When Peter graduated from a leading private university, he was very excited. He knew that the sky was no limit for him. He quickly landed a job with a local bank as back office staff. During the orientation week, the bank manager came to address all the new staff members. He said many good things to assure the “fresh blood” that their dream had come true. He went on to tell them how privileged they were to work for the bank. As a parting shot, the bank manager said, “Here in this bank, we take loans, yes that’s what we do, we take loans. The bank will give you a loan to do practically anything from glooming to buying house furniture, to paying dowry (if need be)”. Peter was very excited. He quickly took a loan, ran to one of the leading shops that sells men’s suits and bought 5 designer suits (one for each day of the week) and two pairs of shoes all at a total cost of Kshs 100,000. Now, he looked like one of them…you know, a bank official. In fact, if you are queuing for a bus at Kencom, you can tell who works for a bank….it’s easy, bank officials are the most expensively dressed.

There was a tradition in the bank that every month, they visit a staff member in his house, you know, as a way of team building and strengthening the “brotherhood”. Six Months into this job, it was Peters’ turn to host. He took a Kshs 300,000 loan to move to a “decent” house and furnish it. For sure, his colleagues were very delighted to see how organized Peter was. In fact, when I visited Peter, I saw that he indeed works for a bank.

Peter saw that there was need to have a “side hustle”. He asked around and finally decided to start an executive barber shop. He bought an existing barbershop (Kinyozi) at a cost of Kshs 500,000. However, due to his nature of work, he could only visit his Kinyozi on Saturday and Sunday afternoon. In another 6 months, he had made so much loss that he decided to close it down. The Kinyozi had not only gone down with his initial Kshs 500,000 capital, but also an additional Kshs 200,000 in running costs.

Peter is not a happy man today. He is servicing loans from his “small salary”. He is becoming poorer by the day.

James is the exact opposite of Peter. He knows how to live within his means….actually, below his means. He graduated from Campus the same time with Peter and soon after landed a job with a leading audit firm. He had the same opportunities and pressures as did Peter but he had a clear picture of where he wanted to go. He lived in a small house for the first three years of his employment. When his colleagues were taking car loans, he was happy to use buses and matatus to work and a “boda boda” to his house in case he got to the stage late at night. He later moved to a bigger house in order to start buying a few household items as this time he was getting ready to marry. Just before he got married, he accumulated his savings and put a down payment for a house. He then took a loan from his sacco to clear the balance from the house purchase. He is now married and living in his own house. His friends, like Peter are still “languishing” in the mess they put themselves into.

Are you like Peter or James?

 

The book, “The ABC of REAL estate investment in Kenya” will make you a wiser investor.

Order a copy of the book by sending an email to  info@kariukiwaweru.com

 

Kariuki Waweru