How to Use Your Tax Refund for Debt Relief (Video)Aug 01, 2017
The recent news of mass job cuts at the Government of Newfoundland has been a watershed moment in the province’s tough times. As the Canadian oil and gas downturn continues, Newfoundland and Labrador is the hardest hit Atlantic province, as unemployment has remained the highest in the country at 14.2 per cent. With so many people out of work, many more can feel that they’re next, and that debt relief is in their future.
If you have these worries, adjusting your budget to make it leaner can help you prepare for possible unemployment.
Not everyone has the ability to cut back. But if you can live leaner, you have the opportunity to create more room in your budget for emergency savings, which will help you get by if job loss or another financial emergency comes along.
To make a leaner budget, start fresh with your calculations. Look for an online budget calculator and figure out what percentage of your take-home income you ideally want to put toward savings. From there, work backwards to fill out the rest: what you’ll need for housing and utilities, transportation, cable, cell phone, and everything else.
Then, it’s a matter of finding creative ways to stick to your budget.
Tax time is an interesting time for this — if you expect to pay taxes, you should set aside money in the months ahead. On the other hand, there’s also opportunity with a tax return to put more towards debt relief or add to that emergency savings account. Your end goal is to have emergency savings set aside that’s equal to about three to six months’ expenses. That way, you’ll be more prepared if job loss comes along — giving you money to tide you over while you search for a new job.