Solutions to personal debts

By Beryl Osindo

Each individual born in a country grappling with economic instability accrues a government debt during delivery. Studies indicate that the worst effects of household debt were between 2007 and 2011 owing to the recession in the US and other parts of Europe.

Personal debt refers to the resources that an individual owes a fiscal entity including banks, micro fiancé institutions and government financed entities. They could be loans accrued for schooling, mortgage fees, credit cards, and other forms of liabilities from a consumer perspective.

The government reimburses the exchequer by taxing individuals in the society.Through tax payment, each person becomes a debtor to the government. In Kenya, the prices of mortgages, inflation, and increase in cost of life are significant in discussing personal debt issue.

Household debt and increase in prices of commodities, increased value of loans, and other figures influence personal debt.A country’s economic stability is crucial in determining the extent each member of the country will spend on commodities.  A Kenyan spends an approximate income ration that is 128 more than the amount spent 13 years ago. The ratio surpasses that of most states in East Africa including Uganda and Rwanda.

In essence, Kenyan residents spend more resources on covering personal debt than most of the residents earn. In the next five years, the ratio of personal debt might be 877% more than it was in 1995. The rising cost of basic commodities might decrease individual dependence on such items and further lead to a recession. Kenyans need to seek alternative survival tactics in order to deal with the changing economic platforms. For instance, over dependence on agriculture might be translated to investment in ICT, which is universal and does not appreciate or depreciate.

First published in September 2012.