During the COVID-19 pandemic, several businesses have had to close their doors, reduce their work hours or reduce their workforce. These cuts have resulted in job losses for many consumers who, overnight, find themselves without a job or salary. Consumers are left without a source of revenue, but the bills keep piling up and the due dates get closer and closer. Several options are available to you.<\/p>\n
An emergency budget is different from emergency savings. Though it is too late to save up for an emergency, it is not too late to make an emergency budget based on your reduced income. Start with the biggest expenses: your rent or mortgage, medical expenses such as drugs, and the usual, reasonable expenses for food. Keep in mind that, because of self-isolation, much of your spending will be reduced or different compared to before the crisis. The expenses that are probably much lower than before include, for example, entertainment, hobbies, daycare, eating out, parking, gas, public transportation passes and personal spending.<\/p>\n
When you examine all of your expenses, bills and financial obligations, contact each of your service providers to see how you can reduce what you have to pay without incurring large penalties. Do not be afraid to temporarily reduce your service plans. Saving a little on each bill will have many positive effects in the long term. But remain alert: if you defer too many obligations, you could have a mountain of debts later. The key is to reduce now where you can without postponing your financial problems to a later date. It\u2019s important to get the right information about the steps to take and the expenses that might be hidden in turnaround measures.<\/p>\n
Paying your debts accounts for a large portion of your emergency budget and the main Canadian banks have all announced that they will examine requests for assistance on a case-by-case basis. If you can, contact your creditors before you begin to fall behind or as quickly as possible once you realize you have fallen behind. They will be in the best position to assist you. Deferring mortgage payments, skipping payments, extending loans, modifying terms or even reducing interest rates are all things that creditors can consider. What they can offer largely depends on what you need, your payment history, the risk associated with your file and your credit behaviour in general.<\/p>\n
As with all modified arrangements, make sure, above all, that you understand the terms and conditions. Deferring your mortgage or loan payments can result in your creditor adding these skipped payments to the end of your loan term. In the case of a mortgage, this could mean that skipped payments will accumulate interest for the next 25 years if your mortgage is still rather recent. If you don\u2019t have any other options, this could be a good arrangement for you, but it is worth looking at all your options before accepting one that will be more expensive in the long run.\t\t