DEBT MANAGEMENT

Going through financial difficulties can be worrying. Changes in life that are unexpected such as loss of your job or illness can leave you struggling financially and can have implications on your physical and mental health.

Usually life will return to normal but you should not ignore financial issues or pressures, as this can make the situation worse and increase the problem in the long term. If your personal circumstances have changed and you are worried about your financial position it is important that you take action immediately.

We are here to provide support and advice through tough times and we would be happy to provide counselling over the telephone or through a face to face meeting to understand the issues and provide options to release some of the pressure.

Tips for Managing Debt

1. Awareness and understanding: The first step in debt management is to study the type of debt, since certain kinds of debt may have more serious implications on you. Not all debts are created equally, and an effective strategy means figuring out your entire debt portfolio. Therefore, start with making a list of the different types of outstanding debts; the creditors you owe the sum to; the total amount of debt; monthly instalments; and the maturity date. You can refer to this list periodically, especially while paying bills. As your debt amount changes each month, you should try not to forget to update this list as well.

2. Timely payment of bills: Late payments on bills make it that much harder to pay off your debt since they incur a late fee. To get into the habit of paying your bills on time, you should take advantage of the power of technology. You can set alerts and reminders for your monthly payments on your smartphones and devices. If you miss a payment, you should make the payment as soon as you can and not wait for the next due date. While a couple of late payments may not seem like an issue to most of us; making a habit of missing payments can have a significant impact on both your ability to pay further and on your Etihad Bureau credit rating. You can opt for the standing order / auto-debit facility provided by your bank to ensure regular payments.

3. Savings: There is often a mismatch between our income and expenses, which tempt us to dip into our savings. This is a potentially harmful move. For example, while refinancing your mortgage at a lower rate is smart, you should also look at immediately rebuilding your liquid savings if you must compromise on them. Remember, it is recommended that you set a minimum percentage of your monthly income aside as savings and then plan your expenses around the remaining amount rather than expecting to save the amount left over after your month’s expenses.

4. Budgeting: Putting a budget together is the most important debt management technique. Even though the process can end up requiring a generous amount of planning and patience, however, you can start off by using a simple excel sheet to start tracking your monthly income and expenses. The next step is to think of ways to reduce your everyday expenditure, the majority of which could be wasteful. And once these wastages are identified, the money saved can be set aside to repay the debt, irrespective of how small the amount is. Reducing debt can take time however good budgeting practices can make you more disciplined in reaching your goal. You can use simple excel sheets like this one to get started. For the more tech savvy, YNAB and Mint offer user-friendly mobile apps for budgeting on the go.

5. Beware of interest rate risk: We tend to borrow money for different purposes like education, marriage, cars, personal loans, and so on. When you borrow funds at a variable interest rate, the cost of the loan rises with the market rate which could end up increasing your expenses over your income and thereby throwing off your budget. This is a significant risk that needs to be adequately addressed by debtors to avoid having to shell out more than they borrowed.

6. Always have a backup: Life is unpredictable and an emergency can arise requiring urgent funds at any time. Thus, one should always have an emergency fund, as a hedge against unforeseen events.

Reach Out

We are here to provide support and advice through tough times and we would be happy to provide counselling over the telephone or through a face to face meeting to understand the issues and provide options to release some of the pressure. You can contact the following:

Name	Location	Contact Number
Kareem Shaheen	Abu Dhabi	+971 2 4122908
Johnson Absalom	Dubai	+971 4 4161209

You can also call our contact centre and request them to put you in touch with your Relationship Manager:

24/7 Call Centre

800 542 54 54 (Within the UAE) +974 4494 0000 (Overseas)

Details on the Fees

All fees and charges will be as per agreements and published guidelines on the Al Khaliji France Website.