With each day that passes the reality is becoming clearer: that the coronavirus is having a major impact on economies around the world. The probability of a recession is steadily growing as companies lose money from lack of business and a number of people are unable to work.
It’s a trying time, especially if you weren’t prepared for it. Since it’s too late to start saving for an emergency fund (that really would have come in handy in this situation), what can you do now as you find yourself in the middle of a health and financial crisis?
1. Get Financial Help
There are resources out there you can use to get the help you need. Consider contacting a not-for-profit credit counselling agency that can help you find solutions in the most difficult financial situations – even if you’re overwhelmed by debt. They’ll be able to give you money advice for the here and now, and come up with strategies that you can use to help you prepare for the worst.
2. Contact Your Creditors and Bank
If you feel like you won’t be able to keep up with your payments due to COVID-19, then you should contact your banks and creditors straight away to let them know. Many of them are putting measures in place to assist people who have been affected by the disease.
3. Work with Your Employer
With everyone encouraged to self-isolate, you may need to stay home, especially if it’s to be with your kids. See what your employer can do to help you out, and what their plans are to make sure that their employees are safe – both physically and financially.
4. Apply for Employment Insurance (EI)
If you are unable to work due to COVID-19, then now’s the time to access your Employment Insurance (EI) sickness benefits. Though the system will likely be quite busy, it’s worth taking the time to set it up if you are eligible for it.
5. Consider a Line of Credit
Under normal circumstances it’s not usually recommended to use credit products (i.e. line of credit, credit cards, or a home equity line of credit (HELOC)) to make ends meet. These aren’t normal circumstances, though, and using one of these products to help with cashflow issues is a much better option than a payday loan or other high-interest loan.
If you’ve been recently offered a line of credit from your bank, it may be worth taking it. Just make sure that it has a reasonable interest rate (under 10% is ideal).
6. Take a “Payment Holiday”
If you can skip making a mortgage payment without incurring a penalty, then now is the time to do so (definitely not a recommended option under normal circumstances). Whether or not you can take a payment holiday will depend on your lender, and also on your local government’s guidelines which may be in effect during this financial crisis.
7. Time to Start Budgeting
If you don’t follow a monthly budget, now’s the time to start. Free guides are available that will show you how, and having one will definitely help you through these difficult times.
Follow these steps you should be prepared for whatever comes your way.