Business | Investment
A tale of rags and riches
For those whose finances are still fine, they should be constantly cautious when spending their money, especially in these turbulent times.
- By Cleofe Maceda, Staff Reporter
- Published: 23:39 December 26, 2008
- Banani Roychoudhury with her husband S.GangaBanani has been able to turn around her financial life by taking steps such as giving up her credit card and cutting down on movies and mall trips.
- Image Credit: Supplied Picture
Driving down the highway to Oman with bags full of Christmas goodies, Dino, 42, is the picture of a lavish, worry-free life.
"In keeping with the Christmas spirit, I'm on my way to Al Khasab to give these gifts to my compatriots stranded there. There are many Filipinos who got stuck in Oman because their visas have expired. At least I could bring smiles to them during the holidays," he says.
But hard times are never far off for the generous Filipino expatriate living in Dubai.
The father and lone breadwinner of four kids ages 12, 14, 16 and 18 has unpaid personal and credit card loans amounting to nearly Dh300,000.
For three years he has accumulated the amount, which he used to pay mortgages for his relatives, a business that later failed, and a series of other financial mishaps.
Since his monthly income is not enough to pay off bank dues and family-related financial obligations, Dino has been playing "credit card roulette," juggling payments for his 10 credit cards and moving balances all over the place.
His debt is shooting through the roof, Dino admits, and each month he spends about 70 per cent of his salary on loan payments. Always subservient to the needs of his family, he sets aside part of his income for his kids and mother and a meagre amount for himself every month.
Misplaced priorities
Dino maintains that he's not a big spender, saying he rarely shops or spends for himself and hardly goes out to expensive restaurants and bars. But his is a tale of misplaced priorities and wrong investments, he says.
"Now, I have Dh200,000 in personal loans with five banks and multiple credit card debts worth Dh60,000. I know my overhead expenses are big," he says.
"I've been gullible to sales people from the banks, so I ended up with 10 credit cards and mounting debt. My loans piled up because of the wrong decisions I made. I thought I was born a good businessman, but I was wrong. Now, it's hard to pay off my credits," Dino says.
"At the end of the day, I've learned my lesson. And I'm sharing my story so people won't face the same dilemma. They should invest their money wisely, tighten their belts and save their money for a rainy day," he says.
"I just wish that banks, at this time of crisis, would be more lenient to borrowers," he adds.
However, it's not the end of the road for people like Dino. According to Gurnos Stonuary, business services manager for the Nexus Group of Companies, there are ways to turn one's financial life around.
"The first thing to do is to get professional advice from a financial adviser. When people are worried about debts, they often don't see the woods for the trees. An outside professional can look at their situation objectively and help identify a solution," Stonuary says.
"If there is more than one outstanding debt, consider the option of covering all your debts under one loan which may well reduce interest charges," he says.
"If you can negotiate the loan repayment over a longer period, it could reduce monthly outgoings to service the loan. However, this will add a considerable amount to the final accumulated interest you pay on the loan."
Stonuary suggests selling things to cut down on debt or trading down from a large vehicle to a small one, or simply using public transport to keep expenses to a minimum.
Minimise debt
"The main thing is to minimise any debt you have and to ensure that you have enough money each week to live on."
Stonuary also warns consumers against excessive credit card use.
"Credit cards are great and provide much convenience, but usually charge very high interest rates. Your purchase then ends up costing you far more."
But life is not as tough for Banani Roychoudhury, 45, an Indian teacher at the Institute of Applied Technology in Ras Al Khaimah.
Bananai had been a habitual saver and leading a meagre lifestyle until she lived with her husband in the UAE last year.
With a strong resolve to save, Banani came to the UAE in 1995 and landed an earlier teaching job that gave her a Dh1,500 monthly income.
Bananai managed to save 80 per cent of her salary each month, constantly reminding herself to keep her expenses low: no luxurious shopping spree, dining out or watching movies every weekend.
"I came to Dubai with a very clear objective to save more and spend less. I budgeted my expenditure," she says.
Her income expanded when she got married in 1997, which was also about the same time she moved to Oman for another teaching job.
"My husband was in the UAE at that time, so the income I earned was just for myself," she says.
Over time, she saved a considerable amount of money that helped her purchase a flat in India and further her education in London.
Changing times
Things changed in 2007 when she moved back to the UAE to live with her husband and work at an international school for one year.
The rising cost of living, the allure of exciting goods in the UAE and her husband's loans quickly put a strain on her finances.
Not ready to accept financial defeat, Banani turned their financial life around.
She found a better paying job four months back at the Institute of Applied Technology in Ras Al Khaimah, convinced her landlord to lower the rent increase for their flat in Sharjah, monitored her husband's spending and found ways to minimise their out-of-home expenses by cutting down on movies, mall trips, among others.
"I surrendered my credit card. Instead of going out for movies, we invited people to spend time with us at home. My savings are higher now. I try to save 50 per cent of my income. I now advise my friends to save money as often as they can," says Banani.
For those whose finances are still fine like Banani, Stonuary said they should be constantly cautious when spending their money, especially in these turbulent times.
"Safeguard the money you have. Implement a diversified investment strategy to safeguard your wealth by spreading your savings over various assets," Stonuary says.
"Practice caution when spending your money... Could you get something not quite as expensive? If it is something that you purchase regularly, could you buy in bulk and make a saving?"
Gulf News would like to help you. Do you have any personal finance matters that you would like us to investigate? Let us know.
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