The Debt Panel: 'I arrived in the UAE in 2017 debt-free. Now I owe over Dh100,000'

The Dubai resident, from Ireland, says bad planning and mental health challenges contributed to her financial struggles

Illustration by Alvaro Sanmarti
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I arrived in the UAE from Ireland two years ago in a solid financial situation. I was able to pay six months’ rent in Abu Dhabi upfront and my company helped me open a bank account. I was able to live and send money to my home country to save. 

The problems started when I had to pay the second part of the first year’s rent. I wasn’t aware of my employer’s policy of securing an advance on your housing allowance to pay rent. I applied for this benefit too late so had to find a solution. I changed bank and took out a salary-transfer loan of approximately Dh40,000 from the new lender.

During this period I went on holiday and used my credit cards too much. Some of the debt was also accumulated from therapy sessions (cognitive behavioural therapy) as I was going through a rough patch in my life and my health insurance does not cover mental health. I then applied for a top up on my loan to try and reduce the card debt.

As my rental contract was up, I moved to a cheaper apartment to reduce costs and be closer to my job and took an option to pay monthly. I was then promoted at work and spent a lot of time travelling between three sites in the UAE. I don’t drive so I relied on public transport and taxis making transport very expensive.

I was then promoted and relocated to Dubai with a salary of Dh14,000 and had just a few weeks to move. Of the Dh5,000 deposit I put down in Abu Dhabi, I only got back Dh1,000. By then I had maxed out my credit cards and had no additional savings. I was struggling to make the minimum payment on my cards.

My debts are:

Personal loan: Dh70,000
Credit card 1: Dh13,806
Credit card 2: Dh17,161

Total: Dh100,967

I tried a few other accommodation solutions such as living with friends, which resulted in three moves in Dubai. I now live in a shared villa and pay Dh3,700 a month. I purposely moved near the metro to reduce costs.

I have missed several credit card payments and I have had heated conversations with one of the credit card lenders. Their staff even visited my workplace, which was extremely humiliating. My loan instalment is Dh2,700 and with my rent, a monthly phone bill of Dh490, transport costs of Dh500 and a gym membership of Dh200, my expenses come to Dh7,590. 

This budget leaves me with Dh6,410 and I plan on putting Dh3,000 each month towards the credit cards so hopefully I can pay these off in 10 months. I have enquired about taking out a debt consolidation loan but my credit bureau score is low. I admit my problem is a result of bad planning and not attacking the situation earlier. What do you suggest? SF, Dubai

Debt panellist 1: Shaker Zainal, head of retail banking at CBI

Credit cards are designed to finance expenditures or short-term financing needs. Therefore they tend to have higher interest rates compared to personal loans. In your case, it is a good idea to consolidate your loans into a single personal loan and fully pay back your credit card balance. This will allow you to reduce your interest expenses and manage your monthly cash outflows better.

Mental health and money issues are often connected, whether people are too depressed to open their bills and pay their cards off or too manic to control spending properly

Your credit score must have been negatively impacted by your past payment performance issues, which might be related to overdue payments or your inability to make the minimum payments on your credit cards. However, your debt burden ratio is below the regulatory cap of 50 per cent, which is good news. You can apply for a debt consolidation loan without increasing your overall indebtedness. Instead you simply need to convert your credit card balance into a personal loan with a long enough tenor to be able to service your monthly payments.

As a first step, get in touch with your bank, where your salary is credited to, and apply for a debt consolidation loan. If your application is declined, approach other banks, which generally offer loans based on salary transfer. Your chances of getting a personal loan from the banks where you have credit cards are higher, if you undertake to use the loan proceeds to pay back your credit card debts.

Even if you are not able to get a debt consolidation loan, you have about Dh6,000 surplus cash each month, after your monthly personal loan instalment and living expenses. The more you pay to reduce your credit balance, the better, since your interest expenses will come down. Therefore, slightly stretch your cost control efforts to pay more than the Dh3,000 you are planning.

Finally, using any overseas savings or utilising an advance salary payment from your employer are other options. However, if you use these, make sure you maintain the cost reduction discipline and pay back your outstanding debts rather than using the additional cash for other purposes.

Debt panellist 2: Steve Cronin, founder of

You haven't done a huge amount wrong – and plenty of things right – yet you still find yourself in financial difficulty. Mental health and money issues are often connected, whether people are too depressed to open their bills and pay their cards off or too manic to control spending properly. In fact, the new book Money by Laura Whateley has an entire section on this area and you might find her wide-ranging personal finance advice helpful.

What we see here is a gradual worsening of your situation until you can’t pay your monthly card instalments. So what you need is a plan to keep your mental health in reasonable shape and to slowly strengthen your financial situation.

Like any big city, Dubai can be stressful and lonely. Find cost-effective ways to keep yourself from spiralling down mentally. Become attuned to how you are feeling, maybe even keep a journal, and identify what can trigger bad episodes, as well as what relieves them. If a session of CBT can keep you feeling strong and productive for a month or so then pay for it. Augment this with low-cost activities: reaching out to friends and family, getting enough food and sunshine, sitting on the beach, reading, watching a favourite show. Be ruthless about cutting out people and places that upset you.

When it comes to your finances, tracking your money and having a plan will give you a sense of control that will reduce anxiety and despondency. It will also give the banks more belief in you so they cut you some slack. You must prioritise important bills and be able to pay them on time.

Your monthly Dh6,410 is a lifeline. It needs to support paying off your credit card balance as well as preparing for any big costs coming down the pipes. Paying your rent monthly removes one of these, but do look six to 12 months ahead for anything on the horizon.

Build a cashflow model, on paper or in Excel that predicts your balance, major incomings and outgoings for each day of the month. That way you will know in advance whether you can make your card payment or not, and do something about it.

Missed payments will impact your credit score for five years, but the banks will appreciate it if you can demonstrate an increasingly long unbroken chain of monthly payments. Be disciplined about building this. Keep trying for a consolidation loan – try to talk to someone more senior at the bank and show them your salary, new financial plan and recent successful payments history.

If you can pay more than Dh3,000 towards your card balances each month, without jeopardising health and friendships, then do so.

See if you can boost your income also, either with small jobs in the evenings and weekends or by talking to your employer. They may have extra work for you or may not be paying you the market rate for your job. You’ve got this.

Debt panellist 3: Ambareen Musa, founder and chief executive of

Spending beyond your means, especially when you rely on debt to do so, is not sustainable and almost always ends with trouble with lenders. Your financial problems began around the time you moved into your first home in Abu Dhabi. With no savings to turn to, paying the half-yearly rent in advance was always going to make things difficult financially. This led you to your first loan, then came the credit card debt to counter the income shortage and finally you topped up your loan to repay the growing credit card balance.

Your priority right now should be to get rid of the credit card debt. Not only is heavy interest piling on every month this debt goes unpaid, but late payment fees, over limit fees and penalty interest, are all adding up and inflating your original outstanding balance.

A common solution is to ask your credit card provider to convert the outstanding dues into a fixed-rate loan that comes with a fixed tenure and monthly instalments.

Also, look for ways to cut costs and optimise your spending. You've already made some smart moves to ease your financial situation: moving to a cheaper accommodation and living closer to a metro station. However, a quick look at your current monthly expenses reveals more scope for cutbacks. You can slash your telecom spend easily by switching over to a cheaper plan; you can suspend the gym membership for now and, if most of your transport expenses are work-related, negotiate with your employer to have these included in your employment benefits.

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