Tying up loose ends and paying off your debt
As with all financial concerns, planning is essential and an independent financial adviser will be able to assist you with this.
QUESTION: I moved to the UAE around ten years ago from India and I have been making good money ever since, however like many people I am also heavily in debt to the tune of $35,000 (Dh128,534). I am planning to move back to India in 12 months time to set up a small business with $50,000 in savings and investments. I want to know the best way to wrap up my financial commitments in the UAE without having to dip into my savings.
Many people in the UAE have made good money in the past decade. A recent report by Credit Suisse revealed that the average adult in the UAE tripled his or her wealth between 2000 and 2010. But people’s debt has increased too. The same report shows debt quadrupled over the same period from an average of $7,110 per person to $28,483.
With a debt of $35,000 you will need to look at how you can repay this in full as you will not be allowed to leave the UAE without having done so.
As with all financial concerns, planning is essential and an independent financial adviser will be able to assist you with this. The first positive point is that you have enough savings and investments to fully pay off your debt.
However, clearing your debts in the UAE and still retaining $50,000 to set up a business in India will be impossible unless you are prepared to make some hard decisions.
Make a list of all the things you own that you can potentially sell or downgrade. This includes your car, home entertainment systems, white goods and exercise equipment together with any other potential assets you may have.
Renting a smaller property for a year may help you pay off any outstanding debts and downgrading your car will hopefully allow you to clear your car loan.
It’s also time to assess your outgoings and see what you can make savings on; holidays, restaurant dining, gym memberships and luxury shopping. Any money you can save should be put towards paying off loans.
You also need to look at your savings and investments. Have these been made within the UAE or are they in offshore accounts and funds? If they are held within UAE banks or with UAE-based companies then you need to explore the best method to repatriate these sums to minimise possible subsequent tax liabilities. You may wish to look at moving these offshore.
When looking at offshore options it is advisable to ascertain what currency you want your money to be in. Making large currency exchanges at the right time can give your savings a real boost, or at the wrong time, depress them.
Favourable exchange
The golden rule is to maintain funds in the currency in which they will be spent. For many, this means earmarking funds for future expenditure and converting these funds when the exchange rate is favourable.
As this is often difficult, and hedging may not be available for this level of transfer, an alternative strategy is to drip funds in by a series of transfers which has the effect of securing an average exchange rate over a given period.
Above all it is clear that you recognise the issue you have and with some simple but decisive steps now you can indeed wrap up your financial commitment in the UAE whilst maximise the benefits of your stay in the UAE.
The writer is Commercial Director, Nexus Insurance Brokers LLC. Opinion expressed are the writer’s own and do not reflect that of Gulf News. If you have any questions, please email to advice@gulfnews.com
