Sometime in 2015, I received a random call from my bank. On the other end of the call was a sweet-sounding female voice, which went on to convince me to come and pick up my “free” credit card. She went on to entice me about the benefits of this magical card. I could swipe it at any supermarket and walk out with whatever I wanted. I could even withdraw cash from the ATM. I could buy stuff online. The winner was that the limit on the card was ugx 20m. I couldn’t believe it!
My mind started racing. My heart skipped a beat. My palms became sweaty. All this cash for FREE! So I made up an excuse at work and rushed off to the bank to meet this seductress who would give me a magical credit card.
Natalie was as enchanting in person as she was on the phone. She handed me the card, and I signed some forms. I thanked her profusely for thinking of me dearly and for handing me such a gift without even asking. I then went to a nearby ATM to test out this card, and voila, the machine spat out some neat 50k notes!
And then began my troubles with this credit card. At the time, we were building our home, so when things got tight, I would go to the ATM like a boss, withdraw cash, and send to the Site Engineer to buy more materials. I kept on abusing this card in this manner for quite a while until I woke up one day and had run a bill of over ugx 10m.
Natalie was charming, and maybe she forgot to tell me how credit cards work, or I was simply too transfixed on her radiant beauty to understand what she was saying. You see, credit cards give you convenience but at a significant cost. I later found out that there was a 20% surcharge on every ATM withdrawal! I also found out that the annual interest came to over 40%. I did some research, and the repayments were set up in such a way that it would take me several years to pay off this loan.
This seemingly free gift turned out to be quite a poisoned chalice. At that time, I was becoming more aware of my financial situation and wished to get out of debt. On top of the credit card debt, I had a bank loan, a SACCO loan, a development loan from work, and a salary advance. The loans were bearing down heavy on my back.
I chanced upon a book called “The Total Money Makeover” by Dave Ramsey, which introduced me to the idea of the Debt Snowball, which can be used to reduce the debt burden. I listed all my debts in ascending order, starting with the smallest, which was the credit card. I then focused on eliminating the credit card debt first. I literally cut up the card into pieces. I also increased the amount I was paying per month towards the credit card. I also used other income sources to pay lump sums towards this debt.
Luckily, I managed to pay off this credit card debt before it became an entrenched habit, and I have not held a credit card since then. Natalie kept calling to give me an even better card with a higher limit, but once bitten, twice shy.
Unlock your true potential 