Bank Notes

When you're out of work or facing decreased work, keeping up with debt repayment can feel like an impossible task. Mortgages, car loans, credit card debt and student loans all pile up and, sometimes, paying all your monthly bills in full just isn't an option.

If you are needing to sort out what to pay first, know that you're certainly not alone. There are steps you can take to defer some of those payments until your finances are a bit more stable.

Which payments should be a priority?

Generally speaking, the most important payment you make each month goes toward your rent or mortgage or whatever is keeping a roof over your head. If possible, keep up with your housing payments as much as you can; if you get to the point where you can no longer afford them, reach out to your landlord or mortgage adviser right away to figure out a solution.

It would also be prudent to group bills related to home-ownership into this top-priority category; things like your property taxes, home insurance, condo maintenance fees and any other payments.

Your utilities are also important bills to keep on top of; these would include things like your water, electricity, gas payments and more. If you are spending more time at home, and especially if you're trying to work from home, keeping the utilities running is a must.

Depending on your job, expenses such as car payments and gas, internet and cell phone may be integral for you. Anything that allows you to earn an income should be considered a priority.

For certain people, payments such as child support or taxes owing to the Canada Revenue Agency must also be paid.

Which payments can be cut or deferred without penalty?

A good place to start when thinking about general spending cuts to make is to consider which services are needed and which are just wanted.

Cable television and streaming services are a good place to cut back. If you currently have multiple streaming services, you can pick one streaming service and consume that content and once you feel you've gotten all you can out of it, cancel and sign up for a different one.

If you have both a landline and a cell phone, think about getting rid of your landline if it's not absolutely essential.

Whether you already have a budget or need to create one for the first time – an essential-only budget can help you cut down your spending and ramp up your savings.

Click here to learn how you can build an essential-only budget

Will deferred payments affect credit scores?

Make sure you discuss this directly with your lender because it can differ with your credit score being based on many factors and is unique to you.*

If you have any questions about your credit score or how it is calculated,  you can visit TransUnion at  www.transunion.ca or Equifax Canada at  www.equifax.ca.

Looking for help?

Determining how to sort out your bills when you’ve lost a job or are facing reduced income can be complicated. We are here to provide our expertise and perspective to reaffirm your long-term objectives and help you create a tailored financial plan. Reach out to your financial advisor to get started.