How to Cope with Rate Hikes
In 2023, rate hikes have resulted in higher costs for Canadians in many areas. The cost of groceries, transportation, and other basic necessities have all increased. The cost of credit has also gone up, making it more difficult for Canadians to access financing for large purchases, such as a car or a home. In addition, higher interest rates have limited the number of attractive investment options, and have led to less spending by Canadians. Ultimately, rate hikes have impacted Canadians in various ways, from higher costs of living to the dampening of investment
Canadians can implement the following guidelines to help them cope with rate hikes in 2023
Cut Expenses: Cut spending in areas where you can and make small changes that have big impacts on your budget. Consider upgrading to a low-flow showerhead or light bulbs to reduce your utility bills, switch to a lower cost phone or internet package, cancel or downgrade cable or streaming services.
Pay off or Consolidate Debt: Paying off or consolidating your debt is one of the best ways to cope with a rate hike. Transfer high interest debt to a low-interest loan or consider consolidating multiple loans or lines of credit into one payment.
Refinance: Refinancing might make sense if you have a mortgage or loan with a higher interest rate than what is currently available. Refinancing can help you unlock more money in your budget and lower your monthly payments.
Earn More: Consider increasing your income by taking a side-job, freelancing, or starting a small business. You can also look for ways to increase your income at your current job such as asking for a raise or taking on more responsibilities for additional pay.
Build an Emergency Fund: Build an emergency fund or increase the amount you have set aside in your existing one. This will help you in the event of a rate hike or any other financial emergency.
Save on Tax: Take advantage of any tax deductions or credits available to you. Tax-free Savings Accounts and pension accounts are a great way to save without being subject to tax.
Find a good mortgage broker: A good mortgage broker can help you stay ahead of any rate hikes by providing you with up-to-date information on mortgage rates. They can also advise you on which lender is most appropriate for your particular set of circumstances, including what rate you can expect in this uncertain economic environment. They can also provide you with advice on different mortgage options and help you to decide between fixed and variable rates. Additionally, a mortgage broker can help you to compare different lenders, taking into account their interest rates, fees and terms. In addition, they can explain the difference between the lender’s actual rate and the advertised rate.
Stay Informed: Monitor the financial news and stay up-to-date with any announcements made by the government or the Bank of Canada. This will help you to understand the impact of rate hikes on your personal finances and help you to make the right decisions at the right time.
In conclusion , rate hikes in 2023 have been a challenge for Canadians. Fortunately, with the right approach, Canadians can cope with the impacts of rate hikes, in order to ensure financial stability and prosperity.
