Reader case study: I'm useless with money. Time to sprout a 'stache

[jimbo_p]

I've spent the last 15 months blindly running up a huge debt.

My family and I moved to Dubai in Sep '13 for a new job and a new start. Enticed by the tax-free salary, and great work package, I assumed we'd be able to live it up and still save some money each month. So every time my wife asked 'can we afford this?' I just blindly said yes.

Fast forward 15 months, and I'm currently approximately AED350,000 ($95,000) in debt. Well done me.

Some painfully antimustachian decisions got us into this mess. I took a loan to furnish the house and buy a car, and did all the spending on a credit card (with intentions to pay it off in full each month) to get us air miles to fly home.

I'll start with the car. A used Porsche Cayenne Turbo (hey, fuel's cheap, right?). After AED25000 in repairs in three months, I gave up and swapped it in part-exchange for a new Hyundai, with a warranty. I lost another 35000 on the part-ex deal.

As for the credit card, I remember the first month that I didn't pay it in full. The alarm bell in my head wasn't loud enough. It's now bouncing off it's AED50000 limit, and I've only just noticed the AED2000 in interest and 'credit shield' they're adding each month.

I've been stupid and irresponsible. Things are going to change and we are getting out of this.

• We're doing one food shop per week, and eating exclusively home-cooked food
• I'm in the process 0% balance transfer on the credit card debt, and should have it paid off in 6 months
• There'll be no wasteful spending, and we'll find lots of activities around the house for the kids

Let me have it. I'm pretty thick-skinned, and full deserve a verbal and physical smack in the face.
I'll keep you posted on how we get on. This forum has been a goldmine already.

Jimbo

[MDM]

jimbo_p, welcome to the forums.

But we need more details.  Generic face smacks are no fun.  The community here needs gory details so excruciatingly specific and well-targeted face smacks can be delivered. ;)

Seriously - for your own benefit the place to start is "write it all down."  That means preparing a budget (aka "what we want") and tracking your actual spending (aka "what we do").  You can do those two things in either order.

Do it in a way that makes sense to you.  The spreadsheet in the How To Write a Reader Case Study thread is one way to start.  Other common ways include YNAB, Quicken, Mint, roll-your-own Excel, pencil & paper, etc.

Good luck!

[mxt0133]

In your defense whenever I go to a foreign country my ability to budget/compare prices goes out the window.  I know there are these things called calculators to do the forex conversions but when prices are 10-40x of USD my mind doesn't have a point of reference.  The only place I save money is in the UK or a country that uses the EURO because then everything is just way more expensive so I really think about the purchase.

But I'm curious to know how you spent 95K+, because I'm assuming you were paying down the debt as well.  You got kids so it couldn't have been all coke and hookers.

Please give us the gory details, I want to live vicariously through your experiences.

[jimbo_p]

Just finished the painstaking, but valuable task of inputting the last 12 months into YNAB. My bank lives in the dark ages, so I could only download 12 months, and even then only as an Excel Spreadsheet. Got there in the end. Here's my Net Worth over the last 12 months.

It shows a decreasing pattern, but not really how we got to nearly 400,000 dirhams so quickly.

The main culprits were:
- The car. The second car was financed through an interest-free car loan from my employer

- We were conned out of 7500dhs by a shipping company

- Furnishing the house. I promised the wife we could have nice furniture if she agreed to the move. Even so, with hindsight I probably didn't need brand new furniture/white goods/golf clubs...

- The birth of our second child. Not covered by the health insurance as she was pregnant before we moved here

- Credit card interest and payment protection. Currently 2000dhs a month!! That's the first target

- School fees. Not covered by the employer prior to my eldest son's 4th birthday. We've paid 39000dhs so far, and currently scrabbling to get the last instalment of 13400dhs by the end of February.

- Overspending on groceries. Exactly as mxt0133 just said. For the first few months, the prices were just random numbers. Then I realised I was paying $12 for a small bunch of asparagus. Most 'fresh' food here is flown in. Apparently in a first class seat. We've brought it down from nearly 7000dhs a month, to 1400 this month. Similarly, we were spending 2000-3500dhs a month on takeaways and restaurants. This month down to just 200dhs, all of which on coffee (damn kids).

Hopefully the future is brighter now that we're aware of where the money is going. Once we've paid the last instalment of school fees, that will free up about 4000 a month, which will go directly to clearing the credit card. The next few months are going to be a real adjustment for us, but I can't wait to see the results, especially on the pretty YNAB picture!

[NICE!]

Jimbo,

I'm not going to give you a face smack, I'm going to say something to which not everyone on this forum can relate (EDIT: props to mxt to beating me to this)...

It is not easy to live as an ex-pat. I feel that the pressure to look the part, particularly if you are obviously a foreigner (If you're not Arab, you probably look like a foreigner). I've felt it before myself, and someone else said something in another thread that was quite astute and accurate. Someone approached her (she worked at an Embassy overseas) about her old Mustachian car and said that wasn't the 'image' the US Embassy wanted to project. That is definitely the way people think.

I'm sure you've noticed some of the military personnel from the nearby airbase eating $200 steak dinners downtown, or skiing in the indoor ski resort (can't remember if that is where you are or in Abu Dhabi) so you see exactly what I'm talking about. Sure, they're doing well since they're deployed, but the vast majority of them are not rich.

Figure out where the leaks are and fix them. Luckily you're probably making good money and soon (if not already) you won't be paying any taxes.

[MDM]

Just finished the painstaking, but valuable task of inputting the last 12 months into YNAB.
...
Hopefully the future is brighter now that we're aware of where the money is going. Once we've paid the last instalment of school fees, that will free up about 4000 a month, which will go directly to clearing the credit card. The next few months are going to be a real adjustment for us, but I can't wait to see the results, especially on the pretty YNAB picture!

Great work!  Appears you have identified the major items.  Best wishes for future success.  Let us know how it goes - always nice to see a success story (or if needed, provide encouragement to get back on track).

[deborah]

Sounds like the North West (Western Australia) - when my parents lived there, visitors used to photograph the fresh food prices in the supermarket - they were just unbelievable because everything was flown in!

The key for them was working out what was actually grown in the area, and growing a lot of food themselves (even with the area being complete desert, and water being high cost, things like tomatoes were very cheap for them to grow because of the amount of sun).

 When my brother lived there (his family was in an apartment not a house), there were definitely places that the white expats went, where the Asians went and where the Arabs went. They had a lot of problems because his wife was Asian, so she must be a nanny...

I thought everyone lived in an apartment in Dubai (my brother did with two children a bit older than yours) - a house must be awfully expensive (both to buy and run).