Thanks to the crazy year, the ratio of Canadian household debt to the country’s GDP could reach 130% later this year, up from about 99% pre-2020.
If your are among those households that have been hit hard by debt in the past several months, you may be wondering what steps to take next.
Should you sell your home or car? Can you pick up another job? When to get a payday loan?
Join us as we explore the options for Canadians with economic woes.
To Borrow Or Not to Borrow?
That is the question for many people. And there’s no one right answer; it depends on your personal situation. In some instances, it may make more sense to take out a loan.
This is especially true if you are still employed, anticipate going back to work soon, or have other guaranteed sources of income. Anyone who just needs a short-term solution could get by just fine by borrowing a little (or a lot) of money.
What if you’re nearing the end of your financial rope and are considering a loan as a first step? Not so fast, say the experts. Consider other moves first. This is not the time to saddle yourself with debt without knowing exactly when you will be able to pay it off.
First, Look Into Community Resources
Many people are simply unaware of the resources that are out there to help folks in a financial bind. You could be eligible to get assistance with utilities, childcare, housing, and food.
To find out what’s available in your area, and what you may qualify for, do a Google search for the service you need. You can also contact 211, which offers assistance in 100 different languages. It connects people in need to government- and community-based health and social services.
Consider Liquidating Some Assets
Have a savings account, retirement fund, or investment assets you can dip into? Now may be the time. In some cases, you might have to pay a penalty for early withdrawal, but it could be worth it.
Homeowners who have been thinking about downsizing will find that it’s a seller’s market right now. Plenty of properties across the country are going for well above their asking price.
Even those who don’t have stocks, bonds, an IRA, or property to liquidate may still have belongings of value. Collectibles, tools, jewelry, electronics, musical gear, high-end fashion and accessories, even kitchen items like mixers can fetch a pretty penny. Take a gander in your attic, basement, and cupboards to see what you might be able to sell.
Cut Back on Expenses
Another wise move is to take a good long look at your budget for any signs of bloat. Where is your money going? Where could you turn spending into savings?
Families who have more time on their hands than money in the bank could look into making household supplies at home. Some of the things that can be made easily and cheaply include cleaning and personal care products. Grocery staples such as bread, salad dressing, soup, seasoning mixes, granola, and pasta sauce are often better than their store-bought counterparts, and cheaper, too.
You can also suspend or unsubscribe to meal delivery services, streaming entertainment options, and other monthly expenses. It doesn’t have to be forever, but might be a smart move right now.
Communicate with Your Creditors
Anyone whose income has been reduced or dried up completely may be forced to make hard choices, month after month. For example, whether to put food on the table or pay down that VISA bill.
Financial experts advise that taking care of the necessities is absolutely essential when push comes to shove. So get those groceries.
However, that doesn’t have to mean that you suffer late payment fees or prolonged periods of paying interest. Especially if you have traditionally paid your bills on time, the credit card companies, utility providers, and other creditors and lenders may be more than willing to work with you.
They could grant you a deferment or grace period, waive fees, or negotiate a different payment plan. The pandemic is causing trouble for so many people; you might be surprised by how understanding these agencies can be nowadays. At any rate, it doesn’t hurt to ask!
Explore All Types of Loans
Maybe you’ve explored all the other options and still don’t see a way forward that doesn’t involve a loan. That’s OK. Loans can be real lifesavers.
The trick is to do your research and figure out which kind of loan is best for you. Here are some of the possibilities:
- Borrowing money from family members or friends
- Credit unions, which tend to offer lower interest rates
- Cash advances on credit cards
- Traditional loans from banks
- Online lending services
- Peer to peer lending services
Again, the best type of loan for you will depend on your credit score, your employment status, how much you want to borrow, and other factors. Just make sure to weigh all the options before making a decision.
When To Get a Payday Loan?
We won’t sugarcoat things. It’s true that payday loans are generally loans of last resort. That said, they have helped lots of folks get through tough times.
If you’re really in an economic pickle, payday loans are worth looking into.
Keep these tips in mind:
- Check and double-check the fine print
- Have a payback plan in place
- Know when and how you will pay the loan back
- Hold yourself to your plan
Know, too, that not all payday loans are created equal. Check out these online payday loans at the beginning of your research. It may save you time, trouble, and money!
There Is Hope!
Getting through an economic crunch isn’t easy. But you have plenty of options.
Sell what you can or liquidate assets. Cut your expenses and get help wherever you can. Know when to get a payday loan versus a different kind of loan.
Circumstances may seem dire now. But remember that it’s always darkest before the dawn. There are lots of people out there in the same boat. We’ll get through this together!
Overwhelmed by what you owe? Check out our blog section for some great tips on how to get out of debt.