(TORONTO, ON) – While many Canadians are celebrating at the pumps – BMO says low gas prices could save Canadian drivers around $1500 this year – those working in the oil sector aren’t so quick to rejoice.
Plummeting oil prices spell bad news for Alberta. This week, Suncor Energy, Canada’s largest oil company, said it will react to falling prices in 2015 by cutting 1000 jobs, reducing spending, and delaying projects.
Oil’s freefall even caused the Conference Board of Canada to utter the dreaded “R word.”
“The province is certain to suffer, especially on the employment front, from the drop in oil prices — and it is likely to slip into recession,” said a report by Conference Board of Canada economist Daniel Fields.
The plunge in oil prices couldn’t come at a worse time. Alberta saw dramatic increases in household debt over the last year, with average household debt exploding by 40 per cent from $89,026 in 2013, to $124,838 in 2014. This leaves financial experts worried that a sudden job loss or reduction in income could send Albertans into a debt-tailspin.
“We are in volatile times,” says Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada. “Albertans are no strangers to boom-and-bust oil prices, but with household debt so high, they need to take some serious precautions to safeguard themselves.”
Consolidated Credit offers the following tips to help Albertans brace themselves for possible periods of unemployment:
- Create your own glut – Try to direct at least five per cent of your income to a savings account every month. You will want to build up an “emergency fund” equaling three to six months of living expenses to help you avoid taking debt during this time.
- Don’t live on the edge – Just because you are making money and feel like you can live large today, doesn’t mean you should. A sudden reduction in income is often outside of your control. Being conservative with your large purchases and everyday spending means you won’t be hung out to dry in the event of sudden job-loss or income reduction.
- Be prepared-just in case – If you are laid off, it’s worth finding out whether or not you are entitled to EI and how you can apply. As well, find out what other sources of income you may be entitled to including severance, unpaid overtime and unpaid vacation. Seek professional advice to see how you can maximize your options without too much long-term damage.
- Drill into your budget – Budgeting is tough in the best of circumstances and worse when money is tight. This is a time to review your financial picture and seriously consider needs vs wants as you assess your ability to keep up with your bills.
“Don’t just live within your means; live well within your means,” adds Schwartz. “Spending wisely today will help weather any storm that might come tomorrow.”
About Consolidated Credit Counseling Services of Canada, Inc.:
Consolidated Credit Counseling Services of Canada is a national non-profit credit counselling organization that teaches consumers about personal finance.
For more information or to request an interview with Jeffrey Schwartz, please contact:
Jacob MacDonald, Public Relations Coordinator, Consolidated Credit Counseling Services of Canada, Inc., T: 416-915-7283 ext.1041, C: 647-390-5253, F: 416-915-5200, E: firstname.lastname@example.org