Higher Interest Rates Could Be In Canada's Future - How To Ensure You'll Survive Them | Refresh Financial

Higher Interest Rates Could Be In Canada’s Future – How To Ensure You’ll Survive Them

News outlets all over Canada are speculating that higher interest rates could be in our future. After the Bank of Canada announced this week that it would be looking at whether or not to hike the interest rates, experts have suggested we could see an increase by early 2018.

The problem with interest rate hikes is that we already know more than half of Canadians are just $200 away from not being able to meet their financial obligations every month. Any increase in interest rates could have the potential of seeing some Canadians forced to foreclose or declare bankruptcy.

So, how can you make sure you’re not one of them? Here are a few simple steps to protect yourself:

1. Decrease your monthly expenses

If you’re one of those Canadians who is $200 away from not meeting your monthly financial obligations, it might be time to pull out the big guns and consider riding your bike to work or maybe taking the bus. Cut out the expensive meals in favour of one-pot, veggie-rich dishes that cost pennies per serving. Homemade coffee instead of Starbucks and restrict yourself to only buying clothes at thrift shops. Whatever possible way you have to lower your monthly expenses, do it. Make the gap bigger between your expenses now and financial ruin.

2. Pay down your debts

Go at your debts with the ferocity of a lion. Use whatever money you can scrounge up to make bigger payments than your minimums and bring what you owe down as fast as you possibly can. The lower your debts are, the less they will cost you and the more wiggle room you’re going to have in your month-to-month spending.

3. Save an emergency fund

If a higher interest rate is going to make things tighter for you month-to-month, then little things like car and home repairs could be a real threat to your well-being. So, cut down where you can and save the rest in an emergency fund for those inevitable moments when our brakes need fixing or the garage door gets jammed shut.

4. Ask for a raise at work

If you’ve been a loyal and reliable employee, there is nothing wrong with asking for a raise every year or so. Even a slight raise can make a difference, so get asking!

5. Increase your income in other ways

There are plenty of options here. You can either get a second part-time job for some extra cash, or you can think of ways to bring in extra dough working from home or offering services. Take stock of all the skills you have and ask yourself if any of them are marketable to businesses or individuals in your neighbourhood. If you’re a web designer by trade, offer to design or webmaster sites for your local business owners. If you’ve got good handyman skills, post flyers around town that you can help homeowners with small issues around the house. Perhaps you’re great with kids - offer babysitting services. Maybe you’re great with animals, so offer dog-walking services. The list goes on and on. Earning a few extra bucks can really go a long way towards financial stability in the face of an interest rate hike.

An interest rate increase isn’t going to have much of an effect on the prepared, so get working now to ensure you’re still able to meet all your financial obligations when and if it happens.

What other ways to prepare for an interest rate increase can you think of? Let us know in the comments!

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