6 ways to trim your budget when you think you’ve already cut spending to the bone

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The COVID-19 emergency has been a financial wrecking ball for millions of Canadians.

Whether you’ve lost your job, seen business activity dry up or witnessed your investments get pummelled in the stock market, you probably already feel like you’ve cut your expenses to the bone. Maybe you’ve given up on take-out food, trimmed down your subscriptions and forsaken online shopping.

Chances are, you aren’t spending any money on gas or public transit, either.

So what else is left to cut?

You may have already heard of the possibility to defer mortgage and other debt payments. But here are a few more other ideas to slash your budget:

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Pausing your car insurance

If you have two cars sitting in your driveway right now, consider pausing most of the driving-related insurance on your second vehicle, said Anne Marie Thomas of  However, you’ll still want to have coverage for theft, fire and other damage that can occur even while your car or truck is parked at home.

Remember that you must not drive the vehicle on which coverage is on hold.

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Other auto insurance savings

Even if you can’t give up on driving entirely, there may be ways to cut your auto insurance costs.

If you used to commute to the office and are now working from home, for example, call your broker or insurance company to inquire about possible savings.

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Even if you drive just 10 km a day to work every day, that 20-km round trip you’re no longer taking on a daily basis lowers the insurer’s risk exposure and could result in a lower premium, Thomas said.

The Insurance Bureau of Canada (IBC) has estimated this could collectively save Canadian consumers $600 million.

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But consumers may need to take the initiative to communicate the temporary change in driving habits to their insurance company, Thomas noted.

“Don’t leave any money on the table,” she said.

Many insurers are adjusting premiums going back to when the lockdown began, she added.

As soon as the economy reopens and your driving routine goes back to normal, though, you’ll need to make sure to reset your coverage to where you need it, she said.

IBC said in early April premium reductions offered by its members would continue for “the next 90 days.”

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Deferring auto and home insurance payments

Like many lenders, insurance companies are also offering flexible payment options on home and auto insurance to customers who are struggling financially amid the pandemic.

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IBC has also said its members are waiving the fees they would typically charged when customers have insufficient funds to cover their premium.

Still, it’s important to proactively ask for a payment deferral before any missed or late payments, Thomas said.

“You don’t want a registered letter in the mail cancelling your coverage,” she said.

That could damage your credit rating in some instances and will make it more expensive to get coverage in the future, she added.

Delaying property taxes 

From Montreal to Calgary, many municipalities across Canada have been letting residents temporarily postpone payments on property taxes. This may benefit tenants, too, if their rent normally covers property taxes.

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Income taxes during COVID-19 pandemic

Postponing utility bills

Throughout Canada, the COVID-19 emergency relief measures often extend to utility bills.

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For example, in addition to introducing a grace period for property taxes, Toronto is also extending the due date for water and waste charges by 60 days.

In British Columbia, BC Hydro customers who have stopped working because of the novel coronavirus may qualify for three months of bill credit.

Refinancing your mortgage rate

Refinancing your mortgage could also be a way to lower monthly payments, whether you’re switching to a lower interest rate or stretching out your amortization period.
“There’s been a mini-refinance boom since COVID came on the scene,” said Robert McLister, founder of rates comparisons site
But many borrowers are discovering lenders aren’t as keen on refinancing as they were before the pandemic, he added.
“If you’re hoping to refinance and you work in a non-essential industry or have non-guaranteed income, you’ll find it tougher to get approved with a mainstream lender,” McLister said.
And while you may still find plenty of alternative lenders ready to help if you have enough home equity, those loans come with big rate and fee premiums, he warned.
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Worries about debt loads and property values are also making lenders more conservative.
“If you need every last bit of your equity to consolidate other debt, that could be a turn-off to banks,” McLister said.
And if you live in an area where home values look shaky, lenders “may offer a lower mortgage amount than you had hoped,” he added.
If you’re thinking of breaking your mortgage early, you should also watch out for prepayment penalties, McLister said.
Today’s low interest rates have likely widened the difference between your current mortgage rate and something called the “comparison rate,” the rate at which the lender claims it can re-lend the money you’re paying back early, McLister said.
That difference is the basis on which prepayment penalties for fixed-rate mortgages are calculated. And a larger difference means steeper penalties.
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“We just had one bank customer pull out of a refinance because posted rates dropped, which boosted his penalty to $20,000,” McLister said.

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