Survive tough financial times

It seems that the whole world has money trouble these days. The economy is moving backwards, shrinking instead of expanding. The stock market is up-and-down, jobs are going south – literally – and, just when we need them most, our savings are dwindling instead of growing.

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It’s no surprise to anyone that now is a particularly bad time to be in debt. A quarter of Canadians owe between $10,000 and $40,000, not counting mortgage debt, and more than one-third of us are just making minimum payments on our credit cards. “People in many smaller towns have experience with economic downturns,” says Chartered Accountant, Denis Hébert, a partner with Collins Barrow – Gagné Gagnon Bisson Hébert in Hearst. For more than 25 years, he’s advised small business and individual clients to prepare for the unexpected. “Many communities in north-central Ontario are built around a single industry or one major employer – usually either a mining or lumber business,” Denis explains. “Lumber has been a mainstay in Northern Ontario for generations, but the market has been in a recession for a couple of years already.” “But whether it’s lean times in a specific industry, or a general downturn in the global economy, there are certain basic guidelines that apply,” Denis says. “Businesses will have a better chance of staying open, and individuals will be able to sleep a little better if they remember these things. 1. Don’t take big risks. This is not the time to make major changes or put large amounts of money into unsure investments, either as a business owner or an individual. If you’re looking to salt away some cash right now, consider more reliable GICs and bonds. 2. If you’re already invested, don’t panic. Sit tight and wait – at least until the markets have recovered enough that things seem likely to turn around again. 3. Sharpen your pencil. Reel in your spending and start saving. If you don’t have a written, itemized household budget, make one. Revisit your company’s business plan, and see what spending can be put on hold. If you’ve managed to accumulate some extra cash over the years, you can use it if necessary. 4 Put off making major decisions. Unless you’re on very solid financial footing and absolutely need it, this is not a good time to buy a new vehicle, open that second office in a neighbouring town or even sell your home. Many seniors in smaller communities tend to own their homes outright, and may be well advised to sell if there are good personal reasons – like moving closer to care facilities, friends or family members in larger centres. 5. Don’t hesitate to renegotiate. When the chips are really down, the bills are stacking up, and sleep is harder to come by, talk to a Chartered Accountant. Call your suppliers. Schedule a meeting with your banker to renegotiate the terms of loans, and extend the repayment periods, if possible. You can always make up the difference and accelerate payback when the economy improves,” advises Hébert. Brought to you by The Institute of Chartered Accountants of Ontario

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