GDL Nigeria
5 min readMar 17, 2021


7 Effective Ways to Avoid Unnecessary Debt like a Plague (That it is)

Debt is anything, can be money, services or even favours that one person or group of people is obligated to give or return to another person/group usually within an agreed time.

Basically speaking, if you make an agreement to give or do something for someone else, you now owe a debt.

As a Nigerian, taking petty debts tend to become a part of our spending routine. That random N2000 that you collect from your friend to pay for something while you are out of cash and waiting for payday is a petty debt.

Many of us use these little debts to support our monthly expenses because as they say, problem nor dey finish.

Luckily or unluckily for us, most traditional banks seem not to pay attention to personal credit and so personal credit cards are not mainstream. The space has been largely dominated by SMEs and start-ups which give instant loans at unimaginably high-interest rates.

Being in debt, especially as a Nigerian can be very expensive and, in some cases, life-threatening.

According to a study published by the University of Southampton, people in debt are three times more likely to have a mental health problem than those not in debt.

In addition, people who worry over debt are more likely to suffer from a variety of stress-related illnesses including ulcers, migraines, back pain, and heart attacks. There have also been cases where people have been assaulted and physically harmed because they are debtors.

Some debts are necessary and totally understandable. For example, taking a loan to expand your business. We totally understand it and even support it but debts get unnecessary when they are incurred for purely avoidable reasons like taking a loan to go on vacation.

Unfortunately, most people are fond of taking debts such as these without thinking of the long-term effects. We decided to come up with a few tips to help you avoid unnecessary debt as much as you can because you definitely should.

Avoiding Debt 101

Start with the Small Debts

Before we start talking about how to avoid debt. Let’s first cater to those who saw this article too late and are already swimming in debt.

Just like any other thing in life, the first step to getting rid of personal debt is by starting small. Research has shown that paying off the little debts can give you the confidence to tackle the larger ones.

You know, like paying off the N5000 you’ve been owing the shop owner at the front of your estate before you start paying your office for the loan you took to sponsor your wedding. It is necessary to start prepping your mind for the journey to being debt-free by upsetting as much little debt as you can.

Start Budgeting

You need to start keeping track of your income and expenses. Know what you can afford based on what you earn.

Your budget should be written monthly and there should be an allowance for unexpected expenses (miscellaneous) because they will surely come and when you’re not prepared, it can be tempting to take a loan to cover these expenses.

Write down every single expense you must make monthly and those that are optional and make sure to have categories for them. Recurring and one-off expenses must be differentiated.

Have an Emergency Fund

GDL SIA account helps you save in case of emergencies

Keeping some money aside every month will come in handy whenever you are faced with unplanned expenses. With an emergency fund, you do not have to go into debt to afford certain expenses. You can just dip in your fund instead.

Keeping an emergency fund will save you from a lot of embarrassment and will prepare you for surprising occurrences in the future.

Pay in Cash

Paying in cash can help you avoid spending past your limit. When you’re out shopping, take just enough cash to cover your price estimates.

Going with your bank card can force you to spend more than you planned, which can lead to a distortion in your monthly expenses and might eventually lead to debt if you don’t make enough cash to cover it. It is a continuous cycle and it is better not to start the journey.

Also avoid “Buy now, pay later” schemes, they just put you in unnecessary debt.

Never Cosign a Loan

Standing as a guarantor for a loan is a very risky business. If the borrower — your friend, family member, significant other, whoever — misses payments, your account balance would have to take the hit.

The lender can come after you for the money, and it will likely destroy your relationship with the borrower, so it is better to just avoid it entirely.

Avoid Impulse Buying

Anytime you are tempted to buy something that’s not in your budget, consider using the 24-hour rule. Stop yourself and wait for 24 hours to pass and see if you still want to buy that item.

Forcing yourself to wait until you are less emotional before you make a purchase will help you make more rational decisions. You should adopt it whenever you go shopping or scrolling through an online store.

Be Generous

This sounds counterproductive but both religious and scientific research has shown that generous people consistently have less debt than non-generous people. Give out to family members, friends, strangers when you’re buoyant enough.

Like world-renowned Economist, Adam Smith, once said “What can be added to the happiness of a man who is in health, OUT OF DEBT, and has a clear conscience?”

We want you happier and can't wait for you to live a debt-free life. You can get rid of debt or avoid it when you heed the simple tips shared. It might not be an easy feat but it is doable and we are here for you on your journey.



GDL Nigeria

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