<strong>I am a UAE national with a nice salary but recent circumstances have put me in trouble and I am in a lot of debt. My salary is nearly Dh50,000, but the Equated Monthly Instalment (emi) on my loans is Dh90,000 plus. My total loan amount is very high at nearly Dh1 million. I’m willing to pay Dh20,000 every month if someone can help me. I can give them postdated cheques and will not run away as I have nice job, salary and have never defaulted on my credit cards or personal loan payments. However the monthly emi has gone above my salary. Maybe someone will help me, and my family life and work life will be sorted out. I just need one consolidated debt plan to reduce the emi to at least 50 to 75 per cent of my salary. ZS, UAE</strong> <strong>Debt panellist 1:</strong> Jamal Alvi, chief credit officer at Abu Dhabi Islamic Bank This is an ideal candidate for ADIB’s debt consolidation product. It appears that high amounts of repayments are due to high interest rate cards / minimum payment requirements and other loans that the customer may have acquired in addition to a salary loan. ADIB can certainly help the customer by reducing his current monthly payout from Dh90,000 to Dh23,000. By consolidating all loans/cards in one single Al Khair offer from ADIB, Mr ZS will pay only 47 per cent of his salary towards his debts. This is well within the maximum repayment expectations of the customer. This consolidation will also result in significant savings on finance charges/interest rates. Please see the instalment calculator below: <strong>Finance amount:</strong> Dh1 million <strong>Tenure (Months):</strong> 48 <strong>Salary:</strong> Dh50,000 <strong>Debt Service Ratio (instalment / salary):</strong> 47.20 per cent <strong>Installment:</strong> Dh23,599.82 <strong>Profit rate (on a reducing rate):</strong> 6.25 per cent This is subject to other credit terms and conditions including satisfactory repayment behaviour as demonstrated in the credit bureau. Customers should look at their monthly outgoings such as school fees, rent/mortgage, utilities, food and compare that with their monthly income. Ideally, they should be setting aside at least 20 per cent of their income to savings for emergencies and retirement. Borrowing should only be considered for extremely important items that cannot be funded through savings. Lifestyle related items like holidays or non-essential luxuries should not be funded through loans or credit cards. <strong>Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com</strong> The first step is to check the eligibility criteria set by the banks that offer consolidation loans. If debt consolidation is an option, this is how it can help. By combining multiple debts owed by you – outstanding credit card debt and/or the outstanding amount on your personal loan or car loan, into a single loan, debt consolidation lets you take advantage of a lower interest/profit rate and lower monthly instalments spread over a longer tenure. Debt consolidation can be a double-edged sword – while it makes loan repayment more manageable, reducing monthly instalments, as well as easing the overall debt burden with lower interest rates, on the flip side it also extends the loan repayment term. This means that even though the rates are lower you may end up paying the same or even more in the long run. Reconsider how much you can pay back. Can you afford to pay back more than Dh20,000 per month? Take a closer look at your budget – cut all unnecessary expenses and stick to the basics, and allocate the rest towards your loan repayments. Is there a pool of savings that you can tap into? This can help you make repayments faster. You can also pay off your debts faster by adopting the ‘Debt Stacking’ method, wherein you pay off the loans with the highest interest rate first. Once you’re repaying the maximum that you can afford to, you can turn towards family members for financial support to get some help in paying back the loans to avoid accumulation of interest. You can then put a structure in place to pay your family back in smaller instalments. You can also check with the lending banks, regarding restructuring your loan repayments as well as negotiating an extended tenure or payment holiday to ease the repayment burden. Another way to help ease the debt burden is to unlock another income stream, whether it’s taking on another job after hours or doing some freelance work. The only way to actually get out of debt for good is to restrict your spending and steer clear of taking on additional debt. Becoming debt-free should be your primary objective now, which also means that you will have to put your lifestyle on the back seat. <em>The Debt Panel brings together four financial experts: Jamal Alvi, the chief credit officer at Abu Dhabi Islamic Bank (ADIB); Ambareen Musa, the founder and chief executive of the comparison website Souqalmal.com; Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life; and Keren Bobker, </em>The National<em>'s On Your Side columnist and an independent financial adviser with Holborn Assets in Dubai. Together they answer queries in a weekly online column to help readers better tackle their debts. If you have a question for the panel, write to pf@thenational.ae.</em> pf@thenational.ae Follow us on Twitter <a href="https://twitter.com/TheNationalPF">@TheNationalPF</a>