If you’re finding money is tight during a recession due to the increased cost of living and high inflation, you’re not alone. Perhaps you have some home repairs or renovations that need to be done, but you don’t have the savings to cover them.
From examining your spending to applying for a reverse mortgage, here are four things you can do to help yourself financially during a recession.
Examine your spending
With the cost of living going up even higher, along with the cost of borrowing increasing simultaneously, it’s important to take stock of your spending and determine if there are areas you could cut back.
You don’t have to change your lifestyle permanently, but understanding where you’re unnecessarily spending extra can help you save vital funds.
For example, instead of eating out three times a week, see if you can cut back to once a week. You could also shop at lower-cost grocery stores and be more mindful about your grocery purchases.
Get rid of high-interest credit card debt
When money is tight, relying on credit to survive is tempting, but high-interest rates push you further into debt. Avoid using your credit card continuously, and pay it down as quickly as possible when you do have to use it.
If you have the option, consider moving higher-interest debt into lower-interest debt by consolidating your debts or transferring the balance of your high-interest credit card to something with a lower interest rate.
Think long-term with any investments
Market movements can be nerve-wracking. But it’s important to remember that investing is something you should commit to for the long haul.
An economic downturn is actually a great time to purchase stocks affordably. If you want to take advantage of this opportunity in a low-risk way, invest small sums at regular intervals rather than one large amount.
Consider applying for a reverse mortgage
If you’re a Canadian age 55 or older and own your home, you can consider applying for a reverse mortgage to access up to 55% of the current appraised value of your home.
A reverse mortgage is obtained by taking out a loan on your primary residence. The money accessed can be turned into tax-free cash, and you don’t have to pay any regular monthly mortgage payments on it. The money from a reverse mortgage can be used however you want, including paying down debt, renovating your home, covering the increased cost of living or helping a loved one.
As long as you live in the home, you don’t have to repay the reverse mortgage. The loan doesn’t become due until you move out of the home or sell it.
The rising costs associated with inflation can take a toll on personal finances, and there are steps you can take to protect yourself.
By examining your spending, eliminating high-interest credit card debt, thinking long-term with any investments, and accessing a reverse mortgage, you can keep yourself in a solid financial position.
Name: Michael Bertini
Job Title: Consultant
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