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How Long Does It Take to Pay Back Ksh100K Loan if You Earn Ksh50K Gross?
How Long Does It Take to Pay Back Ksh100K Loan if You Earn Ksh50K Gross?
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How Long Does It Take to Pay Back Ksh100K Loan if You Earn Ksh50K Gross?

Stephen Kimani
September 13, 2023

A loan can be the bane of your existence, but it can be very productive when well managed. It can allow you to access opportunities you would otherwise not be able to. However, the loan can sometimes be tricky to manage, especially considering all the other things in your life demanding financial attention.

If you're currently earning Ksh50,000 and facing a loan worth Ksh100,000 here’s what you can do.

Net Pay 

Like the good book says, give to Ceasar what belongs to him. The first step before you use your money should be to pay taxes. Only what is left after taxes is your legal share.

Typically, earning a gross salary of Ksh50K, assuming you do not have a mortgage or life insurance, are not disabled, and do not have a homeownership savings plan, your tax obligation will be Ksh7059.05, according to the KRA calculator. 

You can calculate for yourself here.

This means that your net pay is Ksh42,941. You shall now use this to repay your Ksh100,000 loan.

Read Also: How to Get the Most Out of Your Loan


Being able to manage your funds properly happens in three major phases. The first is planning, then executing and assessing. We shall cover all the three phases.

Budgeting is the planning phase. This is where you consider all the money you make, all your needs and wants, and allocate each portion of your money as you deem fit.

It might sometimes seem like a cumbersome process, but if you fail to plan, you plan to fail, as the wise say.

50/30/20 Rule

Regarding personal finance, the 50/30/20 rule is the most basic and practical way to allocate your finances. The financial model advises that you should allocate 50% of your income to your needs, 30% to your wants, and 20% to your savings.

Your needs are the things you cannot live without, like rent, utilities, food, and transport. Your wants are the nice to haves, like entertainment, fancy clothing, eating out, and vacations.

Using this basic model, the amount you would dedicate to paying your loan would be 20%. You will not have savings as you are clearing your debt.

Also, if the debt forces you to put aside 20% percent of your pay, it will create a good discipline you can leverage and keep saving the 20% even after finishing your debt.

Paying 20% of your net income, your monthly debt payment will be Ksh8,588. Divide this monthly installment by Ksh100,000, and you get 11.6 months.

This rough calculation has not considered the loan's interest rate, as the interest might vary from very aggressive to very soft. Using the Money254 website or app, you can compare loans and their interest to know which works for you.

Therefore, if you earn Ksh50k and use your 20% to offset a Ksh100k loan, it will take you roughly a year to pay back the full amount.

However, you might want to offset the loan faster, or your circumstances do not allow you to commit that much to offsetting a loan. Secondly, depending on the interest on the loan, you can crank up the payments or reduce them. 

If you have a higher-interest loan, it is advisable to pay it off as fast as you can, but if the interest is low, you can play around with your options, but make sure you are making certain installments.

Let's look at what other options could look like.

Read Also: What Your Budget ‘Should’ Look Like on a Ksh50K Salary (50/30/20 Rule)

Sample Budget Options

Aggressive payment: Using the 50/30/20 rule, the needs are non-negotiable. Therefore, half of your net pay has to be committed to your needs. That is Ksh21,470, according to our earlier calculation.

This leaves you with a similar amount for your wants and savings. The most aggressive version of your debt repayment would be to commit the total amount to the loan payment. However, this requires a lot of sacrifice and is most likely unsustainable. But if you did, paying off the loan would take roughly five months.

A more sustainable but aggressive approach would be dividing your wants allocation into two and using one half for your pleasure and the other half for debt repayment. This would mean you commit 35% of your paycheck to loan repayment, making the installments Ksh15,000 per month. This would take roughly seven months to clear the loan.

Soft payment: A more soft payment approach is viable if you have a significantly low-interest rate on the loan and you earn more savings rather than offsetting the loan. 

If this were the case, the 20% percent allocation for the savings would be split in half, and you would pay 10% as debt repayment installment and 10% as your savings. You can play around with these percentages as applicable to your situation.

But paying 10% as your installment will double your repayment period, taking you roughly two years to clear up the Ksh100K loan.

Read Also: How the 70/20/10 Budget Rule Can Help You Build Savings & Crush Debt

Tips to Help You Succeed

Any financial goal, whether buying an asset, offsetting a loan, or eventual financial freedom, is a significant undertaking. It requires from you a commitment to see things through.

As observed in the previously discussed debt repayment options, whether you go for the aggressive, moderate, or soft model, a level of commitment has to come into play.

Therefore, here are a few fundamental tips to help you achieve your goal, whichever model you choose.

Track your expenses

Tracking your expenses helps you understand fully where your money is going. Having this understanding is crucial as it allows you to assess whether you want to spend the way you are.

For instance, if you choose to go aggressive and commit the wants allocation to debt repayment, you must understand what your wants are and what you will be cutting out. With a better understanding of your sacrifices, you can better weigh the impact of such a commitment.

Prioritise essentials

As indicated by our 50/30/20 rule, there are non-negotiables regarding personal budget allocation. Your needs are your essentials. You must prioritize these needs to avoid finding yourself behind in paying your rent, your utility bills, and out of food. Lack of essentials is a significant inconvenience that might force you to find a way to take care of them, leading to you borrowing from predatory lenders. This does not help your debt repayment goal.

Read Also: The 7 Types of Personal Budgets and How to Choose One

Cut unnecessary expenses

Unnecessary is a very subjective concept in personal finance. What might be unnecessary to someone might be necessary to someone else. Some people might do without a Spotify subscription. However, a Spotify subscription might be essential for die-hard music lovers or podcast listeners who use it to escape the daily hassle and bustle.

You can determine what is necessary for you by tracking your expenses and noticing how you spend your money. Then, you can decide what you can do without permanently or for a while until you finish paying the loan.

Once you sort out the necessary and the unnecessary, be frugal and cut unnecessary expenses.

Bulk Buying

Bulk buying is another excellent option to help cut expenses for two reasons. When buying bulk, you buy things at wholesale rather than retail prices. While saving a few coins on one item may not seem much, the cumulative savings when you buy months' worth of goods is remarkable.

Secondly, when bulk buying, you can take advantage of discounts and offers much better. Increasing the value you get, in terms of your supplies, for a fraction of the budget.

Read Also: The 30/30/30/10 Budget

Review and Adjust

In conclusion, life is rarely a straight line. Needs and priorities change every day. Whereas you need discipline to stick with your debt repayment plan, it is sometimes okay to consider and reassess your strategy. Remember, as much as you want to offset a loan, you must take care of yourself, finish the loan, and possibly start saving.

Therefore, do not just stick to a plan even when it hurts your life. This is not to say that sacrifices are not expected, but you must have a functional life. Choose what works for you and get it done.

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Stephen Kimani aka KIMSpeaks is a thought leader, speaker, and writer. He is also the Founder of Living the DREAM. He is passionate about learning and teaching ideas that empower people to improve the quality of their lives. You can connect with Kimani on LinkedIn.

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