The easiest way to evaluate your financial situation is to set up a budget. This will help you to determine what expenses you need to continue to pay such as a home loan, cell phone contract and health insurance and other expenses that you can reduce. If you need help setting up a budget, our Debt Advisors are here to assist you.
It is hard to cut out specifics in your lifestyle that you could once afford. It is important to re-evaluate your circumstances and make the best decision on what is necessary. You could consider:
Tally up all of your income sources and assets such as savings that may be able to get you through this uncertain time until you can replace your income.
If you’re without an income, look at your budget and make as many cuts as you can. Cut your takeout or dining out budget and stick to home cooked meals while you’re unemployed. By cutting out unnecessary expenses, you can put your emergency fund towards the necessities: food, housing, and transportation.
If you are worried about paying your bills during this time, talk to your creditors to find out if they have any options to help you. Many creditors have hardship programs in place for those experiencing financial loss. Some creditors may be able to extend your due date, waive late fees or offer different payment plan options. Take a few moments to prepare before you call so you can clearly communicate your needs:
If you are feeling stressed by debt, exploring options such as debt management plans or working with a debt counsellor could help you reduce monthly payments and reduce the overall cost of your debt.
You can take out credit insurance on most debt products including card accounts, home loans, your overdraft, and vehicle finance. It is not always mandatory, so you need to check whether you have credit insurance in place.
If you took out an unsecured loan after 1 August 2017, it is guaranteed to come with the new credit insurance mandated by law. Credit insurance on these loans will cover payments if you become unemployed or are unable to earn an income. This type of cover means if you lose your job and entire salary, instalments will be paid for 12 months, or for the remaining period of the loan, or until you can earn an income again, whichever is the shorter period.
It is important to note that credit insurance won’t pay out for every type of lost income. The loss in your earnings needs to be in an unforeseen or unexpected event. A contract coming to an end, or similar foreseen circumstances will not be covered.
Our Debt Counsellors can help you prepare a budget that can help guide you through a time where you are facing a sudden loss of income. We can also assist with creditor negotiations on your behalf to work out a payment schedule that best suit you.
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