During these increasingly difficult times, the financial impacts of COVID-19 on the people of Sault Ste. Marie to date have been staggering and it doesn’t seem to be getting better. Ongoing layoffs and the shutdown of non-essential services has caused many to have reduced incomes with limited change in essential expenses, including servicing debt.
These circumstances are dire for many. It’s no wonder why the majority of Canadians are more concerned about their financial health over their physical wellbeing.
Here are five ways Canadians can help manage debt during the COVID-19 pandemic.
Build an emergency budget
While it might be too late to save for this emergency, it’s not too late to create a new budget based on a reduced level of income and any changes in monthly expenses. Include all family members in the discussion about reducing costs and consider cancelling or putting on hold non-essential monthly fees like subscription services - these can add up.
While self-isolating, ask to put other monthly expenses like parking passes and gym memberships on hold.
Apply for the help you’re eligible for
Losing any amount of your income can be frightening. As the COVID-19 crisis continues to evolve, there are several resources available to eligible Canadians to help relieve some financial burden. Financial assistance can come from traditional Employment Insurance, municipal and provincial rental assistance programs for tenants, the Emergency Care Benefit program, or extended benefits at work, if available.
Research and submit any applications promptly as processing times may be longer due to application numbers and the possibility of reduced staff.
Recognizing the early signs of debt:
- Not knowing how much you owe. This can make debt unmanageable.
- Treating your savings as an emergency fund.
- Taking on new debt to pay off existing debt without a strategy. Debt repayment strategies include consolidating debt with a low-interest loan.
- Feeling overwhelmed or losing sleep over expenses.
- Anxiety about your financial health is causing rifts in your personal relationships.
Look to your bank for assistance
Many of Canada’s major banks have implemented changes to lending rules in response to COVID-19. These changes are designed for people experiencing loss of income and businesses experiencing profit loss.
Mortgage payment deferrals, skipping payments, loan extensions, revised terms or even reduced interest rates are all things your lenders can consider.
Contact your bank or credit union for further information and assistance.
If you can, use deferred payments to create or deepen your emergency savings for the future.
Consider a personal loan in an emergency
Personal loans don’t require any security and can be used for any purpose, making them an ideal financial resource in the face of an emergency. A personal loan is a flexible form of financing that allows you to access a lump sum with a fixed repayment schedule. This type of loan can be obtained quickly, especially through a licensed online lender.
Seek advice
There’s no shame in asking for help. If you are experiencing looming debt issues as a result of COVID-19 or other circumstances, consider seeking the advice of a credit counselling service. Credit counsellors can offer tailored advice or enrol you (if you qualify) in a Debt Management Program (DMP) to consolidate unsecured debts into one, affordable, monthly payment. Creditors are more likely to accept a DMP in a financial crisis because some payment will be collected.
“Times are really tough right now, and what we are seeing with the COVID-19 pandemic is completely unprecedented”, explains Loans Canada Chief Technology Officer, Cris Ravazzano.
“We are seeing a lot of volatility in the lending space, with some lenders slowing or even temporarily stopping their operations. On the other hand, many lending institutions are designated as essential services and are choosing to keep their doors open. As Canada's first and largest loan comparison website, our close relationship with these institutions enables us to continue to provide Canadians with the emergency financial solutions they need. We have also made it a priority to maintain up-to-date information on COVID-19's effect on the credit industry and invite Canadians to visit LoansCanada.ca for the latest information.”
The impacts of COVID-19 are widespread, affecting all Canadians. If you’re experiencing financial hardship and are coping with debt during these exceptional times, use what tools and forms of relief are available to manage the circumstances. Although you may feel overwhelmed, the first step to addressing debt is to come up with a plan.