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Use only one credit card with lower spending limit to curb expenses

In these times of uncertainty it is savings that will act as a shield

I haven't been able to control spends on my credit card - I have two of them. I want to use my debit card after clearing my credit card dues of Dh 40,000. Is it a good idea?

The answer to this problem lies in your question itself. It is basically the 'haves' and not the 'have-nots' that you have to focus on. Rather than using two credit cards, we would strongly recommend that you cancel one of them and reduce the limit available on the other card, to two months of your monthly expenses. This check on your spending limit may discourage you from excessive spending. In these times of uncertainty it is savings that will act as a shield. Hence, a complete rejig of your daily spending is important. If your income is more than your necessary expenditure which is the case, you may wish to sign-up for long-term investment options and start contributing part of the savings systematically every month. This investment over the long term will generate returns for you. Ultimately, you will have to rescue yourself.

I have been unable to pay the instalment on my flat after losing my job. My savings will last two months. The bank is making queries. Should I put my property up for sale and move to a rented apartment?

At any age and at any stage of career, the importance of reserves cannot be ignored. We sympathise with you in these times when you have lost your job and you may be in the lookout for another job while your savings are depleting. We always advise that individuals should hold reserves equivalent to at least six months of cash outflow that also includes mortgage payments or loan instalments if any, to cater to any eventuality.

In the given circumstances, you have following options:

1. Offer the existing flat for sale with the intent that sale proceeds realised would be offered to offset the outstanding mortgage first, and the remaining balance, if any, can be transferred to your bank account.When the flat is listed for sale you may continue to occupy it and appraise the agents that the apartment will be vacated on transfer.

2. Alternatively, you may wish to move out of the apartment, offer the apartment for rent and relocate back to your home country. Rental proceeds being realised can be offered to the bank as repayment of monthly instalments. While in your home country, you may continue to look for a suitable job and return to the region upon securing employment. This two-pronged strategy will help with yout mortgage payments while curbing costs as you continue looking for a suitable job.

Moving out of your apartment and renting would mean an additional cash outflow at a time when you have limited savings while any rentals realised from your flat could be offered to the bank for repayment of outstanding mortgage. Going forward, please initiate building up your savings corpus the moment you are employed again.

- The writer is the CEO of ZTI Global