Unemployment in the age of COVID-19

According to Government of Canada figures, upwards of five million Canadians have applied for COVID-19-related income loss support since measures were announced in March. Given the uncertainty around how long social distancing measures will last and the lasting impacts on the economy, that figure will likely continue to climb.

Households across the country who are already concerned about what this virus means for themselves and their loved ones are now having to contend with reduced incomes — many also with an overwhelming amount of debt and a lack of emergency savings to see them through.

If you’ve recently lost your job or are worried about future layoffs to come, the following tips and resources should help to ease the impact of the coming financial storm.

Revisit and revise your monthly budget

If you already have a monthly budget, set aside an hour to review it. Look for any regular expenses that:

• May not be applicable during a time of social distancing — e.g. dining out, entertainment, fuel and automotive maintenance, transit passes, gym memberships, large mobile data plans, etc.
• Are not essential during a period of reduced income — e.g. multiple media subscriptions (cable, Netflix, Crave, Amazon Prime, etc.), shopping or discretionary spending, automatic transfers to your RRSP or savings accounts

If you don’t have a monthly budget, now’s the time to create one. We’ve created a helpful spreadsheet to get you started.

Take your time when you’re putting this together. Look back through several months’ worth of bank and credit card statements to make sure you’re capturing all regular, irregular and semi-annual expenses — especially ones that are set up to auto withdraw from your accounts (e.g. car insurance).

Once you have everything on paper, you can begin identifying areas to cut back or eliminate until you return to full income.

Tap into government assistance and support

The Government of Canada has announced several significant investments and measures to support households who have been impacted by the COVID-19 pandemic — particularly those who have lost income or are struggling financially. These include:  

Employment Insurance (EI) — There is no longer a one week waiting period or requirement for a medical certificate to claim EI benefits for those who are sick, quarantined, self isolating or otherwise unable to work due to COVID-19.

Canada Emergency Response Benefit (CERB) — The CERB provides up to $16,000 over eight weeks to qualifying wage earners, contract workers and self-employed individuals whose income has been interrupted due to COVID-19 but would not otherwise be eligible for EI.

GST Credit — Adults currently receiving the GST rebate will receive up to $300, and up to $150 per child, deposited to their account in May.

Enhanced Canada Child Benefit (CCB) — The maximum annual CCB payment has increased by $300 per child for the 2019-20 benefit year. This increase will reflect in the May payment for qualifying households.

Canada Student Loan Payments — There is a six-month interest-free moratorium on the repayment of Canada Student Loans.

Registered Retirement Income Fund (RRIF) — The required minimum withdrawals from RRIFs has been reduced by 25 percent for 2020.

Investigate payment deferrals

Many lenders and financial institutions are offering delayed payments or grace periods in light of the ongoing pandemic. These can be extremely helpful for managing your budget if you’ve lost income, but there are a few considerations to keep in mind:

Lender’s terms and conditions

Before accepting any offer, make sure to read the fine print and ask the right questions so you know exactly what you’re getting into.

Will they charge interest or convenience fees over the month(s) you’re not making payments? Can you afford these extra costs when you resume? What impacts do you expect to see on your credit report?

Plan to avoid credit while deferring payments

Increasing the amount of your debts at the same time you’re not making payments on that debt can be a recipe for financial disaster. If you’re struggling to afford your debts now, how severe would the situation be if your amounts suddenly increased by 10, 20 or 30 percent?

Explore alternative options

If you’re in a position where you can no longer afford your debt payments, there may be more beneficial options than simply putting your payments off for a couple of months.

A Life-Changing Debt Solution such as a Consumer Proposal would potentially allow you to reduce your monthly payment to a figure you can afford right now. It would also move you closer to the point of being debt free.

Contact a Licensed Insolvency Trustee for a Free Confidential Consultation to learn more about the most appropriate approach for your unique situation.

Do your taxes

The Government of Canada announced extended income tax filing and payment deadlines as part of its plan to support households affected by the ongoing COVID-19 pandemic. However, if you expect to receive a refund or rely on other subsidies like the GST/HST credit or Canada Child Benefit, you’re better off filing as soon as possible.

Even if you expect to owe on your taxes, you may still be better off filing early. You can still take advantage of the extended August 31, 2020 payment deadline and you’ll have more time to budget and save.

Lean into support networks

We’re currently going through multiple unprecedented crises: the ongoing COVID-19 pandemic, widespread economic turmoil, extensive job losses and a prolonged period of personal isolation. The stress from any of these events would be difficult to manage on its own and many people are facing several all at once.

Call your loved ones

Even though you cannot be together physically in most cases, this is the time to reach out to friends and family members via phone, text or video chat — both to give and receive helpful words of encouragement.

Numerous studies demonstrate strong social ties improve resilience and can help encourage more favourable outcomes. You may even find opportunities to save money, feel better and avoid leaving the house too often by trading off on things like buying groceries for one another.

Speak to a professional

If you find you’re really struggling under the stress, you may find it beneficial to speak with a licensed counselor or psychologist. We have a list of helpful resources on our website who will likely be able to provide the insight and tools you need to weather the current storm. 

Prioritize self care

Lots has been said about using this time to learn a new skill, write your magnum opus, work out three times a day, save tons of money, start a new career path or otherwise be super productive. And, if that’s something that will give you a sense of comfort and purpose right now, by all means go for it.

But just as good is using this time to catch up on lost sleep, reconnect with your family, watch that bingeworthy TV series you’ve never had time for, journal — or go for numerous (socially distanced) walks throughout the week.

Do your best to manage the difficulty of the situation to the best of your abilities. But don’t let it consume all your time and energy. Look for opportunities to find joy, search for things to look forward to and treat yourself with patience and compassion right now.

Life Changing Debt Solutions

Whether you’re struggling with unmanageable debt because of the COVID-19 pandemic or for any other reason, you don’t have to face the situation alone. Find out your options to get the Financial Fresh Start you need and deserve — contact an MNP Licensed Insolvency Trustee for a Free Confidential Consultation today.

During this no obligation initial meeting, a federally licensed debt expert will review your entire financial situation while seeking to understand your unique challenges and goals. They will outline all the potential pathways you can take to become debt free, and help you choose the most appropriate one for you.

Your options could include a Life-Changing Debt Solution such as Bankruptcy or a Consumer Proposal, which could help you erase your debt within as little as nine months from your initial filing. An MNP Licensed Insolvency Trustee can also connect you with a wide range of other service providers to ensure you feel empowered, supported and prepared to rebuild your finances and your life after your debt is gone.

The sooner you address your debt, the sooner you can move past it. Take that first step and call us today.