Goodbye to all of that

My financial mistake This former broadcaster kept spending when her income fell, and hit $120,000 in debt. Now, after losing her job in Abu Dhabi, she attempts to alter her lifestyle.

Alma Kadragic admits there was a time when she let her fondness for the good life get the better of her. Back in the early 2000s, as the public relations company she set up in Poland began to falter, she carried on with the free-spending lifestyle she had become used to. Even after she sold her firm, things did not change, and she continued driving a Lexus and making improvements to her house in Florida.

Ultimately, Dr Kadragic racked up US$120,000 (Dh440,000) in debt, which she was able to repay only after selling her house. A Hungarian-born American, she spent 16 years as a broadcaster for ABC News, much of it as a bureau chief in Eastern Europe covering the momentous events surrounding the fall of communism. Keen to use her skills in a new field, in 1990 she set up a public relations company, Alcat Communications, and attracted a string of blue-chip clients such as General Motors, American Express and Eli Lilly.

But her mother's poor health meant that in the early 2000s Dr Kadragic spent increasing amounts of time in Florida, and with the boss away the company did not continue to generate income on the same scale as before. She sold Alcat Communications in 2003 and spent the next two years in Florida freelancing, a period that also was not as lucrative as she had hoped. "I had various assignments, but as a freelancer you're marketing [yourself] all the time and executing your assignments and it's hard to do both. Florida is a place where freelance fees are lower. The whole thing doesn't work," she says.

Despite her modest career situation, she continued to spend money on her house, eventually sinking $100,000 into the property. The improvements she made, she now says, were often unnecessary. "The house and its environs were lovely but the money to sustain them wasn't there," she says. "You don't get into it thinking it will cost $100,000. You get into it thinking it will cost $8,500." Her high-cost habits early in the decade stemmed from her conviction that her employment situation would improve. As a result, even when her career was going through a rocky patch, she acted as though she had a secure job.

"The thing to have done was to have got rid of the house and downsized radically. But because I'm a perpetual optimist, I didn't do the obvious thing," she says. "It never occurred to me to do that because I thought I would make more money." So she kept hold of the three-bedroom house, which had its own swimming pool, and the costs piled up. She also drove a Lexus, albeit not a top-of-the-range model. Dr Kadragic, who is single, borrowed against the value of an investment portfolio she had, and also had several credit cards.

"In order to maintain that house, I extended credit cards," she says. "I had numerous credit cards and I was getting applications for more. I didn't have enough money to juggle the payments. My interest rates were low. I never didn't meet the credit card payments, but I made that happen by drawing from other credit cards and using this margin from my investment account." Also, on two occasions, Dr Kadragic remortgaged her house as a way of coming up with more cash.

She eventually sold the house in August 2005, and at least made a healthy $200,000 profit. Given her financial situation, Dr Kadragic says she had little option but to dispose of the property. "It would have been nice to have kept it but [selling the house] was the only way I could make headway to paying my debts," she says. "The first thing was to pay off the mortgage and the credit cards, which I did. The profit from the house was not enough to quite pay for everything, but it came close."

Dr Kadragic's situation improved considerably when in August 2005 she started a full-time job as an associate professor in the college of communication and media sciences at Zayed University in Abu Dhabi. When she moved to the UAE, she was determined not to repeat the free-spending habits she developed in Florida. She had learnt a lesson. "Once I came here, I decided I wouldn't do anything with a credit card that I could not pay by the end of the month," she says. "And I killed the store cards. All the credit debt has gone away. By the end of 2005 I was completely clean and I've stayed so and will stay so into the future."

Instead of the new Lexus she drove in Florida, in the UAE she drives a second-hand Toyota. Dr Kadragic completed her three-year contract at Zayed University and was awarded a five-year extension, only to find herself out of favour midway through last year following management changes in her department. Her contract was terminated and she was given six months' salary as a settlement. Since then, Dr Kadragic has secured part-time work at UAE University in Al Ain, in the media and in public relations, but is yet to find a full-time position. As a result, she finds herself in an uncertain career position not unlike the one she experienced in Florida.

However, this time, she's keeping a close eye on spending, and she's determined not to get in debt. "I've definitely tightened up on lunches and I'm being less free with offering to pay for lunch or dinner when I go out. I've bought coffee to make at home instead of having daily cups bought at various places." To further save on the pennies, Dr Kadragic often buys Dh15 lunches that consist of rice or noodles with vegetables and meat.

The only major expense she continues with is her three-bedroom flat in Abu Dhabi, which has an annual rent of Dh164,000. However, if her work situation does not improve by March, when the apartment contract comes up for renewal for another six months, Dr Kadragic will leave the UAE. For the moment, though, she continues with her slightly downsized lifestyle, while doing her best to hold true to her philosophy that a person should live for now, and not compromise too much for the sake of the future.

"I've seen so many people who've saved for retirements they weren't able to have, because they had accidents or illnesses," she says. "I'm about living for now, because you don't know what will happen."