Albertans are being warned to take a closer look at their finances with the economy teetering towards a recession and many companies announcing layoffs.
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Bruce Alger, a financial advisor and bankruptcy trustee at Grant Thornton, says he saw a record number of personal insolvency filings in 2009 after the last recession and is expecting more of them same.
“Albertans continue to have the highest household debt in the country, and as other expenses continue to hike up such as utilities, property tax and potentially interest rates,” he said. “Now is the time more than ever for consumers to have discipline and caution in term of their expenses.”
Alger says it’s particularly true of people with RRSPs, RESPs and equity in their houses.
“[People] go through their savings and their termination pay and their EI payments,” he said. “Quite frankly, if you’re at the point where you’re off a job and you’re eating your savings, you should come and talk to a qualified professional because there are some things that would put you in a better position than others.”
Governments and large companies are starting to downsize their budgets, and Alger says consumers need to start doing the same.
“Go back to basic,” he said. “Budget 101: What do I have? What do I own? How much am I making? Where is it all going.”
Edmonton insolvency specialist Freida Richer told the Calgary Eyeopener that Albertans should be taking a hard look at their financial situation.
- Listen to Richer’s full interview on financial belt tightening by clicking the audio button
She offered a list of things Alberta households should be doing in wake of the economic slowdown.
- Stop spending. Don’t take on any more debt. Look for free or low-cost ways to accomplish what you need to do without financing.
- Review your monthly cash flow.
- Review what you can slash or cut out of your monthly budget, which may mean lifestyle adjustments like giving up a gym membership or cutting back on fancy coffees.
- Review your emergency fund — a household contingency plan should have the equivalent of three to six months of living expenses set aside for security.
- Be honest about your debt. Be real about where you stand with it and commit to tackle it.