As the year began, I took a candid audit of my 16 years Journey with money & Wealth.
Money tops the list for many people’s New Year Resolutions as they battle January Blues. Unfortunately, all hardships get forgotten as soon as the paycheck hits the account.
I want to share some experience that would help put into context how perilous this cycle is.
I joined active teaching in 2008, as an adjunct lecturer. By 2009, I was teaching in 2 Universities. That meant 2 incomes, paying at different dates each month. Though with good cash-flows, no bank would touch me with loans because it was part-time.
In 2010, I moved into a full-time assignment, securing the coveted Payslip for adjuncts. With that, the banks would start chasing me literary! I still retained my 2 part-time teachings for another 2 years.
I wanted to own a Home, a car and all this things middle class crave for.
On the 8th Month, I found a nice plot within a nice estate. Real estate was booming due to the Kibaki Era economic growth. In this Estate, prices had jumped from 150K in 2000 to between 900k -1.25m depending on the location.
Mine was strategically located -Water, Electricity, police post & access roads on 2 sides. The non negotiable asking price was at the apex 1.25m.
I figured a ‘good’ financing plan. I had savings of 450k, and planned to borrow 900k. 100k would be used for transaction costs and processing transfers. I must become a land owner within Kanairo!
I signed the contracts, paid down payment of 350K. I walked to the bank and applied for a loan of 900k, the exact amount to complete the transaction. This bank held my salary account & savings, but they still asked me very annoying questions to tabulate my rents, groceries, entertainment….blah blah nonsense!
Despite all this, after 3 days I received a rejection on a technicality – I was still on probation. My employer then offered a 1 year probation! Thanks to competition, I quickly moved to a better suiter, who only required 6 months payslips!
I secured my loan a week later and completed the transaction.
However, with a loan of 900k @17% + transaction costs, the plot cost me a total of sh.2.1m.
Property values grew in the locality, but platooned at about sh.4m in 2015/16. I should have sold-out then; but I didn’t! Rem you can’t go wrong with land nonsense?
Now here are the numbers!
1. If I had invested my 450k savings in a Treasury bond @ 12%, with nothing else except compounding, it would be returning sh.2,463,104.59 by November 2025 (15 years);
2. Assuming I had put the sh. 2.1m in the same bond, it would be returning sh.11,494,488.09, after 15 years!
3. In November 2024, I couldn’t get a buyer @4.5m for this Plot! Lakini, an African Man MUST own a ka-plot somewhere!
Lesson:
1. See money, wealth & investments for what they are – remove cultural stereotypes and emotions to win!
2. Longevity & compounding is the King in Money games!