Steps to Survive the Financial Crisis during Wave Four

Posted by Pam Silverberg on February 5th, 2022

Has the pandemic affected your financial health? At this point in the crisis, it is not difficult to see inflationary challenges that add to affordability challenges for many Canadians. And many households do not know what to do to improve their situation.

According to the recent  BDO Accessibility Index , 35 percent of Canadians are in worse financial shape from  COVID-19 and 43% have more debt, a four percent increase from last year.

Worse yet, the fourth wave of the pandemic coincide with a new, more complex reality. Indeed, with the reopening of offices, schools and businesses, financial obligations and household spending are likely to increase. Accessibility could be an even bigger challenge in the coming months.

Are you in financial trouble? We would like to offer you clear and simple strategies to help you move forward. No matter what you\\\'re going through, options are always available to you and debt professionals are here to help.

What do Canadians affordability challenges look like?

Let\\\\'s start by listening to what Canadians are saying about their affordability challenges . 

• The increase in the cost of living has repercussions

There has been a lot of talk about inflation over the past six months. No wonder Canadians are spending more on essentials like shelter, food and gas. Sadly, the rising cost of living also contributes to higher debt levels. Among people with higher levels of debt, 70 percent say they attribute it to the rising cost of living. ?

• A bigger debt burden is more stressful

Not all Canadians are increasing their debt. However, many are. Four in ten people added to their debt because of COVID-19 - credit cards, lines of credit, personal loans, etc. And among them, a quarter have contracted at least one new type of debt.  ?

• Lack of savings affects financial security

The increase in debt shows that many Canadians are not earning enough money to cover their expenses. Thus, nearly half, or 47%, live to the rhythm of paychecks. This is why so many people, 42%, save less or not at all.

How to Survive the Affordability Crisis?

Take it one step at a time and keep it simple. Dealing with financial difficulties can be overwhelming, but if you understand what you need to do, each step will increase your confidence, ease your stress, and give you a foundation to build on.

Here are 4 simple steps to overcome your financial challenges:

1. Determine if you are in financial deficit

Lots of people struggle to budget or don\\\\'t even know where to start. There are several ways to start a budget. But the most important thing is to determine if you have a deficit or a surplus. Are you spending more than what you earn? Start by tracking all your spending and monthly purchases. Are your expenses greater than your income? Take action now.

2. Cut down on non-essential expenses and think smaller

The next step is to reduce your non-essential expenses. It can seem very difficult, especially with the economy recovering and expensive social activities return. Think of your budget as a spending plan. That doesn\\\\'t mean you have to cut out everything that makes you happy. But choose your optional expenses carefully. 

Still a long way from reducing your deficit? Consider reducing your necessary expenses or selling some of your possessions. From phone bills to rent, many expenses can be reduced or eliminated if you are in bad financial shape. Thinking smaller means re-evaluating what you consider to be “essential” expenses. By making a few sacrifices, you put your financial health ahead of other conveniences or preferences, like living solo or owning two vehicles. 

3. Explore your options for financial recovery

Debt can put a huge strain on your monthly budget. Exploring your options for financial recovery should also be part of your reduction process. Having less debt can lower your deficit and help get you out of the red. Your first step? Calculate your  debt-to-income ratio . 

Are you paying too much interest? Strategies to lower your interest costs, such   as a debt consolidation loan  ,  can be a big step forward for people who qualify for low interest bank loans .

Is your debt situation more complex? Speak to a Licensed Insolvency Trustee  as soon as possible  . This person can explain all the available options to you free of charge, with no obligation on your part. You may be eligible for a  consumer proposal  that could reduce your debt burden by up to 80 percent. 

4. Start saving because every little bit counts

The ultimate goal of your budget is to move you from a deficit to a surplus. In short, do whatever you can to cut back on your expenses so that you can start saving.

Saving money promotes peace of mind, increases your options and improves your quality of life. All your budgeting efforts should be aimed at this course. If COVID-19 has taught us anything, it\\\\'s good to always have an emergency fund or savings.

Saving money promotes peace of mind, increases your options and improves your quality of life. All your budgeting efforts should be aimed at this course. If COVID-19 has taught us anything, it\'s good to always have an emergency fund or savings to draw from when the unexpected happens. According to the BDO Accessibility Index, most people - 60% - will save over the next year to build an emergency fund or have a sock.

Remember, this is about developing the habit of saving rather than looking at the dollar amount. Set increasing goals based on your financial situation. These little gestures will not only become eye-catching, but also establish a healthy habit for your financial health. 

Still if you felt that you need more assistance. You may contact us here at <a href=\"https://rkillen.ca/\">Richard Killen Associates</a>. We assist thousands of people to become debt free through consumer proposals.