Paying Off Debt

How To Not Overpay Debt (Duplum Rule)

I first heard of the Duplum rule from a family that had lost their breadwinner. The banks came calling, wanting to sell their family company. The banks didn't know their loved one had taught them the Duplum Rule.

The Duplum Rule states that the interest on your loan should not be more than the principal. In Kenya, the rule applies to non-performing loans. Non-performing means your payment is more than 90 days late.

The family got a reprieve from the exorbitant bank rates by using the Duplum Rule. Knowledge can help you not overpay debt. Here are some things you can do to avoid paying too much interest.


  • Insist on Email

Some debt collectors present themselves in a friendly tone. Remember that their interest is getting a cut of the amount they can make you pay. They are not your friends.

Insist that all communication is via email. The strategy gives you a record that can help you later. It formalizes your exchange with the debt collector, which can minimize the stress you can feel when you receive their phone calls.

Insisting on email communication helped me prevent the periodic harassment that I was receiving from debt collectors over a credit card. I would pay, and after some time, they would insist that I have not made any payment. The record and request for a clearance via email stopped the madness.


  • Protect Yourself

Don't share sensitive information like where you work or live. Under no circumstances should you give them your bank account details. They will pull out cash as soon as they can get access.

Learn as much as you can regarding the laws surrounding debt. Did you know Kenya has a law stating that acknowledging a loan re-activates the time limits of considering it a non-performing loan? Ignorance can cost you heavily.

Use technology to your advantage. Get call screening apps like Truecaller to decide which numbers to pick and which to ignore. Protect your mental health.


  • Mental Health

Keep yourself sane. Focus on only what you have control over. Minimizing interactions with debt collectors can reduce harassment.

Insist on formalizing communication. Ensure to keep records of your interactions. Some debt collectors don't keep their word, which can distress you.

Your mental health can determine how well you handle negotiations with debt collectors. Don't let them harass you. Insist that they treat you with respect.


Way Forward

Take control of your finances to relieve yourself of the stress that comes with debt. Face the truth of your money situation by embracing zero-based budgeting. Get debt as an option off the table to stop the cash bleed.

Use the debt snowball method to get rid of your debt. The process involves listing your debts from smallest to largest and then clearing them in that manner regardless of interest rate. Many people may find this method counter-intuitive.

 The debt snowball method considers the psychological element of paying off debt. The more you pay off debt, the better you feel, the more likely you are to continue paying off debt. Set up an emergency fund to buffer you from slipping back into debt.

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