In the unfortunate event that you are let go from your job, taking certain steps can make a huge difference.
5 June 2017| Last updated on 15 June 2017
Possibly one of the most stressful things to happen to an expat while in the UAE is to lose their job. Living expenses here are high and not paying off debts and bills can have very severe legal consequences.
However, there are some things you can do to minimise the impact.
1. Talk with your bank
If you have debt in Abu Dhabi, expect for your accounts to be frozen. This is the case even when changing jobs, as the salary is always tagged as a final payment by your employer. So make sure not to be caught off guard and left with no access to any funds.
The best thing to do in such a situation is to simply talk to your bank. If you are still able to make the payments until you find a better job, explain that to them and try to come up with an agreement about it. If you already have a new job lined up, inform yourself about their policies about employment change and the process of getting a salary certificate and letter from the new employer.
2. Create a budget
If you no longer have an income, it’s a crucial moment to have a budget. Keep track of every expense, no matter how little, which will help you know what you’re spending and what can be eliminated.
Any luxuries or extras that aren’t necessary should be stopped. It might not be ideal, but it will slow down the running out of money process.
SEE ALSO: Common financial scams in Abu Dhabi
3. Don’t go into more debt
It might seem like a good way to deal with the situation, but borrowing more money could just make the situation much worse. Spiralling into debt can’t happen very quickly. Credit cards should only be used as a last resort.
Think about what would happen if you aren’t able to pay off the credit card once the bill comes. You’d be pushing yourself further into debt and making it that much more difficult to get out of it. Also, don’t spend on the hope that you’ll have a new job soon – only act based on concrete plans.
4. Set of repayment plans
It’s a good idea to verify if your bank offers repayment plans that would result in lower monthly payments. The best thing to do is to be proactive and not ignore the situation. Most banks will give possible solutions to your debt as it’s both in your best interest and theirs.
5. Prioritise your bills
While leaving any bills unpaid is not good, sometimes you don’t have a choice. Credit card payments and rental cheques are one of the worst to miss, so it’s best to look after those first. There are a few repayment strategies to consider, such as debt stacking which puts priority on paying off the most expensive debt you have.
Keep in mind that accumulation of missed payments can negatively affect your ability to take a loan or get a new credit card in the future.
6. Take heed with quick fixes
If you’re in a dire financial situation where you won’t be able to pay your for your necessities, you’ll probably be tempted to take just any job to stay afloat. If that’s the case, take caution with what you decide to accept.
Make sure it’s not a limited contract or have binding clauses that will hinder you from leaving when a better opportunity. Consider taking up freelancing or temporary employment and always keep in mind laws of visas and bans.
Expats are always advised to keep some savings for when such unforeseen financial difficulties hit. If you ever take a loan, try to enquire about job loss insurance. However, always read all the terms and conditions to avoid any surprises. Generally, claiming the benefits of such an insurance will only be possible if your job loss was involuntary.