The Debt Panel: 'I am on a low salary and struggling with debt'

The Sharjah resident and her husband are relying on friends and family to keep up with their financial responsibilities

Steven Castelluccia / The National
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I work in the finance industry and earn a monthly salary of only Dh5,000. My husband is a cleaner and earns even less – Dh2,500 a month. We have two children to support but struggle to pay their school fees, other daily expenses and our debt repayments.

We have a personal loan of Dh26,000 and the monthly instalment is Dh1,000. We also have a credit card and owe Dh14,000 on it. We can only afford to pay the minimum amount on the credit card each month and have defaulted on paying it twice.

We have been relying on friends and family to support us financially, which is how we are managing to make ends meet at the moment. I am worried that we will not be able to rely on them for much longer and our debts will balloon beyond our ability to pay them off because of interest and late charges.

Can you advise me on how we can we pay off our debts and improve our financial situation, so we can start saving for the future? MM, Sharjah

Debt panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank

This is an understandably difficult situation to be in and I empathise with you. However, funding your life with debt is not a sustainable solution in the long run.

I see a few levers you could pull to manage your financial situation. The first is to manage your debt, the second is to reduce your expenses and the third is to boost your income.

As a first step, I highly recommended that you communicate with your bank about your situation. Keeping them informed demonstrates that you are taking responsibility to meet your financial obligations.

You could request them to restructure your debt to help ease the burden of repayments. Ideally, you should seek a consolidation plan that will allow you to aggregate all your existing liabilities into a new loan with a longer tenure and lower financing rates.

Rather than getting into a pointless argument about paying something you cannot afford, you should request a restructure of your card immediately
Nathan McFarlane, founder of

If you find it challenging to secure a favourable restructuring deal, you could reach out to a debt management company to negotiate with the bank on your behalf.

As well as liaising with your bank, I advise you to review your budget, track your spending and find ways to cut back on your daily expenses. Try to be disciplined and do not use your card if possible.

As you may have already seen, it carries high financing rates, penalty fees and other charges that make it harder and more expensive to pay off.

While it is good that you have the support from your friends and family, it is important that you look at boosting your own financial resources. You and your husband could do this by moving to new jobs with better pay or negotiating a raise with your current employers.

You could also look into supplementing your existing income through freelance or part-time work with the permission of your current employers. You could use the extra earnings to meet your debt repayments – and I strongly recommend prioritising the card balance as it has the potential to increase rapidly if left unpaid. Finally, you may also consider liquidating assets to help service your debt.

Debt panellist 2: Nathan McFarlane, founder of

This situation is very real to millions of people around the world due to the economic impact of the Covid-19 pandemic. I have come across this situation several times and have experienced it first-hand myself. The great news is that if you act now, you can move yourself into a better situation.

Credit cards in the UAE carry heavy interest rates of more than 35 per cent per annum. If a person has difficulty paying off the full amount owed each month, it is likely that they will default. It is estimated that as many as four out of five users who max out their credit card limit and only make minimum payments will eventually default. It is important not to feel scared or embarrassed about it as many people are currently facing a similar situation.

If you miss three consecutive payments, the bank’s collections department will contact you to make an immediate payment. Rather than being embroiled in a pointless argument about paying something you cannot afford, you should request a restructure of your card immediately and the collections agent should be able to help you organise this.

For the loan, you should approach the bank to request an extension of the term to reduce your monthly payments. However, be aware that the moment you miss payments, your credit score is affected and it will be more difficult to get an existing loan extended. It is important to focus on solving your debt issues sooner rather than later to potentially keep all options open.

I would also focus on increasing your income. You said you work in finance, so perhaps you have accountancy or other skills that can be used to generate a part-time income via sites such as

Debt panellist 3: Felicity Glover, personal finance editor at The National

Earning a lower salary and being in debt is a difficult situation to be in, particularly if you have young children to support. It seems these days that the cost of living is rising but salaries are failing to keep up with inflation.

You are fortunate that you have been able to rely on family and friends to help you make ends meet but, obviously, this cannot continue forever.

In terms of your debts, your first priority should be paying off your credit card as quickly as possible. While paying a minimum instalment each month will keep the bank’s collection department at bay, it will not bring the debt down.

Instead, the compounding interest will cause it to rise quickly and before you know it, the amount you owe will reach a point where you can no longer keep up with the repayments. It is important that you do your best to avoid this type of scenario.

Is it possible that you can ask friends and family for help to pay off your credit card in one lump sum? Alternatively, do you have an asset to sell? Your personal loan is a cheaper debt compared with the credit card because the annual interest rate is much lower. However, it is also important that you do not default on these instalments.

I would also advise you to sit down with your husband and work out a budget that will allow you to start saving and paying off your debts. This can be a difficult task, as it requires honesty and sacrifice. Ask yourselves, “Where are we wasting money? What more can we do to cut back on our expenses?”

There are numerous ways to lower your outgoings, including moving to cheaper accommodation, catching public transport instead of taxis, limiting your entertainment expenses and cancelling subscriptions. It will not be easy, particularly in the beginning, but you will start noticing that you have a little more money to save at the end of each month.

To earn extra money, a side hustle outside of work could be a solution. If this is the route you decide to take, it would be wise to use all earnings from this to pay off your credit card.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to

Updated: August 04, 2021, 5:36 AM