How To Be a Responsible Borrower


Are you in a constant battle to pay off old credit, do you still need to borrow to stay afloat? What are your credit needs?

Do you borrow for consumption to compete in a society obsessed with displaying material possessions to impress people who are negligent? Or you can borrow to meet basic needs. Regardless of the reason, irresponsible borrowing needs to be nipped in the bud in order for you to break free from this precarious financial situation.

Realistically, it happens to the best of us. Recently, a senior official in charge of a domestic medical facility shared email feedback about how their marital home was at risk of being auctioned off due to their insatiable appetite for credit. He was trying to figure out how to inform the woman that the house would be days away from repossession if he didn’t bring in millions of shillings. He owed a loan shark.

He was desperately trying to borrow money to fend off auctioneers. Unfortunately, this financial situation was fueled by a gambling habit.

Regardless of how this scenario plays out, it is clear that his household will suffer the consequences of his irresponsible credit habit.  More loan available at

With the information available on financial literacy, the importance of responsible borrowing is no stranger to anyone.

Regardless of your excuse, if you don’t practice responsible borrowing, your habit will derail your financial goals and negatively affect your budget now and in the future. Some people are so selfish that they run into enormous debts, most of which are discovered after they die, and leave families to deal with a truckload of creditors.

Typically, most income earners are hit by the debt trap mainly because of financial discipline, although a relatively low income is also an important factor. At the same time, there is a category that borrows credit just because the money is available, not because they can afford it.

As much as possible, we need to acknowledge our financial situation and deal with managing our goals in order to arrive at our financial goals over time. Trying to change our financial status overnight to mimic the rich (with questionable sources of income) leaves us vulnerable to poor money behavior. For example, those with relatively high incomes are increasingly suffering from high consumer debt due to a “lifestyle trap”. Pursuing a lifestyle that you cannot afford forces you to borrow to keep up. In most cases, your spending decisions will be influenced by

try to compare what your peers. Inevitably, you acquire material possessions that match or surpass your peers. Unfortunately, there is a misconception that equates wealth with material acquisitions as opposed to passive income generated by assets.

To avoid the debt trap, you need to distinguish between good and bad debt. If you’re borrowing money to invest in profitable businesses, that’s good debt.

Borrowing for consumption, that is, the purchase of material value that is depreciating, however, leads to bad debts. If you fall into this category, then you surely need to figure out how to implement a workable debt reduction plan and start paying off your loans.

If you are a heavily indebted person who struggles to sleep at night or has a challenge focusing on your chores during the day then you need to seek help.

This category relies on loans as a financial solution. For example, these individuals borrow from Greg to pay Beverly, and this is done with co-workers, family, and friends. There is no doubt that you suffer from unhealthy debt.

Urgent intervention is needed to figure out how to deal with your situation. Priority should be given to the total of your debts and prioritizing what to clear first.

Most importantly, if you do decide to figure out how to pay off your debt, you will need to change your behavior and attitudes to take responsibility

Your situation. Maintaining financial discipline through delayed gratification is what you need to work on.

Work with the belief that if you can’t afford it, unless the situation is life threatening, it can wait. Distinguish between a need and a need at the same time and focus on expanding your resources.

Focusing on deleveraging is inevitably one of the ways to get back into financial goals. Unless you actively face the challenge of irresponsible borrowing for consumption, you will either stagnate or keep falling back on your financial aspirations.

The author works with the Bank of Uganda [email protected]

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