The world has changed significantly over the past couple of weeks as we continue to deal with the health and financial implications of the COVID-19 outbreak.
Businesses of all sizes are struggling to cope and many employees and business owners alike are understandably concerned about their ability to make it through these challenging times. While you may not be able to control your income earning potential right now, there are many things that are still under your control.
In this column, I wanted to provide eight tips to help get through this crisis as best you can:
Stop consumer spending! As much as possible, you should cut down on any discretionary spending at this time. While bored at home in isolation, it may be tempting to cruise the web for online shopping deals, but this is the absolute last thing you should be doing right now. Any discretionary income should be directed toward debt reduction and building up an emergency fund.
Review your debt from all sources. Now is a great time to consolidate higher interest debts to a lower rate and make sure you’re paying as little interest as possible.
Much like debt, do a thorough review of all recurring monthly payments that you make. Are there any that can be suspended or cancelled? Are you still paying for that monthly gym membership? Do you really need to pay for Netflix, Amazon and Disney+ at the same time? Anything you can do to cut down your monthly carrying costs should be done right away.
If you are or are expecting to have trouble making ends meet, reach out to all your creditors and request temporary relief. Most, if not all mortgage providers in Canada are offering payment deferral and other such relief measures to those that need them. Make this call now instead of waiting until things are bad.
Consider setting up a line of credit type product if you don’t have enough set aside in your emergency funds. This would likely be far better than leaving a balance on your credit card or withdrawing (taxable) money from your RRSP account. Having said that, each person’s situation is different and a Certified Financial Planner (CFP) professional should be consulted to determine what source of funds makes the most sense for you.
Be extra vigilant for fraud or phishing schemes. It’s sad to say but there are many scammers out there working to take advantage of this situation. Watch your credit card and bank statements extra close over these next few months and report anything unusual right away.
If additional funds are available, consider investing more into the markets while they are down. While not an option for everyone, catching the inevitable rebound of the market is important. For those that are already invested and thinking of cashing out, remember that your losses are only realized if you decide to sell while the markets are down.
When possible, help out your fellow neighbours. Check in to see if they need help picking up groceries or with any other daily living activities. We are all in this together and it is times like this when the goodness of humanity can shine.
Finally, try not to panic. Blaming doesn’t help and dwelling on poor past decisions won’t either. Focus on what you can control and try to stay positive. Do what you can to help flatten the curve and keep your family safe and healthy.
Oh yeah and wash your hands!
This column is brought to you by Michelle Weisheit CFP, IG Wealth Management and presents general information only and is not a solicitation to buy or sell any investments. Please contact your own advisor for specific advice about your situation.