5 Best Way to Manage Debt as A Nigeria Low Income Earner

By | January 24, 2024

Borrowing from family, friends, and co-workers is common among low-income employees, especially when their take-home allowance is depleted before the month ends or their monthly salary is delayed beyond expectation.

Borrowing isn’t necessarily a terrible thing if it’s necessary, but rising debts is what might financially kill you and your aspirations. If you spend more than you earn monthly, you are clearly on the verge of a significant financial disaster.

The sooner you prevent this risk; the better and healthier your financial situation will be. However, it’s worth noting that the most important tip for avoiding debt accumulation is to spend less than you make.

This rule has several major advantages, including debt elimination and the ability to develop money.

Before we go into ways of managing debt as a low-income earner, let’s have an understanding of the types of debt available.

What Are the Different Types of Debt Available?

Adequately Understanding the types of debt assists you in comprehending the bankruptcy process. Except when your creditors in all ramifications are legally different, bankruptcy law does not favour your creditors.

Best Way to Manage Debt as A Nigeria Low Income Earner

The most fundamental legal distinction between creditors is their division: 

  • Unsecured debt
  • Secured debt 
  • Priority debt

Secured Debts

The money individuals owe is fully secured by collateral with secured debts. Home equity, for example, can be used as collateral for a secured loan, as well as other assets can also be used for a secured auto loan.

Your commitment to make payment is secured by a lien on more than one of your assets, such as personal property or real estate, which gives the creditor control over that asset if you fail to pay.

Home mortgages and Vehicle loans, as well as contracts for furniture, electronics, or appliances, are the most prevalent secured debts. In addition, an unsecured loan can inadvertently become a secured type of debt. 

Unsecured Debts

An unsecured type of debt is one that is not secured by a claim on a property. Unless the creditor first obtains a judgment against you, the creditor has zero claims to anything you own. Unsecured debts can be divided into “general” and “priority” categories.

Most medical bills, deficiency accounts, credit card debt, repossessed autos or other collateral, many loans, and a variety of other debts fall into this category.

It’s the “leftover” form of debt—if the loan isn’t secured and doesn’t fall into the “priority” debt category, it’s an unsecured obligation.

Priority Debts

Some debts are referred to as priority debts because they may result in serious consequences if not paid. Priority debts should be paid first, followed by non-priority debts. The following are debts that must be paid first:

  • Repayments on a mortgage and debts secured by your home
  • Rent
  • Debts for gas and electricity
  • Tax levied by the municipality

Child support and maintenance payments and payments for your television licence are all considered priority debts.

  • You’ll face harsh repercussions if you don’t pay a priority debt. For instance, you could:
  • Mortgage or rent arrears cause you to lose your home
  • Enforcement agents (formerly known as ‘bailiffs’) may take action against you.
  • Be forced to accept an expensive pre-payment metre instead of having your gas or electricity supply turned off
  • You may lose your stuff on a hire purchase, such as a car, furniture, or other items.

How Can Low-income Earners Best Tackle Debt?

Best Way to Manage Debt as A Nigeria Low Income Earner

This isn’t saying you should completely avoid debt. However, you must know how to correctly handle it and keep it under control.

It’s all too easy to get into a debt trap, derailing your finances and hindering you from realizing your goals. Here are some of the deadliest “debt traps,” along with tips on how to avoid them:

The “New Car” Illusion

Rather than buying a brand-new car and incurring the massive debt that comes with it, disregard this and seek out a decent bargain on a reasonably-used vehicle. Cars that are 3 to 7 years old can, in most cases, still be quite good and reliable.

They’re also a lot less expensive. Use the money you’ve saved to help you balance your budget, start funding your dream projects, finance your retirement account, or save for a property in the IBAFOR/IMOWE area or low-cost places like AKUTE and SANGO OTTA.

However, if you have a well-planned living style and your income allows you to meet the monthly repayment plan without going into debt, you may be eligible for a fair car/consumer loan from StanbicIBTC.

The ‘Fine/Big Apartment’ Syndrome

This is a term used to describe a situation in which a person sees joys in getting a new apartment at all cost, this is a good character that should be attributed to low-income earners.

You should constantly look for a nice and reasonable apartment, especially in low-cost but decent regions. This strategy would save you 40% on your annual lodging costs. You may use the money you’ve saved to buy or build a modest apartment in a more desirable location.

“Good-Looking” Syndrome

Best Way to Manage Debt as A Nigeria Low Income Earner

There is a strong desire to spend a lot of money on clothing and other trendy products. Though we believe that having clothes that fit well and make you feel good is crucial, this should not be gone too far.

Most stylish women and men believe it is vital to follow the current fashion trends, and they have accumulated debts on new shirts, trousers, shoes, and coats.

Make a budget that includes a certain amount for clothing and other apparel to prevent falling into this trap. Then, once you’ve met your monthly maximum, hold yourself accountable and be satisfied.

You can stay out of debt by following a tight budgeting strategy. Just remember to stay away from the debt traps listed above, and if you find yourself considering a purchase that will put you in debt, consider what you could do instead. This could salvage your dreams and make your financial future look brighter.


If you have a low salary, there’s a good chance you’ll need to borrow money to keep yourself afloat. It doesn’t have to be this way since being in debt may be extremely stressful and irritating, especially if you have a low income.

As a result, rather than planning ways to better your life with your hard-earned money, you’re making plans to pay off your obligations. This is why you must get out of debt and stop paying your bills regularly.

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