Don’t live beyond your means

The biggest financial challenge is living beyond your means. You could attribute this extravagant life style to our society. As one rich Ugandan once

The biggest financial challenge is living beyond your means. You could attribute this extravagant life style to our society. As one rich Ugandan once advised, “if you want to succeed in Uganda, appear to be successful by driving a great car, owning a fantastic home in the CBD and having a big office.”

Well… by the time you have these things, you are already rich!

The bottom line is people want to associate with success. No one will give you business deals if you don’t play Golf or enjoy coffee at the upscale Serena or Sheraton hotels. If you are a self-employed, and are living beyond your means, it may be understandable: you want to keep up appearance which is critical to your business success.

It is interesting how society can make life difficult for you.

In Europe, when they see you walking or on a bicycle, they say you are healthy conscious. In Uganda, when a friend finds you on the street walking, they think you are a failure.

This has led to the following:

Borrowing to drive. It is said that over 60% of cars bearing private number plates which are non-company owned are on either a salary or car loan. For most folks working in a bank, the first thing they do when they get a job in the bank is to get a car loan.

Personal experience.

One of my friends, I will call James, shared a personal story I trust you can also learn from. Here is James: “When I got my first job in the bank, the first thing the HR officer advised me (wrongly of course) was to get a car loan. I was fresh from campus, and had been appointed as a credit officer. The HR intoned “as our customer contact person, you must look and smell professional. Having a car improves your confidence and smartness. You should seriously consider getting a car loan as soon as possible.” So, around 2003, instead of getting a loan to buy a small piece of land, I got a car loan with my salary as ‘collateral’ as it was deducted at source to repay the car loan to the bank, my employer.

Everything went ok, and I enjoyed the ride. However, after four years of paying the loan, it was in a dangerous mechanical condition (DMC)! That was in 2007. The bank suggested to give me another loan to replace it with a new one, my newly wedded wife intervened. “We don’t need to always be on the move. We need a home to stay and settle.”

With the help of my wife, I continued using my DMC, but got a loan which I used to buy a plot of land. Although the prices were high in 2007, I got a piece of land just enough for our pad. I must say, that was the best decision I have done. In 2010, I sold the land at a big profit, and bought two plots of land. Unfortunately, one of the plots had a forged land tittle, and the ‘lawyer’ who transferred it to my names was a fraudster. Notwithstanding fraud in lands, I found it a great investment option for both educated and uneducated, as long as one has money to buy it.

A car depreciates and land appreciates. A car needs lots of fuel and on-going maintenance. Land just appreciates. True, you need a car. But not before you get a plot of land. The alternative to land is to invest in a business like a shop, hair saloon, etc that earns money.”

Welcome back. The lesson is, if you must drive, first buy a plot of land.

Taking your children to very expensive schools. The cost of education is overpriced in Uganda. Recently I was perplexed to be billed Ugx. 1.2m (US $ 480) each for my twins planning to join pre-nursery. Keep in mind these are three year olds. Is this the correct price for babysitting? How can pre-nursery education be more expensive than University or vocational training? It is madness. The challenge is, other parents were rushing to pay on the pretext that “thank God, my kid got an admission.” Really! The schools these days know how play on people’s psychology by creating an artificial scarcity of vacancies so that parents think of intense competition due to high demand. And they have won. Other than socializing, I don’t see the value imparted to kids at pre-nursery. After all, I never had even Nursery education.

It is good for the kids to have a great foundation. But great things are not necessarily expensive. This like water, salt and air are so critical to life, yet very affordable in any country, including those in deserts.

After reading several biographies of great people, I have noticed that few had a great background. Many of them did not have pre-nursery or nursery education.

Yours truly started in primary one at 6 years and was also made to skip a class, P.4 i.e. from P.3 to P.5 directly.

Copyright Mustapha Mugisa 2013. All rights reserved.

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