Don’t follow Mr Financial Fugitive and leave a mountain of debt

Skipping the country is never the solution to your debt woes.

Gary Clement for The National

“I made the decision never to return to the UAE.”

Meet Mr Financial Fugitive. I’m not privy to all the details, but know that this person skipped the country leaving behind a mountain of debt.

It is the culmination of years of poor decisions that have involved him taking out loans from Peter to pay Paul. And Ali to pay Jassim. Losing his job in the UAE brought the flimsy pack of cards tumbling down.

He’s not only done the dirty with the banks – but his former wife too.

Having made out post-dated cheques to settle money owed, he asked her not to deposit any since February. She complied, not wanting to rock the boat, but subsequently discovered that he’d closed his bank account before absconding.

The UAE’s laws vis-à-vis bounced cheques and filing a complaint with the police are pretty useless in her case, although I would advocate she does so, as it gives her options – whether she chooses to pursue these or not is another matter.

This is an extreme case, I hope. But it brings to life something that is on the rise. Financial stress. Specifically, people reaching financial breaking point.

Personal finance is an emotional issue. Elections, revolutions, are won and lost on the back of it.

I never thought I’d live to quote former US president Ronald Reagan, but he put it perfectly when he asked: are you better off than you were four years ago?

Is it easier for you to go and buy things in the stores than it was four years ago?

This opening gambit put the nail in his predecessor Jimmy Carter’s coffin. The two debated just once during the contest for president of the United States in 1980. The results marked the beginning of the Reagan era.

Let us get back to you now. How is your – personal – economy doing?

My guess is, you are not doing as well as you were four years ago. Most are not.

A few months ago we had the news that outstanding UAE personal loans reached Dh434 billion. I hope none of it is yours.

The media love numbers. Headlines screaming figures, but they don’t mean anything until you dig.

For example: a headline tells us that personal debt is on the decrease does not necessarily mean that we, the people, are in less debt. It means that we, the people, are in debt, and unable to get any more loans. That we are stuck with paying back what we owe – plus some – but not able to grease the money-wheel because the banks are tightening their lending criteria. Ergo personal debt will balloon – because defaults kick in, with even more interest due.

This is what happened to Mr Financial Fugitive. He won’t show up as an official statistic bolstering figures for personal debt – but his debt tally was increasing every day.

Plus, and this is key, he did not set out on a path to steal money from banks, or his wife for that matter, but that’s what he has done. He probably feels that running away from his problems is his only option.

He is not alone. Extrapolating from debt questions posted online, on the radio and in person, it is going to get worse.

Fitch, the rating agency, says Abu Dhabi Government spending shrank by 10 per cent last year and 18 per cent in 2015. Again the media is full of stories sharing the impact of slowing growth, clawed back perks and people in financial pain.

Result: more personal finance implosions.

The figures, and circumstance, differ, but decades ago in the United States, Reagan put it succinctly. As you read, ask yourself if it represents you. Your financial life or even your life:

“We’ve raised our debt limit three times in the last 12 months, and now our national debt is one-and-a-half times bigger than all the combined debts of all the nations of the world. We have $15bn in gold in our treasury; we don’t own an ounce.”

This 1964 speech by Reagan is known as “A Time for Choosing”. It is considered to have launched his political career. By way of background, he was giving it in support of Barry Goldwater’s run for the presidency. But that’s neither here nor there for today’s purposes.

I quote it not only for its content – is he describing your personal finances? – but also because of the title: A Time for Choosing. Every one of us has a choice every single day. If you chose to get yourself into a financial mess, what are you choosing to get out of it?

In 2008, Barack Obama commented on how Reagan changed America’s trajectory.

“He just tapped into what people were already feeling, which was we want clarity, we want optimism, we want a return to that sense of dynamism and entrepreneurship that had been missing.”

Mr Obama’s words probably describe how Mr Fugitive feels, having left his troubles behind. But he’ll be living looking over his shoulder for a long time to come, and will suffer some form of fallout at some point.

I truly hope this will never be you.

Go back and read Reagan’s and Obama’s words. Heed these words.

Gosh, I sound like such a preacher. But really, truly: heed your needs, not your wants. Lest you become the next financial fugitive.

Nima Abu Wardeh describes herself using three words: Person. Parent. Pupil. Each day she works out which one gets priority, sharing her journey on finding-nima.com