An overzealous arrival

Dreaming of a tan, this Londoner flew into Dubai excited for a change. But with a mortgage, no savings and her weakness for shopping, she soon realised that new starts can be costly.

illustration for my financial mistake 
personal finance jan 9, 2010
Illustration by Rahul for The National

My failure to do the maths has a long and less than illustrious history. When I was 11, drawing a "pretty flower" in my trigonometry book failed to impress my teacher. I was given a detention for not doing my homework. Sadly, my inability to plan my finances is no different. And it led to more than a few tight situations when I moved from London to Dubai in January 2006; a detention would have been a welcomed substitute for the financial problems I caused myself.

When I was offered a job in Dubai as a magazine production coordinator, I accepted eagerly. It was a cold and rainy November in 2005, and the promise of a suntan was perhaps more of a deciding factor than it should have been. At the time, I was plugging away at an uninspired, dead-end job as a graphic designer for a tiny, privately-owned publishing company. I was ready for a change of scenery. My bags were packed, and within six weeks - in January 2006 - I arrived in Dubai at the ripe age of 27, eager to start my new job on a modest salary of Dh9,500 a month.

But the experience started on a sombre note. The day after I arrived, Sheikh Maktoum bin Rashid Al Maktoum, the former Vice President and Prime Minister of the UAE, passed away. So I found myself with a week off work, as all offices in the city closed for a period of mourning. To pass the time, I decided to explore, and I quickly discovered what many people consider the UAE's national pastime ? shopping. Of course, I hadn't yet received my first salary transfer for my new job, nor had I set up a local bank account.

I decided to use my UK credit and debit cards, with the comforting thought that, at the end of the month, I would be paid. A few treats to help me get settled in my new home isn't unreasonable. Plus, I'd just bought a house in London, which I started renting out once I moved to Dubai. So a nice juicy injection of cash once a month from my tenant ought to see me off in fine style. I charged £750 (Dh4,451) a month for my one-bedroom flat in London on the ground floor. This rent helped pay my mortgage of £500 per month.

So overall, I felt financially secure. Of course, my big mistake was that I didn't put aside a sufficient nest egg to get me through those first weeks in Dubai. With time on my hands, I decided to splurge on new clothes, shoes, some jewellery and two handbags. Before long, I had slapped Dh2,000 on my credit card. At the time, as I looked for permanent flat, I was staying in a hotel in Bur Dubai, and the company withdrew Dh2,500 from my monthly salary. And because I had only worked half of January, once the period of mourning ended, my first salary transfer was a measly Dh4,500. So after the Dh2,000 on my credit card for those precious clothes and accessories, there was nothing left.

Meanwhile, back in London, my tenant wasn't paying up. I had rented the ground floor of the house to a former colleague of mine at the publishing company. He was diligent, organised and neat at work. But he proved to be a miserable tenant. I had calculated his rent to hit my account a few days before the mortgage payment came out at the end of January. Unfortunately, this clever system fell apart after my tenant didn't pay on the agreed date.

I made the discovery when my British debit card was declined while buying yet another pair of shoes. I would soon realise that my overdraft facility had been exceeded. In fact, my account was suddenly a whopping Dh11,870 in the negative. Luckily, there was just enough to make the mortgage payment for that month. But now, with my January salary spent, a drained bank account and a dead-beat tenant, my sunny prospects in Dubai were suddenly looking a bit dim.

I called home immediately and demanded that my former colleague pay his rent, and he promised to transfer the cash into my account the following day. The money did finally fall, but not for several days, arriving in the first few days of February. Of course, this £750 payment wasn't nearly enough to bring me out of the red, let alone provide enough money to live on. All that was left was a £2,000 balance available on my UK credit card - and I didn't have a permanent home yet. So I took out a two-year loan of Dh35,000. With three friends, I rented a villa with a pool for just Dh100,000 in Mirdif. I never really considered how I would pay all of this money back. It was only because of a small family inheritance later that year that I was able to get back on my feet again, and it took me nearly two years and several pay rises to start saving any money at all.

In hindsight, I can't imagine moving anywhere again without finding out exactly how much money I would need in advance. In other words, moving to a new city is full of costs, so be ready for them. Now, at 31, I have since moved on from the magazine to a few other jobs in the media industry. And my sense of financial responsibility has changed, too. I have enough savings to keep me going for up to a year if misfortune happens to strike. In mid-2008 I also started an investment scheme with Friends Provident, to which I contribute a modest sum every month. But back then, I was foolish financially.

I would definitely have spoken to more people about day-to-day living costs, and if I'd bothered to ask about loan rates in Dubai I would have received a much cheaper loan or overdraft facility from my UK bank, as the interest in Dubai can be ridiculous. I would also have rented my home in London to someone with references from previous landlords, and I'll never rent to a friend or colleague again. If there is a disagreement, the relationship can be destroyed in the process.

I think I would also have stayed away from the malls; one loses sight of the value of money when spending in a foreign currency. Finally, and most importantly, I would have done the maths before leaving London. Trying to wing it when you don't have a lot of cash to begin with is a recipe for disaster, and if I'd defaulted on a mortgage payment while in Dubai I could have risked losing my home. And that's not something I intend on doing anytime soon.