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A licensed financial institution regulated by the Central Bank of the UAE
Al Ahli Bank of Kuwait - UAE Branches
Tools and Tips
Change in circumstance can affect your financial planning and ability to repay your dues on time.In case you are facing difficulty in meeting your repayment obligations, please reach out to us at:
debtmanagementuae@abkuwait.com
Or call us at +9714 6075555 ext. 697
Alternatively, you can visit our Dubai branch opposite Hamarain Centre, Abu Baker Siddiqui Road, Deira, Dubai – UAE. We are here to assist you to discuss and provide tailor-made solutions that will help you manage your debt settlement. Kindly ensure to act as soon as possible as missed payments, bounced cheques, and having too many credit cards and loans will affect your credit score with Al Etihad Credit Bureau (AECB), which in turn will affect your creditworthiness
Avoid Getting Into Debt
No one deliberately gets into debt – it happens without notice or sometimes due to poor expenditure patterns, or sometimes due to unexpected situation out of our control. Try following these strategies to avoid falling into the hole of debt:
- Use an app or maintain a financial excel sheet to track down your income and expenses
- Prioritize your needs, not your wants
- Everything is better within the budget
- Limit the number of credit cards you have. If you can't afford an item or service without a credit card, don't buy it. Avoid cash advances on your credit card
- Keep emergency funds as a back-up plan
Manage Your Finances
Maintaining a balanced budget is a rewarding practice that will help you live a healthy financial lifestyle. Follow the 50-30-20 rule. Spend 50% of your income on your needs, 30% on your wants and save 20%.
Use an app or maintain an Excel sheet to track your cash inflow (salary/other income). List down all your expenses, such as rent, loan repayments, groceries, utility bills, fees, entertainment, life style expenses, etc. Once you have listed down all your expenses, categorize them in to fixed and variable expenses to know where you can make adjustments and increase your savings.
This helps you:
- Identify things you need vs. things you want
- Pinpoint purchases that can be delayed for a future date
- Analyze your short and long-terms goals and cut back on irrelevant expenditures
This calculator can help you see your spending habits and improve your saving goals.
Follow the 50-30-20 rule. Spend 50% of your income on your needs, 30% on your wants, and save 20%.
Discipline yourself to adhere to the 20% saving goal. From there, managing the rest becomes easy.
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Your debt-burden ratio
What is Debt-Burden Ratio (DBR)?
DBR is a measurement of your debt repayment obligation against your income.
It a very useful tool to assist in managing your credit card and loans repayment and have control of your finances.
DBR = total debt / total income
The lower the DBR, the lower your debt obligation. This means that you will have more cash to be set aside after paying all your debt obligation. This will allow you to save more or allocate surplus cash to invest for the future.
A low DBR also means that you will have the higher possibility of getting a loan or a credit card. However, it is prudent and always advisable to maintain a DBR of less than 50%. This will ensure you do not over expose yourself to debt and avoid stretching your personal finances.
It is advisable to keep your DBR in-check by:
- Paying off your existing debts as high cost of borrowing i.e., increase in interest rates can also increase your DBR
- Reducing your monthly outgoings
- Increasing your income
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