In a few week’s time, it will be my fourth year here in Dubai. Four years of working in a foreign country and enduring the scorching summers and pleasant winters in the Middle East.
Out of those four years, I spent half being neck deep in debt. Credit Card debt. Just like many other OFW’s who came here, I too fell into the debt trap not long after I started working and getting my salary. After filling out my bank forms, I was also given a credit card application form which I was more than happy to sign. They gave me a good credit limit. I thought to myself back then, I can handle this. I will not use this for anything other than emergencies. I didn’t know any better.
It didn’t take long before I began over-spending, and depending on my credit card to bail me out and use it to supplement my shortfall on cash to buy my groceries and other “necessities”. There were even a few times when I made cash advances on my credit card. I was able to pay off most of the balance every time I received my salary, but because I wasn’t paying the balance in full, and due to my ignorance; it didn’t take long before the principal and interest payments consumed nearly half of my monthly salary. Boy, was I in trouble. I’ve heard of other OFWs who went to jail because they couldn’t pay their debts and that wasn’t something I wanted to experience. I needed to do something and I needed to do it fast!
One of the things that really helped me was learning how to stick to a budget. I had to make sure that I carefully planned and thought about where my money went instead of wondering where it went. It wasn’t easy sticking to a budget. Not for someone who was so used to just spend his entire salary on anything. After learning how to stick to my budget- strictly, I made sure to leave my credit card at home. Bringing it with me only added to the temptation of using it. I also made sure to erase my credit card details from apps and websites that I usually visit to buy things. I don’t like re-typing information so being put in a position where I would have to re-enter all my info again really helped me to curb my online spending.
Old habits die hard- and trying to kick a bad habit on your own makes it even harder. They say that you become the average of the five people you spend most of your time with. To help me become at managing my money and debts I associated myself with like minded people. I began to attend more seminars on proper money management by Randell Tiongson, Investhusiasts and Money Talks UAE. Met with people who also struggled with bad money habits in the past but became debt free, and are closer to achieving financial freedom. It took me a while to pay off my credit card debts, but I did it, and it felt so amazing. It felt so great knowing that every time I get my salary, I won’t have to spend almost half of my salary paying off debts. I was now able to use the spare cash to get insured, invest in the stock market and even real estate.
Being in debt is probably like being in quicksand. I’ve never been in one- fortunately, but the way it’s shown in movies, it’s probably the same feeling. Buried neck deep and with no way to get out. It was not easy,mind you. But thankfully, I was able to make it out in one piece. After paying off all of my credit card debts, I calculated all of the payments I made on my credit card and was shocked to find out that the amount I’ve paid for the past two years was nearly the same amount I would have made in one year! One year’s salary gone! Albert Einstein was right. Those who don’t know how compound interest works will pay for it, while those who do will get rich because of it. The bank certainly made a lot of money on me from all of the interest and finance charges that I paid on top of the principal amount. It was a lesson learned the hard way.
There are different ways to pay off your credit card debts. You just need to find one that works best for you. One of the most effective ways is to make sure you don’t incur any more debts while paying off your existing ones.. All your efforts will be wasted unless you have the discipline to stop yourself from overspending and using your credit card. Live within your means, and always be mindful of how and where you spend your money.
I still get calls and offers from banks to get a new credit card. I remember cancelling my ADCB Simply Life Card a few months back, and receiving a call from the bank offering me a different card- which I also cancelled less than a month after getting it. Why? Because I simply don’t have a use for it. Why get multiple credit cards when one is good enough? I used to have three, but now I’m down to just one. Getting that new credit card feels good, but believe me when I say that cutting that piece of plastic with a pair of scissors after you’ve closed it feels A LOT BETTER! Plus, having paid all your debts also greatly improves your credit score.