The past year has plunged many Quebecers into uncertainty, and the stress on personal finances has continued to grow. Here are the answers to frequently asked questions in 2020.
Never before have requests for information been so numerous on the information line and website of licensed insolvency trustee Jean Fortin et Associés, says its president, Pierre Fortin.
“People’s concerns change over time, so we’ve grouped the main issues by age group,” he says.
25-34 year olds
I want to buy my first house. Is this the right time?
Even though interest rates have reached historically low levels, with soaring property prices and uncertainties in the job market, it is arguably best to wait for a return to normal before making a commitment to whether long term.
Should I prioritize the repayment of my loans and grants or build an emergency fund?
At about 3% interest on average for a student loan, we recommend that you maintain regular payments on your student loan. However, any excess amount should be kept to build up an emergency fund equivalent to at least three months of running expenses to meet the unexpected.
“In 2020, many people realized that having such a safety cushion would have enabled them to better weather the turbulence caused by the pandemic,” notes Pierre Fortin.
How to best manage my credit?
The job market remains uncertain, especially for those with little experience. Postpone non-essential expenses and avoid using credit. Remember, interest rates on credit cards can go as high as 20%, and any outstanding balance will end up costing you dearly.
35-54 year olds
I want to renovate my house. Is this a good time to plan and spend?
In this age group, we have accumulated assets and our professional experience also allows us to claim a good salary and stability in employment.
“However, for the next few months, I recommend prudence and the preservation of its achievements. In this period of uncertainty, it is better to avoid embarking on major expenses, especially if they are on credit, ”notes Pierre Fortin.
Is it better to pay off my mortgage faster or save?
Those who kept their jobs were also able to benefit from a significant reduction in their expenses. This combination means that they are left with more money now than before the pandemic.
You may therefore be tempted to pay off your mortgage faster with the money saved.
“The interest rates on mortgages being very low, it seems more advantageous, given the context of uncertainty, to favor savings rather than large prepayments. In addition, the money saved will be available in the event of a problem, ”says Pierre Fortin.
How do I quickly repay my debts?
Any good debt repayment plan begins with an inventory. For this, we must take stock of the balances owed to our creditors and interest costs, as well as a budget to know how much we can release to repay. Several organizations and experts can assist you in this process.
55 and over
How can I maximize my savings?
It’s not easy to choose when the interest rates on guaranteed investments are very low and the stock market regularly breaks records … However, the closer you get to retirement, the more you have to protect your capital and avoid risky investments. Take advice from professional members of the Financial Security Chamber, rather than your brother-in-law!
I want to spoil myself a little. Is this the right time?
The temptation can be great to use the equity in your property to finance renovation projects, buy an RV, or plan future trips.
“The objective of arriving at retirement without a mortgage and without personal debt should be favored,” recommends Pierre Fortin, who reminds us that in retirement we also generally have less income.
There is no magic recipe, but by following these tips you will be able to do better.
“The crisis does not affect us all in the same way. I recommend that those who have managed to keep their assets to exercise caution and save until the situation returns to normal. As for those experiencing financial difficulties, prepare your budget, prioritize essential expenses, use government programs to ensure a basic income and do not hesitate to ask for advice, ”emphasizes Pierre Fortin.
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