It’s All Part of the (Financial) Plan – Avoid Debt While Living Abroad
Moving abroad is an adventure in every sense of the word. New location, new language, new culture— there’s a lot to take in and enjoy. Of course, this new way of life will also affect your finances, which you need to manage well if you don’t want to end up moving back home.
Moving back home is a lenient ‘punishment’ compared to specific countries which have a reputation for being harsh on defaulters, such as the UAE. Even though laws are changing regarding debt, it’s best to stay on the right side of them, so here are a few tips to prevent your dream move from turning into a financial nightmare.
Be Sensible with your Credit Card
Cities like New York and Dubai boast amazing attractions, but some people travel to them purely to shop. They’re the kind of place where you can easily use your credit card too much. With designer labels and irresistible prices, temptation surrounds you. Resist.
Don’t apply for credit card after credit card. If you reach your credit card limit, accept it. Recklessly applying for credit cards is an easy way to get into debt — and debt isn’t a nice place to be. Not only that, you chalk up entries on your credit history, which paints a picture of you as exactly the kind of person banks shouldn’t lend money to.
Fail to plan and you plan to fail. Before you move, find out about property rental prices, costs of living, and, if you have kids, the cost of education. For instance, rather than pay rent monthly, tenants in the UAE must pay a year’s rent up front, and expats must pay for the education of their children (it’s expensive).
Make Saving your Duty
Hard times can hit us all, so prepare an emergency fund in case they hit you. Start this before you move, and have enough to get by for at least three months. Once you arrive, budget your expenses. Make a monthly quota for savings part of this budget — and put that money away without fail into an account that makes it harder for you to draw it out.
Spread your Savings and Income
Diversifying your savings, investments, and income is a sensible way to reduce risk and protect yourself in case debt strikes. Save, invest in stocks, and buy a property. This way you have cash available as well as assets that you can turn into cash if debt raises its ugly head. Hopefully, it won’t.
Consider Taking out Insurance
During the crisis a lot of people have lost their jobs and gone into debt as a result. These days, there are insurance policies for all kinds of circumstances, including loss of earnings. Find a policy that suits yours best and assure yourself of income for when hard times appear to be on the horizon.
The possibility of getting into debt while you’re living abroad is scary, but it’s not an imminent reality. Plan ahead, save all the while, and be sensible when you’re out and about with your credit card. That way, you’ll be in a better position to make financial decisions rather than let your finances make the decisions for you.
You can find more information and advice on living abroad on the US Government website.
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