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Surviving the slump: Money tips when you lose your job

CALGARY – Many Calgarians are struggling with a whole new reality right now — life without a pay cheque. Since oil prices plunged last year, thousands of workers in the patch have been laid off.

The phone is ringing off the hook at the Credit Counselling Society with calls from people seeking help with unpaid bills and mounting debt.

“We’re busy,” said Nadia Graham. “We’re booking two to two and a half weeks out for a first appointment.”

Since oil and gas companies started slashing jobs, Graham said, the organization has received so many calls for help, it had to double its Calgary staff.

Many of the new clients struggling most are laid-off administrative or support staff, who earn less and have very little in the way of a safety net.  Others are trades workers who normally spend part of the month in work camps, and are suddenly facing higher food and utility costs at home, on top of no pay cheque.

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Graham encourages laid-off workers to:

  • Stop spending on restaurants and entertainment;
  • Ask family or friends for help;
  • Consider looking after the kids if your stay-at-home spouse can get a job faster outside the oilpatch;
  • Get an employed spouse to take on more hours or a second job.

Credit counsellors can also direct laid-off workers to community resources, such as programs for renters who can’t afford their utilities, or alternatives to the food bank once you have maxed out the number of allowed visits.

If you are unable to make payments, counsellors can:

  • Negotiate lower interest rates with creditors;
  • Help convert a severance package into a debt settlement;
  • Help you declare bankruptcy.
  • So what about dipping into your RRSPs for some quick cash? That’s a bad idea, according to Sterling Rempel, a certified financial planner with Future Values.

READ MORE: RRSPs -The basics to get you started and if they’re right for you

“It’s taxable, you’ll lose your contribution room and you can’t redeposit it to that RRSP without having new RRSP contribution room,” Graham said.

Instead, Sterling Rempel suggests:

  • Draining a Tax-Free Savings Account first (because they’re more flexible);
  • Check if you can cash out a part of a pension returned to you after a layoff, or cash in your employee shares;
  • Swipe the principal from your child’s registered education savings plan (RESP);
  • Withdraw cash value from a life insurance policy.
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“Focus on: What do I need to do in the immediate future and how can I position myself for when things get better?” Rempel added.

READ MORE: 5 dos and don’ts of tax-free savings accounts

Layoffs in Calgary aren’t just affecting oil and gas jobs, but also industries that service the oil patch, like hotel and restaurant workers.

Both the Credit Counselling Society and also Momentum offer money management classes and support.