Handling the Changing Price of Oil

As all in Alberta know, the price of oil has fallen substantially and many fear what this means for business until the market picks up again. This lower profit margin can lead to cuts made in every department of a company, and couple lead to layoffs. In order to help you rest a bit easier while we wait out the price of oil rising, here are some ideas to survive this unpredictable time.

1. CONSIDER THE LITTLE EXPENSES

There are often many little changes you can make to your finances to save money each month. First, check if your bank offers fee free banking. This could save you up to $20/month! Another place to look for extra cash is the fee you’re being charged on your credit card. By calling your credit card provider and negotiating a better rate or seeing what other deals are out there, you could save another $20/month. There are options like this all around us, so be more conscious of ways you could be saving cash!

2. TAKE OUT A LINE OF CREDIT

If you do not have the home equity available for refinancing, consider a line of credit as a different form of contingency for emergencies. Usually, the payments on this loan are interest only so the costs incurred to you are not outrageous and is available whenever you need it.

3. REFINANCE YOUR HOME

The value of property in Alberta has seen steady increases in the last couple years. If you have been simultaneously paying down a mortgage then you could be in a great financial position to refinance. Let’s consider an example from one of our fellow mortgage experts at the Red Deer Express:

House Value = $400000

Mortgage of $280000 at 3.75% = $1435/month

Credit Cards of $7500 = $200/month

Line of Credit of $20000 = $600/month

Total = $2235/month

If you refinance your home at $320000 at the lower rate available today, your monthly payment will decrease to $1514. This gives you the freedom to pay all of the above expenses and have a savings of $10000 of contingency. This also means that you will have an extra $721 to contribute to your savings account each month.

Do keep in mind that you will likely incur a penalty to break your current mortgage contract. To find out if refinancing is an option for you, talk to your mortgage lender to discuss the options. In some cases, the lender will cover the legal fees and appraisal costs associated with refinancing, saving you up to $1000.

4. START A SAVINGS PLAN

Especially in an economic downturn, people think about saving money more than ever. To make the process of saving easy for you, consider setting up an automatic savings plan. This option involves an automatic monthly withdrawal from your account that is deposited in a separate savings account. The only thing to be cautious of with this option is to make sure the money is deposited in an account such as a TFSA (tax free savings account) where it is easily accessible. Other accounts, such as an RSP, can involve incurring penalties if you need to access the savings for an emergency expense.