Ripples are spreading far and wide from Covid-19. Kiwis are already starting to lose their incomes through unemployment and business failure.
The economic impact of the virus is already being felt in sectors such as tourism, hospitality and education.
Many more are bracing for the inevitable. Casual workers willbe hit hard and many are already on the bottom rungs financially. Small retail businesses such as cafes and gift shops struggle to survive at the best of times. The situation for them is worsening by the day.
Almost anyone who works in a customer-facing role is at risk as are many sectors ranging from fitness instructors to landlords who rely on rents to pay the mortgage.
The economic impact of Covid-19 is unprecedented in our lifetime and many who lose their incomes may never have considered that their income could be at risk.
Denise Smith, manager of the Papakura Budgeting Service, says Kiwis who lose their income out of the blue often suffer from trauma and are quite simply overwhelmed. There are steps to take if they can keep cool. They include:
Smith says you do need to list your outgoings and create a budget. A budget advice centre, which you may now have to contact online, can then help you work out how to meet your commitments. If appropriate budgeters can take other measures such as negotiating with your creditors.
It's a prudent time to clear your debts. Photo / 123RF
Check your insurance policies now
If you have loans through finance companies there is a good chance you have some sort of consumer credit insurance, says Smith. You may have redundancy or income protection insurance. Most business interruption insurance only kicks in if there is material damage to the premises, says Karen Stevens, Insurance & Financial Services Ombudsman. Whatever the policy, check for exclusions. It's best to know now.
Consider your mortgage
It might be worth refinancing your mortgage. If you've overpaid in the past you might want to put a portion of the mortgage on revolving credit so you can dip in if necessary. Or refinance with the aim of minimising your repayments for now.
Even if you think you wouldn't qualify for a benefit call 0800 559 009 to find out what help might be available to you. For eight months from March 23, there will be no stand-down period for Jobseeker Support. The department has also set up rapid-response teams for employers who may need to make staff redundant or reduce their hours. Work & Income will coordinate with other agencies such as Inland Revenue. More info here: https://tinyurl.com/WorkIncomeCovid.
Contact your creditors
Under the Credit Contracts and Consumer Finance Act (CCCFA) borrowers have the right to request changes to the contract if unforeseen circumstances arise. The lender must consider options such as extending the contract term to reduce or postpone payments or offer a payment holiday.
Cut your bills
Your income may have come to a grinding halt but your bills don't. This is the time to do all those things you know you should do such as turning off appliances at the wall, drying clothing outside, cutting long showers and walking/cycling instead of using petrol.
Reconsider your grocery bill. Photo / 123RF
Cut your grocery bill drastically
Most of what is in our trolleys isn't necessary. Even if it's only for a few months it's possible to take extreme measures to cut out all nonessentials from the food bill. Most people could slash supermarket spending in half. Plan your meals around cheap and healthy foods and stick to your grocery list. Choose basics such as oats, rice, beans, chickpeas, pasta etc, rather than ready-made. Smith says watch what you're spending on toiletries and cleaning products.
If you have lost some or all of your work you may be able find temporary work. Many call centres need extra capacity, for example, and supermarkets are likely to employ extra staff for pick and pack operations. People with health-related skills may be in demand. Chase up invoices if you're in business. Look for alternative sources of income, even if it's as basic as selling off unwanted belongings on Trade Me. This isn't the time to be picky about where money comes from.
Consider KiwiSaver hardship
It is possible to withdraw some of your KiwiSaver if you can prove hardship. This is a slow process and there are high hurdles to cross to get it. So don't count on this money as a given.
Quite to the contrary of what I've said above, if you have are in a secure job and/or have disposable income then spend now to support local business. We're all in this together and the more people who can keep their livelihoods the better for society.
