With about 10 million people receiving Canada Emergency Response Benefit (CERB) payments so far, many Canadians are making a lot less money than they did two months ago. Canadians earned, on average, $4,383 per month at the start of 2019; those on CERB will bring in $2,000 a month. While it’s good to have some money coming in, that gap (and it will be a lot more for some) is going to be a major issue for Canadians who have lost their job.
Over the past two months, Bank of Canada has made a flurry of policy decisions that have seen it slash its target interest rate and embark on an unprecedented bond-buying program to ease the flow of credit.
The report suggests these measures have helped ease liquidity strains and provide easy access to short-term credit for both companies and households.
The Banks review of the country’s financial system says market prices point to a concern that defaults are likely to rise.
The report also raises concerns that household debt levels are likely to rise and become acute for households whose incomes don’t fully recover from these troubling times.
The Banks governor, Stephen Poloz, says “We know that debt levels are going to rise, so the right combination of economic policies will be important.”
If you have found yourself out of work with debts on the rise, I recommend that you:
- Tap into your emergency fund (if you have one).
- Cut any discretionary spending you may have that you can’t use like gym memberships.
- Use all the government relief that there is available such as the BC Hydro or ICBC relief fund. Or better yet, take your car off the road if you’re not using it or are working from home.
- Consolidate your existing unsecured debts, such as credit card and line of credit loans, under one single low monthly payment.
- Refinance your mortgage at a lower rate.
- Avoid payday loans.
Hang in there. At some point the economy will turn, the jobs will come back, and your income will rise again.
