Everybody has financial struggles at some point in their lives. But they can soon spin out of control if you don’t learn to manage your money effectively.
If you have already accrued a certain amount of debt, then it is important to have a plan of action for repaying it. And as quickly as possible. The sooner you do so, the sooner you will have greater freedom with your cash and can start enjoying having all your debts paid and more disposable income.
And for employers too, it can be a rewarding process to support staff and their financial situations. It’s a subject that many keep private, however it can have a detrimental effect on an employee’s performance and so as this is a common problem throughout the UAE, it’s crucial that both they and their boss work together to come to a resolution.
Rewards for a boss
Keeping employees supported and reassured about their situation helps their well-being – and in turn, as a boss, you’ll be rewarded richly with their better performance as you remove this distraction hanging over them.
It is not uncommon in the UAE for some companies to even employ training sessions for their staff to help them learn how to effectively manage their finances – from getting a UAE credit card to managing their mortgage – to both get back on track and prevent them getting into this situation again.
The expert’s opinion
Theda Mullar, a UAE based author* strongly believes that employers have a strong role to play in helping their staff deal with their money problems. She says in an article she wrote recently on the subject: ‘If one employer took the initiative and many followed there could be many lives saved and much more success and prosperity within companies’.
She also goes on to discuss how the approach of some to terminate effected staff’s employment due to debt isn’t likely to solve anything either, as it is likely the replacement employee would be in the same position, due to debt being a wide-reaching problem.
Therefore, speaking to your employer about your problems and gaining their support can be a positive step towards dealing with your debt issues. However, the next step after this is finding a plan to tackle the issue.
Paying back your mortgage
A mortgage is a long term debt and depending on your agreement, you may have fixed repayments or variable. However, whatever the case may be, you should try to ensure you can comfortably manage your repayments.
If you can afford to and you have ‘no early redemption penalties’ clarified in your mortgage agreement, then you should try to pay it up quickly. It is a good idea while you have the cash and will help you out in the future, if anything unexpected should suddenly happen like losing your job or cash flow problems.
The interest on most mortgages can add a considerable amount on top of the actual cost of the house.
You should always try to be sensible when purchasing a personal loan of any kind, but especially a mortgage, as the most common reason for falling into debt is buying a house with a hefty price tag, and accruing a lot of debt, then losing your job. You should never put yourself in a situation where you are vastly overstretching yourself.
Paying back on a UAE credit card
Obviously, again as with mortgages, if you’re looking for a good value credit card – then it’s a good idea to pay this off quicker too. If you choose the fastest repayment option with the higher interest rates and providing it is comfortable for you do so (defaulting on any personal loan or credit card payment is taken very seriously in the UAE), then you will know it will only take a couple of years, for example, to pay off your debt and you’ll be in the clear altogether.
Remember, often they are unavoidable in some situations, but the longer term debts keep you poorer – as the cost of servicing your debt actually keeps your feeling forever in debt. So try to pay these back as quickly as you can comfortably and sensibly afford to do so.
*Theda Mullar is a UAE-based author of Embrace Financial Freedom Volume One: 10 Proven Ways to Reduce Debt and Emotional Fears in Today’s Society and Volume Two: Releasing Fear and Bouncing Back from a Debt Crisis.