Plan how to keep up with loan repayments when earnings fall

Slash spending

She can do this by slashing her budget.

Fixed expenditure can be reduced to Sh18,000, variable expenditure to Sh7,000 besides negotiating for a lower repayment rate of Sh10,000 over an increased repayment period.

This would bring the total average expenditure to Sh35,000, equivalent to the average monthly income.

In addition, she would need to have a short emergency fund of at least Sh35,000 or more to stay afloat during low income tides.

With this repayment plan, every time Jacqueline finds herself earning higher commissions than her average monthly income, for instance in the second, fifth, eighth and 10th months, she will first meet her average monthly budget and channel the excess to the emergency fund.  

But if she earns less commissions than her average monthly income as in the first, third, seventh and ninth months, she should do her allocation starting with fixed expenses and move to variable expenses with the little commissions earned.

She can cut unnecessary expenses in cases where she is able to meet all her fixed expenses and less of variable expenses as in the first month.

Opiyo is a personal financial consultant with Money-Plan Advisory & Solutions. Email: isaiahopiyo@yahoo.com