A job loss is a direct over-indebtedness factor. On the one hand, when someone loses his job, he has less money at his disposal to pay off his debts. On the other hand, he must rely even more on credit to compensate his salary loss. Once started, such a cycle becomes rather difficult to slow down.
Unfortunately, layoffs are very frequent nowadays. Each year, thousands of people are affected by the moving of their plant to an emerging country, or by the bankruptcy of their company, for example.
Some job losses largely covered in the media
Recently, major multinational companies have announced layoffs in Quebec and Ontario.
- Electrolux closed its plant in L’Assomption, resulting in 1 300 job losses.
- Bell Media is cutting 72 jobs in its Toronto television operations.
- Cascades will be closing its East Angus plant on October 3rd 2014.
- Energizer will be cutting 430 jobs between now and 2017 in Montreal.
- After announcing the elimination of 1 700 jobs in January, Bombardier is now stating that it will proceed with the abolishment of another 1 800 jobs.
As a proof of the definite decline of the employment scene in Canada, it is noteworthy to mention that the unemployment rate has increased again in June. It reached 7.1%, a rise of 0.1 percentage point from the preceding month. This also applies to Ontario and Quebec, where the unemployment rate reached respectively 7.5% and 8.1%. These are the highest rates in the country, excluding the Maritime Provinces.
Quebec’s interprovincial migratory deficit appears as a direct result of its unemployment rate and job losses. Approximately 13 000 people left “La Belle Province” in 2013 to move, for most of them, in Ontario or in Alberta. Between 2008 and 2012, this annual figure varied between 4 000 and 10 000.
Six tips to avoid over-indebtedness after a job loss
You have just been informed that you will be losing your job in six months. Here are some measures you can take to be in a better posture financially to face such a period of uncertainty. Globally, the purpose here is to remain cautious and to avoid incurring needlessly new debts.
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Analyze your budget
Draw a projection of your expenses and incomes in order to determine your monthly balance. Will you always have a surplus or be in a deficit? Should you anticipate a deficit without having previously created a contingency fund, you will be racking up more debt.
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Cut down on expenses
Some expenses are essential; others are not! Cut down on the latter! For example:
- Avoid having dinner in restaurants.
- Reduce your use of telecommunication services (cable, mobile phone, Internet, etc.).
- Cancel your housekeeping services.
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Consult the circulars
For essential expenses, consult the circulars. By planning your meals according to specials, you will save money. Benefit also from merchants who follow a price match policy. You should however note that items publicised in circulars are not necessarily on sale.
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Do not buy items you may borrow
If possible, try to borrow the items you need instead of buying them. Sports articles and tools are good examples of expensive items that you may borrow to save money.
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Prepare an action plan with your spouse
If you are a couple, prepare an action plan. Can your spouse work overtime? Can he or she remind the boss about the raise that was promised a year ago? You could compensate part of your salary loss by taking advantage of your spouse’s additional incomes.
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Advise your creditors
Be proactive and advise your creditors of the situation. In some cases, they may even agree to modify your terms of payment to give you some breathing space. Most importantly, do not wait for them to call you because you cannot repay your debt anymore.
If your job loss jeopardizes your personal finances and compromises the well-being of your family, you can also contact a Ginsberg Gingras trustee in bankruptcy. You will then be able to foresee the solutions at hand, and realize that a debtless future is attainable.