From Bedsitter to One Bedroom: Biggest Financial Mistake of My 20s

I was recently in conversation with one of my would-be mentees and I just couldn't help but laugh at the fact that they were insisting on making the same mistakes I did. 

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Well, I wasn’t exactly laughing at them however amused I was at the absurdity of what some people would describe as the hardheadedness of the 20s. I just turned 30 - so you may want to excuse my absolutely unwarranted condescension towards someone who is undoubtedly trying to figure things out - at their own pace - or is it?

So, here’s the story that inspired this article. 

Mr. 24-year-old Man’s just got a promotion at work after just a year and is earning literally twice what they were taking home previously. 

Obviously, this is a guy who is really good at their job and the company very much values him even if he has very little experience - so there is some good job security here - as good a security as a private sector job can be. 

He’s, by all means, a village boy who just struck gold in Nairobi - as far as his village folk are concerned, he’s a success story. 

And indeed he is, villagers fundraised to see him through college. While his parents really tried, they just didn’t have the cash to send him to ‘kambi’ (campus) in the big city under the sun. 

Big man graduated in 2020 to little fanfare as the pandemic was raging and jobs, oh well, it was the height of pay cuts and “restructuring”. So you can imagine the huge shouts of “it’s God’s doing!”, the solemn commitments to tithe religiously, and even wide-eyed promises of “giving back” to equally stricken others in the village when the call came that he had secured the entry-level role.

Perhaps the most earnest was the mother’s advice to not waste what they’ve so arduously wrestled for, remember the younger sibling, and build a strong foundation for their future.

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“Remember where you have come from, son,” I would imagine is what the mother said in addition to a few references to their cracked heels and cold-burnt cheeks to stress the vagaries of poverty and the almost primal need to extricate oneself and loved others. 

This is about June 2021. With a take-home of around Ksh40,000, Mr man has a lot to be grateful for. 

For context, this is equivalent to the highest payday his parents have ever seen from about four months of potato farming in what is the equivalent of an acre in forest land they’d paid Ksh1,200 to a village opinion leader to qualify for allocation. 

That is now long gone as the Shamba system (forest farming) was designed to have trees literally chase away the beneficiaries once they mature. 

Living Arrangements

He settles for a bedsitter going for about Ksh8,000 in the Zimmerman area of Nairobi - a surprisingly spacious one with a little kitchenette that would make it a studio apartment were it not for Eastland's lingo. 

And to cut the long story short, man is happy, making some savings, and really excelling at work - so much so that August 2022 finds him taking home a few thousands shy of Ksh80,000 that came with the promotion. 

Ecstatic!

Something interesting happens when you enter the labour market. With a regular income, the struggles of college days are forgotten pretty fast. But, the funny thing is the realisation that what you just earned is just a little better than college and nowhere near the dream lifestyle you had anticipated when you would join what you call the “corporate world”.

Why? You have exchanged comrades for ‘colleagues’ and since a company rarely hires many entry-level employees at a go, you are joining people possibly earning better than you or those who have been saving up, and investing for a while that they definitely are living a better lifestyle than your entry-level salary can afford. 

So what happens? You have this burning desire to match up, or in the most rational way, to drastically improve your financial situation. 

For Mister Man, the promotion came just in time before the sweetness of the 40K and the relief of having a job had fully worn off. 

Lifestyle Inflation

It is two months since the pay rise when we are having this conversation. Mister Man has enjoyed the feeling of “absolute richness” for only two months. 

He recently installed a mobile banking app that has some pretty rudimentary dashboards but that’s not stopping him from enjoying the display of his balances - at least once the salary checks in - every 27th of the month. Afterward, the numbers can be pretty depressing to watch. 

The bedsitter is no longer enough for mister moneybags. It’s just too small, plus “I need a proper kitchen!” he says firmly. 

He has been on the hunt, he tells me. “I’ve just seen a really nice one-bedroom in Roysambu going for 18k. I really like the neighbourhood.”

As we continue this conversation, I can’t help but drift off to my mid-twenties when I was in this exact situation. 

The year is 2015 and I have a cool Ksh56,000 in the bank every month, no siblings to worry about really, not even in a relationship really, and before this breakthrough, very happy with my 20k job and Ksh6,500 bedsitter in Ngara that meant I could walk to work!

But no, not me anymore. Now I have money! Surely, I can’t keep living in this filthy, dehumanising, bedsitter with all these students around me? I’m a working man now! 

This and a few more reasons that I cooked up in my sleep, I guess also amplified by the confirmation bias my colleagues happily provided would see me - a single, nearly underweight man - move to a Ksh13,000 one-bedroom in Dagoretti Corner - Maan, I loved that place. 

Actually, the rent would come close to 15k because there was this Ksh600 security fee and the water bill for some reason would always be hovering around a thousand. 

But, I was a very happy man. Veery happy. I was living in a one-bedroom bro! Now I could afford to make jokes about bedsitters on Twitter and actually laugh genuinely, heartily even - as any self-respecting liberated man would. 

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Mazematics

Here is what I came to learn later. Much much later for that matter. Moving from that perfectly okay bedsitter to a one-bedroom for two years cost me, at a minimum, a whopping Ksh192,000 in extra rent alone without accounting for associated costs. 

The Ksh8,000 increment in monthly rent for a space I barely lived in cost me an opportunity to save up a lot early in my career to enjoy the spoils of a good financial grounding later on. 

If your go-to investment type is land, as many Kenyans do, Ksh200,000 in 2017 (which is when this realisation hit) would have bought me just about two acres of land in Nanyuki.

Today (5 years later) one eighth of an acre is averaging Ksh350k - I am using Nanyuki as it has become the cliche destination for frenzied land investors. 

You probably have thought of getting a plot or two for your “retirement home” “vacation home” or “Airbnb in the bush” future brilliant idea as Nanyuki plots are dreamingly advertised.  

You can do the math on how much that would be today if one acre translates to 8 such plots.  

Rule of 72

What if I was a little scared of investing in land, especially due to the alarmingly high fraud cases at the time? I could have simply stashed my cash in Sacco shares and reinvested my dividends year over year.  

My Sacco and most Saccos for that matter have been paying dividends in double digits for the last several years. It has averaged about 18% per share since. 

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Using the Rule of 72, you can estimate the amount of time it would take for a fixed-interest-bearing investment to double the principal amount without any top-ups when the interest earned is all reinvested. 

According to the rule, if you divide 72 by the annual interest rate (fixed), you get the number of years it will take to double the value of your investment. In this case, 72 divided by 18 shows that had I invested that Ksh200,000 (rounded off) in Sacco shares in my Sacco, by 2021 (4 years) I would have doubled it to 400k!

But if I chose to keep reinvesting my dividends in Sacco shares - for the rule to work - it would mean I would not be able to withdraw unless I was leaving the Sacco for good. So, I could have opted to put the money in interest-earning Sacco savings which in my Sacco have averaged at 13% - which would then have taken five and a half years to double (2017 to mid-2022.)

There are other very low-risk options such as a 5-year bond, Treasury bills, Money Market Funds and so on that would have guaranteed above-inflation returns. 

Well, how does all this sound? 

Have you heard the story of that bodaboda guy who is trending for building his home after religiously saving Ksh1,000 a day since 2019? I know it sounds a little motivational-speaky, but in my opinion, it is incredibly important to take every opportunity to save on an expense. 

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The little math we have done here shows, what I deemed to be gifting myself basic decencies of life by moving from a humiliating bedsitter to the more like it one-bedroom was actually robbing myself of an even prettier future if only I had waited a little longer. 

They call this delayed gratification. 

But, is Mr. Man Really Wrong to Want Better? 

Maybe I am really between generations. I know a guy who lived in a single room in Githurai with his two kids for almost twenty years as he built his businesses and only tasted decency, and bigly for that matter when he moved into his 5-bedroom maisonette in Ngong - when his kids were just about joining college. 

Man never flinched for almost two decades. 

And then, there’s Mister Man here who is already feeling claustrophobic in a perfectly okay apartment. He represents a generation a little younger than mine that is even more expressive, some say entitled, but definitely less convinced by notions of ‘trusting the process’ and ‘enjoying the toil’. 

One characteristic that I and Mister Man share, at least when I was in my 20s, is the rationalisation of poor choices. You can see how he fashions convenience or ‘status’ as an urgent need or alleviation of suffering, a deserved reward for good work done, and literary anything else but an avoidable expense. 

“I deserve it.”

“I have some specifications I am very particular about.”

“I have to reward myself. If I don’t, who will?”

“As long as my rent is not more than 30% of my salary!”

While there’s perfectly nothing wrong with the need to self-reward, the realisation I made from the simple math on what savings I could have made by living in a modest apartment convinces me that in your 20s, you can do so much with so little and such opportunities should not only be utilised but sought after.  

Should we live in Githurai for two decades to allow us to build a mansion by the time we hit 40? Maybe not - it’s a little extreme. 

But should the pursuit of instant gratification cloud our view of the ideal future benefits of a little strain today? Absolutely not.

But you are in your twenties. What’s there to lose, Mister Man? 

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