially confident and free.

As we dwell on this topic, we also take away some lessons as we are going to look at the limiting beliefs and the truths behind these debt myths. 

Dispelling Debt Myths (23 Debt Myths YOU MUST Know)

Following on, I will exhaust 23 debt myths that you need to know and get rid of today and they are. 

  1. Debt is dangerous and you should avoid it at all costs.

This is a common myth that most people carry throughout their lives.

No one wasn’t in debt and they hate to think about even getting into debt in the first place.

Truth is, debt is not dangerous. It is not at all.

We have good debt and bad debt.

Bad debt is one that has high interest and negative tax benefits.

These are the kinds of debt that you want to avoid. Student loans are good debt so it’s not really true when people say all debt is bad.

If you use your debt responsibly and manage it properly, you will get to realise some, if not all of your financial and life goals in due time.

  1. You should pay off all your debt as fast as you can

It’s not surprising that most people who find themselves in debt want to get away from it as fast as possible.

We hate to think that we owe someone money.

It is binding and nothing can be more exhausting and frustrating than this.

In an effort to become debt-free, you may find yourself compelled to lay off everything you owe as fast as possible.

This is not going to help you.

You will find yourself having to borrow in order to survive.

If you want to lay off your debt, create a system that you will follow and start with the low-interest debt first and then go to high-interest debts later. 

  1. You cannot enjoy life until you are debt-free

Are you putting your life on hold because you are in debt?

Is your debt making you miserable?

You are not alone.

This particular debt myth has a lot of people in a chokehold of thinking that they cannot have fulfilling lives because they have not paid off their debts.

Stop worrying and stressing too much about when and how you will get your next income to pay off your debt.

Don’t put your plans on hold.

Life is short.

Live it to the fullest.

Do not get depressed about debt.

  1. You will go to jail if you do not pay our debts

I have heard this myth quite a number of times.

From a young age, I would share these thoughts with my friends and we would conclude how much better it is to live without debt than risk going to jail.

There are different consequences that will result when you do not pay your debt like having your assets taken, being listed as a defaulter etc.

Going to jail for failing to pay your debts is not your creditors’ top priority.

How will you pay them if you are locked up?

  1. If I loan money to a friend or relative, I will be helping them. 

No, you won’t. This is a big debt myth.

I’ll give it to you that you are a kind person and you want to help out your own people when they are in a financial crisis.

But you need to think long and hard in the long term.

You will not be helping them because they will keep on coming to you to borrow more money, especially if they lack boundaries and are not financially responsible.

A rift will also be created between you if they do not end up paying you your money.

So in the real sense, you are not helping them or yourself. 

  1. Student loans are good debt

I know what you’re thinking– I’m taking contradictory stances without even realising it.

Far from it.

Earlier I mentioned that student loans are good debt.

This myth is only half true.

A lot of students in Kenya take out student loans without a much-needed purpose.

They want to buy expensive things and splurge.

This is the debt they can avoid.

They later spend years with a huge debt hanging above their heads when they could do without it.

Always remember that any debt you don’t need is bad debt.

  1. You cannot be financially responsible if you are strapped in debt.

This is a common debt myth that I had and still do.

I tend to beat myself up over how it is I got into debt in the first place if I claim to be responsible for my finances.

Truth is, you can have debt and still be financially responsible.

So long as you know how to properly use and manage the debt that you already have, then you are good.

Do not live out your life being careless with the rest of your finances because after all, you are in debt.

Spend your money wisely and know how you can reduce your debt while living your best responsible life.

  1. When you get married, you are responsible for your spouse’s debt

This is a common debt myth that I see a lot of married couples holding on to when they get into a union.

This is not true.

You are only responsible for your spouse’s debt if you take out a loan in a joint account.

If your spouse dies, then you are responsible for their debt if you were the cosigner on a loan they took or you are also their joint account holder.

Any loan they take without you having no participation is not yours to pay.

So you do not need to be alarmed. 

  1. Cosigning a debt means 50-50 responsibility 

This is also another debt myth.

Cosigning a debt does not mean 50-50 shares of responsibility in paying off the debt.

It only means that both of you have agreed to pay off whatever amount is left of the debt to write it off.

Do not think that you will only pay half of the debt and leave your partner with the rest. No.

The bank or the credit company will come for you if your partner cannot (whether they are deceased or bankrupt) pay for their share.

You need to be aware of this debt myth and debunk it before you set yourself up for financial ruin and failure.

  1. Paying off my debt saves me money and adds to my wealth.

This debt myth is only half true.

Paying off debt saves you from incurring any high interests that will otherwise be difficult to pay on a given debt.

However, this doesn’t mean that it is adding to your wealth.

If you do not build on your credit card limit, your future is not financially secure when it comes to credit cards.

  1. Lifestyle assets are useful investments that can be used as debt leverage

A lot of people will list their houses, cars and land as debt leverage for when they cannot pay their debts.

It is a myth that this is your only option.

It is painful to watch all the items you bought with your hard-earned money go away because you can’t pay your debts.

Do your research, find alternatives and work with the best financial advisors who can set you on a clear path to paying off your debt without writing off your lifestyle assets as useful investments for debt leverage. 

  1. If someone leaves the country, the debts will automatically and eventually go away.

I’ll just say it: I have a friend who has a huge student loan that she hasn’t started paying off.

She talks about leaving the country soon and never having to pay for these loans.

Until I did my research, I knew this debt myth to be true.

Well, it is only half true.

If an institution that you borrowed money from doesn’t have other branches overseas, then it will be difficult to track you down to pay off your debt.

But if it does have its company branches out of the country, then be prepared to pay this debt wherever you go.

  1. Debt kills young businesses 

When you are starting out your business, you may look for different ways to fund your startup.

One of the ways to do this is by borrowing loans from friends or from the bank.

A lot of people shun this idea and claim that it is better to save than take out debt.

If your business is tangible, then why not take out a loan?

Banking institutions have money set aside for capital that will help entrepreneurs to start their businesses.

It is usually a low-interest debt with positive tax benefits.

If you want to take out a loan to start your business, then do so by all means.

Do not let this debt myth limit you.

  1. Budgeting doesn’t help when you have accumulated debt.

Budgeting helps a whole lot.

If you find yourself with a lot of debt that you need to pay off then you have to track your expenses and budget your money.

You will find that when your budget, you can properly allocate part of your money to pay off this already accumulated debt.

You will create a dent each time, even though it’s slow.

The idea that budgeting doesn’t help you when you have already accumulated debt is a debt myth that needs to be debunked immediately. 

  1. Creditors can always sue you for a debt

Yes, creditors can sue you for their money, but not always.

It is their right to have their money back in an instance where you do not want to pay them back or they are unsure about you.

However, there are statutes of limitations when it comes to debt.

This applies to wuthering old debt that you have not dealt with or a new one you cannot pay.

If you take a person to court over a 2-year-old debt, then you will not be compensated for this.

Make sure you actively pursue your debtors once you notice any sign of untrustworthiness.

  1. I should file for bankruptcy if I cannot pay all of my debt.

This is a debt myth and a mistake that I see most people make.

Filing for bankruptcy should be your last resort when you cannot pay all of your debt.

Filing for bankruptcy damages your reputation and makes other creditors know how incompetent you are when it comes to paying off debts.

You wouldn’t stand any chance if you were to borrow from them.

You will also hurt your credit score and it is going to be difficult for you to qualify for loans or new credit card accounts.

  1. You will lose everything when you declare bankrupt 

This is a common myth that once you file for bankruptcy, the court will take your home, car and furniture.

Once you file for bankruptcy, a court will appoint a trustee to review your belongings and assets and sell some so that you can get an advantage over your creditors.

However, there are certain assets you can claim as exempt and you will not have to give them up. 

The assets you can claim exempt will however be determined by the court and where you live.

So it is a myth to say that you will lose everything if you cannot pay off debt. 

  1. You will never have enough money to pay off your debt.

This is a very dangerous debt myth that hinders financial progress in every aspect.

Thinking you will never have enough money is self-sabotaging.

Instead of walking around with this mindset, why don’t you start thinking about how you can look for multiple income streams to help you pay off your debts as soon as possible?.

It does you no good to sit around wallowing in debts and worry, waiting for a miracle to happen.

Take action today. 

  1. You are in debt because you are stupid and irresponsible. 

I used to think this too about myself.

I’m glad it’s a myth.

We all get into debt for many reasons.

If one of your reasons is either to start a business, support your dreams or just to get ahead in life, then it is a good thing.

Do not feel guilty or ashamed.

On the bright side, you have done something that is worthwhile with this debt instead of wasting it on things you do not really need.

Managing your debt properly makes you wiser and more responsible.

  1. All debt negatively impacts your credit score

A credit score is calculated by the credit balance that you have, your payment history and the length of time you have had accounts with credit lenders.

While having high credit balances is not good for you, if you are managing your credit card debt well, then you are improving your credit score.

It is a myth to believe that all debt negatively impacts your credit score.

  1. Paying the minimum payment on your outstanding debts

Only making minimum payments doesn’t help you in clearing off your monthly credit card balances.

If you are left with huge credit card balances, it will only hurt your credit score.

You cannot afford this to happen to you especially if you want to invest in the long term with credit cards.

It is a debt myth that you should only make minimum payments with credit cards. 

  1. Checking your credit score will hurt your credit score.

This debt myth is half true.

Every time you check your credit score, there is something called a hard inquiry that is done on you.

Too many hard inquiries hurt your credit score.

Credit card companies offer a free credit score check every 12 months so if you do it within this period, you will not hurt your credit score.

If you do it out of this window, then you will hurt your credit score. 

  1. There is no forgiveness for government debt.

This is a debt myth that most people believe to be true.

With government debt, you can renegotiate, have your interest rate reduced or have it eliminated.

You can get a consumer proposal to pay a reduced amount of the debt in 5 years.

Resources Related to Debt Myths

The following are resources on debt myths for you to read further and they are:

How to Pay Debt Off Quickly and Easily

How to Improve Your Relationship With Money as a Kenyan

I get it.

We don’t want debt.

But, have you ever stopped to think that your opinions and actions towards debt are primarily influenced by the limiting beliefs that friends, family and overall society have instilled in us?

Can we really survive without debt? Short answer, no.

It is good to know how to manage our finances effectively.

The first step in doing that is by adopting good financial habits that are going to give us the green light to whether or not we are safe in or out of debt.

You have to debunk these debt myths if you want to achieve financial confidence and live a happier and more fulfilling life.

Do you or are in debt and have been feeling like a coward or inadequate?

Let’s face it, you’re NOT A COWARD, INADEQUATE OR STUPID because you owe someone.

I hope you being in debt means learning something about yourself and your relationship with money.

Being in debt taught and teaches me something about myself and money – I’M A MONEY WORRIER.

Money worriers cannot have enough money; we don’t feel like the money in our hands does us any favour.

We know we must have more always and when we don’t, we panic.

Panicking about money makes you feel inadequate and makes you take unsound financial decisions like going into debt.

You’re always anxious.

Some of you may be gamblers or financial gamblers.

You know what you’re supposed to do with money but instead of doing what you’re supposed to do; you live to gratify your inner child with things you don’t need now.

The money triggers you have got and get you in debt.

These debt myths make people die and others suffer from illnesses like high blood pressure and depression.

What debt myth do you want to burst and why?

What’s your money mindset?

What do you talk about money when no one listens?

Your money mindset may also help you burst some of these debt myths.

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