Abu Dhabi: Victor King’s lowest point came in 2018, when he was stopped at the airport by the authorities for a bounced check. Returning from his trip, the Dubai-based entrepreneur from India found that he was drowning in Dh1.3 million in debt.
It was a dire situation, but King, 46, was determined to turn it around. Within three and a half years, he has managed to settle all his dues, and has clear insight as to what led him to be mired in a debt just a while back.
The journey has required a number of hard decisions, including downsizing his family’s residence, managing without a private car, and cancelling the family’s multiple credit cards. But King told Gulf News that these are learnings nearly everyone can benefit from.
“For me, 2018 was a turning point. My debt was spread out in credit card loans, car loans, personal loans, and corporate loans, and there were four cases already filed against me by creditors. I decided to face the situation head on, and resolve it rather than run away from it,” King said.
The Indian entrepreneur, who has been in the UAE since 1999, was heading up a communications agency, Absolute Communications, which had operations in both the UAE and India in 2018. First set up in 2011 in King’s living room, the agency had grown, and had eight retainers at the time, along with about four other project-based jobs.
Credit card loans
“It wasn’t that we were not doing well as the firm. But I was careless with much of my personal finances, buying a lot on credit and even paying salaries on credit,” King said.
In fact, he possessed a total of 14 credit cards at the time, and a close look at his books and finances after the incident at the airport showed that he was operating the communications agency based on projections rather than reality.
“The worst point came when I was unable to pay my daughter’s school fees, even though we had selected a school that should have been well within our budget,” King remembered.
The entrepreneur and now father-of-two began trimming the excesses immediately. For starters, the family moved from a large three-bedroom house to a one-bedroom apartment, where they lived for three years.
King also met with all his creditors, including the banks, in order to restructure his debts.
“I decided not to ignore all the calls from the banks. Instead, I discussed with them how to restructure my debt, and while some creditors were stubborn, I was eventually able to bring my liabilities down to zero by summer 2022. I paid off the loans in instalments, and also cancelled all my credit cards till I was left with just one between my wife and me,” he said.
The remaining credit card is now set to have all debt paid off in full every month, and from the start of 2023, the family has also stopped buying groceries on credit.
Working with family
The cutbacks did mean that King had to explain the family’s financial situation to his firstborn daughter, who was eight years old at the time.
“We decided to be honest as parents, and told her why we had to move to a smaller place. And we continue being honest till today. So if a toy she asks for feels like a stretch, we just tell her that it is not affordable,” he said.
During this period, King also managed without a car for a few years.
“We set up a contract with a transport provider to take me to my work meetings, and my children to and from school. Only last year, when our debts were nearly taken care off, and I had the funds at hand, we finally went on to buy a secondhand car with cash,” the expat said.
Apart from the personal sacrifices, King also had to review the size and operations of his communications agency. In the UAE, he reduced the number of employees, and he shuttered operations in India.
“I was a sole proprietor, so couldn’t share the liabilities. But I did tell my employees that I would pay all their dues within 48 hours’ of their last day of work,” King said.
“To be honest, even when things were at their worst, we had a number of big clients, and most were paying us on time too. But I realised I had been making a lot of decisions based on projections rather than reality,” he added.
With all his debts cleared, King sad he is far more cautious with loans and personal finances.
“We can afford a bigger place, but we’ve only recently moved to a two-bedroom apartment. We make 95 per cent of our payments in cash now,” he said.
“In fact, before buying anything, I ask myself if we can afford its value three times over in cash. This philosophy guides all my purchases, especially ones that involve luxury items. And it’ a philosophy I would urge everyone around me to adopt,” King added.
6 get-out-of debt lessons from Victor King:
- Limit credit card use. Aim to pay for everything in cash.
- When using credit cards, pay off the debts monthly so that it does not build up over time.
- Make sure you can afford your rent, otherwise downsize.
- If in debt, work with the banks to restructure your loans instead of simply ignoring calls from creditors.
- Do not feel ashamed to buy anything secondhand, especially items that require a significant investments, like a car.
- Before buying a luxury item, make sure you have enough cash at hand to pay off the cost three times over.