The Four Horsemen Of Financial Ruin – The Enslaver

The rich rules over the poor, And the borrower is servant to the lenderFour_Horsemen_400

Today we go to the second horseman. Let me also say that from last week his name is called the enslaver, read with me proverbs 22:7

The borrower is as slave to the lender, you see the second horseman is called the enslaver and he brings financial ruin by driving you into debt. He has three chains or 3 handcuffs that he binds you up with. The 1st one is called the credit card debt. The 2nd chain of bondage is called consumer debt, the 3rd chain is called the golden handcuffs, let me explain.

The enslavers chain number one: credit cards.

It looks good to pull out a chic credit card, when you go for dinner somewhere and you pull it up after dinner and show off and swipe at the machine, and hope others saw you. It looks cool to do that.

Credit cards and use of plastic money is on the increase here in Kenya as more and more people, especially among the rising middle class, Kenya has one of the fastest growing middle class in the world today, the rising middle class starts using credit cards but as convenient as credit cards are, they are the devils tail with a sting in them. Be very, very careful about credit cards, they are not your friends, they are the enslavers chain of bondage.

You see the way they work is, I borrow credit from the bank for 30 days after the 30 days, they send me a bill within those 30 days I am supposed to pay my credit, if I don’t pay the full credit, then it carries over as a credit loan and they charge me interest on that loan. Sounds god so far, okay but there is a sting in the tail, there is a catch.


There are several stings to a credit Card.

Sting 1-the annual interest rate of a credit card is what they call the APR annual percentage rate, the bank does not lend me its money cheaply and they like credits more than they like mortgages, because they make more money on a credit card than they do on an mortgage, you see the bank charges here in Kenya for many of our credits cards somewhere between 2.5-3%-5% on the expensive credit cards a month. I borrow at that rate, and 3% doesn’t sound bad until you compute what the annual % interest is.

I called up my customer service credit card this week and said, that is the annual rate and he said 47 percent. I said, “What!” And he explained to me that when you borrow money at the rate of 3.something per month, the APR, is above 40% and then they load on all the extra charges, renewing your charge and etc., and it works to 47% annually, my mortgage is only 17%, my card if I do not my bills is 47% per annum. Now in the west, they even clever, I went to the banks here, who issue out credits checked their credit cards page, to see if any one tells you upfront what the APR is only one bank had it on their site. All the others tell you 3%, they don’t tell you what the annual rate is. In USA, they don’t even don’t give you a monthly percentage, they give you a daily percent, 0.00something, so you never really know how much interest they are milking off you, because you don’t compute and you don’t know how to compute.

Sting II, when you use the credit card and you are not paying your bill in full, you become a cash cow, wee ni ngombe. What the bank really needs is for you not to pay your bill in full, this is why when you get your bill, they always tell you, your credit this month is 200,000 but you only need to pay 20,000, you see when the money managers of the bank send you your bill they are in the boardroom praying that you do not pay. They don’t like people who pay their bills in full.

They love the ones who only pay the minimum 10%, they love those ones, they don’t want you to pay, because when you pay in full they don’t make any money, they make money when you don’t pay and you carry a bill on your credit card. They love you, because you are paying them at 47% interest, that’s what they want. Now if you pay the amount in full they get nothing, if you don’t pay and only pay the minimum then they can charge interest on the other 90%.

Sting III, if you only pay the minimum on your credit, and you continue each month paying the minimum, say you borrowed 50,000 and they write and tell you, your bill is 50,000 but you only need to pay 10,000 and so you pay 5,000 next month they tell you your bill is you know 45k, but the interest in one month is 3500 so your bills is only 48500 but you only need to pay 4850 and you only the 10% it will take you a 3% interest, ten years to pay off your bill and the banks love it.

By the time you have finished paying off all that bill, you would have paid twice as much, the banks love you, and they would renew your card free of charge and even give you a holiday to Hawaii. It can go on forever, you know this week, Lupita Nyongo just won the Oscar award for the best supporting actress, in a movie called 12 tears a slave, but you will win the actor award in your movie called 10 years a slave. The borrower is the slave of the lender

Sting IV if you dare default, and you decide it’s all too much, I can’t afford, I am skipping this month and I will skip next month, do you know what happens? The penalty for not paying your bill is that your interest rate is increased and there are penalties for default and so your interest goes from whatever it was from 40-47% and goes up by another 10%.


The enslavers chain number 2.

Some of us are saying well, I don’t have a credit card, I use my ATM cards or some of you know have this card, this is your debit card. Ask your neighbor why debit card outlets are being so nice to me and encouraging me to get a global card instead, where is the catch?

Ask them this 2nd question, why are debit card companies going into the banking industry. There’s got to be a reason, do you know what the reason is? The enslaver is stretching his tentacles so that he can also get you who is not on a credit card. Whenever you run a card, visa card, master card, visa electron, ATM-visa enabled, the restaurant or the supermarket or shop you are in, has to pay visa 2-5%, as a charge to visa and so every time you use your visa card/ATM, the outlet has to pay 2-5% of what you bought to visa, why do retail outlets agree to take your card?

There is a reason, the 1st reason why they want all of us to move to their global card, study after study show that when somebody goes to an outlet supermarket/restaurant/shop, they tend to spend 30% more on their card, than they do if they had to pay cash. You see, when I have to take the money out of my pocket, I count it and have to give it over it is very painful, but a card, just swipe and look around with pride, did you notice, and I swiped? what you don’t realize is the reason any supermarket wants you to use a card rather than cash is because traditionally you will spend 30% more on your shopping when you use a card as opposed to cash. And so they don’t mind paying 5% because they get 25% more than you would have spent otherwise, every supermarket in Kenya is trying to push to all of us using cards as opposed to paying cash.

The 2nd reason, when you run the debit card: they give you an amazing card, it has no fees on it. You load it up, it has no fees, and there are no annual renewal fees unlike the credit. There is only 100 shillings when you go and apply for it, you don’t pay anything else.

Did you notice they asked you how many children you have, age, gender, birthday, phone contact? When I filled my form I read it to the family details segment and crossed it and said this is none of your business. The reason they are doing that is not to discount, it is because this card is a smart card and this card contains my names and shopping habits, it’s all in there. And when you buy something, they have a record of what you bought and when you come back, they can soon begin to tell this person always buys a lot of dresses and flowers and perfumes, this is going somewhere.

They can map out your life’s trends.

Some of the issues they are having with these cards in places like U.K In Tesco and USA in Walmart is that they map out your life trends. That is what the smart card is all about. They want to increase consumption so that you can buy more. They are very clever, this is scientific, they study you, they know what you want to buy, and starting sending you coupons and offers so that you can buy more.

The enslaver is after your money and as the bible says the borrower is the slave of the lender, now they know you so well, in fact in this woman’s case, one of the amazing things is she hadn’t even told her husband that she was pregnant, the supermarket knew before the husband.


Enslavers chain number 3: The golden handcuffs

Many of you are wearing them, what are the golden handcuffs, you got a swanky new job that pays well, and they gave you a range rover, when you took up the job and you got a mortgage, and they offered you a scholarship for your children and a fee holiday to South Africa and to Europe every three years. What you don’t realize, is that you have just sold your soul to your employer, the golden handcuffs are your chain have captured you, And you will work for that employer for the next 20 yrs. because the day you come along and say you want to quit.

 Perks that enslave

Some employers give you a lifestyle you cant afford, and when you want to quit, you remember that they are the ones who are paying your school fees, the car is theirs, the house you live in is their mortgage and you just can’t walk away. Whenever they want to yank the chain you are already in handcuffs. So you have golden handcuffs around you.

Your life belongs to your employer because you can never quit, and what your employer does, is this is your standard of living but he finances your standard of living up above and he knows that what he pays you will never allow you to live at that point except, that he is there to bridge the gap and as long as he bridges the gap you cannot live because when you think of leaving the school , I need to start paying school fees, I need to downgrade my children schooling, I better stay, or I have to give up the car, or the house.

Those are the golden handcuffs, what I am saying is this guy’s once you borrow the borrower is a slave of the lender. You lose control over your life, you are now in the hands of the lender. Debt eats your tomorrow today, when you take a mortgage you are saying that for the next 15 yrs. I will take from the future to pay the present. Debt also presumes on tomorrow that I will have the earning power and the job to keep paying for the next 15 yrs. because I have taken a mortgage, I don’t take into account that I could lose my job, this could collapse then what will I do. It presume on the future.


The problem with debt

Debt is addictive because it encourages instant gratification, I want it now and so I will pay into the future to get it now, instead of saying let me save into the future, finally when I have enough or I will buy what it is that I want now. And I will mortgage my salary for the next one year to pay for what I have borrowed. Debt will destroy your credibility if you can’t pay. It will rob you off your sleep. It will put you under tremendous stress, and drive you nuts, it will cause you to worry all the time, it can destroy your marriage and it can destroy your friendships, the best way to deal and to manage debt is to avoid it all together, stay away from it and determine to live a debt free life.

Good loan vs Bad loan

I think there are only 3 things that possibly fall into this category the first is, house loan, because the value of a house appreciates. The 2nd is a business loan so that you can invest in the business. The business can increase your wealth and pay your debt back. And the 3rd is an education loan because getting an education will allow you to get a job, but even a mortgage can turn into a trap if you buy into a house bigger than you need, or a hour that you cannot afford, or pass the limit that we talked about last week or later on it enable you buy a house in a wrong area and the value is going down as opposed to up. So even a mortgage can be bad debt maybe you’re not in a job that is secure enough to secure a mortgage, so maybe you shouldn’t take the mortgage in the first place. Bad debt takes away from your net worth, it drains your resources.

Financial Advice to the Young

Let me give you an example, particularly for the young one here, I said in this series I wanna talk to those of you who are under thirty years. Many young people buy a car as their first big purchase, once they start working, a car does not add to your value and your wealth it takes away from it. It eats up your wealth. I see young men buy a car on their first job and I think it’s clear that they have begun down the path of poverty. They look good and as they drive their car towards poverty their car is a sign of their lack of wisdom.

When you buy it, you then need to fuel it, the rule of thumb is for every shilling on fuel, you spend a shilling on maintenance, changing tires, car service, and so another 5k, then you have to ensure the car, parking fee etc. so that per month for my 500k loan I am paying back 20k for the loan and another 10-15k for running the car, altogether 35k a month. If you earn 50k a month.

You should not buy a car because to pay 35k on a car when you are adding 50k remember what we said last week, if you are living on 60% of what lands in your bank account when you are paid your salary, you are living beyond your means, even when you earn 100k a month, you should not buy a car on a loan because that means that 35k is consuming 35% of your income. And you will not survive on the remaining 15-25% and so you have gone beyond the limit of 60%

Let me give you 8 simple steps.

To help, this is where you begin, and these are no shortcuts

1) If you are in a home stop taking loans, cut up the credit or ATM cards, even your ATM cards would cause you to spend 30% more in your shopping than you need to. It makes money too easy and too painless, go back to a cash economy. Stop spending. Plug up the leaks.

2) Start living strictly by your spending plan. Do not deviate from your cost cutting measures. Stick to your spending plan

3) Sell off some of your stuff. You don’t need that I pad, you don’t ned that galaxy s4, that car, you can sell these things, and pay off some of your debt, go through your house, too many clothes, too many shoes, too many utensils, you can sell off these stuff and pay off your debt-

4) Make a debt repayment plan. Calculate all your debt. How much you can pay per month how long it will take you and put a plan in place? The worst thing you can do with debt when you owe others money is to not pay them and to go into hiding. Mteja. If you owe the bank debt, go to the bank sit with them, what are they going to do with you anyway, they won’t shoot you and remember as long as you owe them money, you are a cash cow they will treat you nicely, they really don’t want you to pay off your debt. Renegotiate your debt obligation to banks and friends.

5) Make your payments automatic. Go to the bank and put a standing order, I owe Susan 200k. I can only afford to pay at 30k a month, tell the bank to set up a standing order for 30k to Susan. A standing order will cost you money so alternatively write out postdated cheques for the next couple of months to pay back Susan staggered monthly and gibe to your debtors. Make it automatic

6) Invest in your debt. Say you have a huge credit card debt, pay it as soon as possible remember it’s costing you 40% per annum. Only your own business can give you such a return on your money and it is wise to take money and pay this bill which costs you so much. Let your money settle the debt first. By paying down the credit card bill, I am actually investing in the best return on my money at 40%. So that the banker doesn’t repossess my assets.

7) Focus on one at a time. You can’t do it all. If you have ten debts, focus on one and commit to it and finish it off and then pick the next one and commit to it and finish it off. One at a time you will see progress, when you try ten it will stress you. Start with the one giving you the most stress.

8) Start an Income generating project to pay off your debt. Right now Kenyans laugh at certain investment-quail farming. Look for extra ways to generate income to pay off the debt.

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8 Responses to “The Four Horsemen Of Financial Ruin – The Enslaver”

  1. It’s difficult to find well-informed people for this topic, but you sound like you know what you’re talking about!

    Liked by 1 person

  2. Geoffrey Wanjala Says:

    Thankz For That Educative Sermon It Has Opened My Mindz.

    Liked by 1 person

  3. Lucy Karanja Says:

    This is wisdom ; thank you for posting . Soo challenged and well taught.

    Liked by 1 person

  4. Jaoko Rajula Says:

    The sermon struck home and I could personally relate to what the Pastor was saying. I was visiting today and the word shared was timely. Keep up the good work,would surely love to have a copy of this sermon series.

    Liked by 1 person

  5. Very true. True freedom is financial freedom.


  6. Awesome. If you see a banker laughing, check your purse or if a banker hugs you keep one hand on your wallet.


  7. The advice to young professionals about buying a car is rather simplistic. A car can, indeed, be an asset and help one generate extra income. It can enable a young professional do two or three jobs a day in different parts of town as opposed to one job. If I have a lecturing job at KU, running a consulting office in Karen, and own a greenhouse and also live in Kitengela then it makes much more sense to have a car. It can be a car for business as well as personal errands and can extend work time and increase family income.


  8. Unpopular Says:

    i lived 3 years without a debit card,in the last year I picked one up and have certainly spent 30% more than I was before.I have wiped out the money on that account and returned to a cash economy.My grandparents were less educated than I am and much wealthier than me.I drive some flosset disguised as an asset,yet they never drove only a workhorse (read the ancient ugly reliable Leyland truck) that was income generating yet left me an inheritance I doubt I will be able to live my own kids.
    Thank you Pastor Oscar.


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