Credit-free Christmas?

Yeah, right; the pandemic's impact on consumption is making this advice tough to follow in an increasingly pay-with-plastic world

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When times are tough, Manitobans are known for rising to the challenge.

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Opinion

Hey there, time traveller!
This article was published 12/12/2020 (727 days ago), so information in it may no longer be current.

When times are tough, Manitobans are known for rising to the challenge.

This year, however, is especially difficult. Topping the list of troubles are finances — perhaps more so now with the seasonal rituals of consumption upended by the pandemic.

But as mentioned… Many of us (excluding this author) are ’Toba tough.

Look no further than Nichole Schaubroeck — otherwise known on TikTok and Instagram as ‘Coupon Cutie Canada.’

Out of work for months — even before the pandemic — after being injured in a car accident, she has turned a passion for couponing into a modestly lucrative gig offering tips on using coupons, cash-back rewards and a host of other ways to cut the cost of consumption, including during this holiday season.

“The amount of money you can save from couponing and price-matching is such a huge help especially with the way the world is right now,” says the 37-year-old in La Salle, who provides tens of thousands of social media followers with the latest deals along with techniques on how to stack those deals with other deals to slash the price of, for example, a Barbie doll from $10 to $2 and change.

Of course, many consumers are looking for ways to cut their spending as their income also has been cut by the pandemic. That’s one reason why an organization representing Canada’s non-profit debt counselling agencies is promoting a ‘credit-free Christmas’ this year.

“We feel this is an important message as Canada’s cities enter the second phase of lockdowns,” says Michelle Pommells, CEO of Credit Counselling Canada.

“We see the rise in Canadians who are anxious about their debt situation, and we would encourage people to give a lot of thought how they can do Christmas this year in a credit-free way while supporting their local businesses, of course.”

Long story short: Try not to use credit cards and add to an already mountainous pile of debt (if you’re among the hundreds of thousands carrying a rolling balance).

Indeed recent numbers from a long-running, annual debt survey by Manulife Financial has found the landscape for indebtedness is particularly rugged in 2020.

“We’ve been conducting this survey for 10 years and we’ve clearly found that COVID-19 has had a negative impact in many key areas of lives of Canadians — whether that’s debt, housing or mental health,” Rick Lunny, CEO of Manulife Bank of Canada at Manulife Financial.

For example: “About half of Canadians who are in debt are saying it’s having a negative impact on their mental health,” he says.

To boot: one-third of Canadians polled indicated they were financially unprepared for the pandemic.

“Now perhaps that doesn’t sound all that surprising, but we found a sharp disparity,” Lunny adds.

That’s where that K-shaped recovery, economists have been discussing, comes into play. One group of Canadians are feeling little financial impact. Heck they may even feel richer with the stock market soaring. And then the other half are struggling, out of work or toiling on reduced hours.

Sure a recent story in the Globe and Mail found, on average, households across Canada got $7 in support for every dollar of lost income, perhaps indicating some of us — i.e. low-income youth — may actually have more cash flow than normal.

But Manitobans, flush with government money, are not what a local non-profit debt counselling agency is seeing on Zoom calls with clients. Although financial support has kept many households from slipping over the edge, these measures are sometimes causing more money problems for individuals who were already in trouble before the pandemic.

“Our counsellors are saying the cases are quite complicated now with all the new subsidies and benefits,” says John Silver, executive director of Community Financial Counselling Services.

That includes taxes owing on government benefits — like the now defunct Canada Emergency Response Benefit (CERB) — and higher debt-loads following six months of payment deferrals on mortgages and other loans.

Add in that some folks have had loved ones pass away from COVID-19, leaving behind estates to deal with, and it’s an avalanche of struggles for the financially fragile, he says.

“We’re finding people are having quite a difficult time now, and we expect to see more of it as this continues.”

Silver adds the holiday spend will likely pose more challenges — though he notes online shopping may prevent the typical in-store impulse buying.

Of course, the tried and true ways not to overspend remain as evergreen as an unfelled Christmas tree.

“The tips are the same as always: Know how much money you have to spend, and make a budget,” Silver says. “Your budget doesn’t have to be completely detailed; it just should include all the kinds of expenses you’re going to have.”

Another tactic, if you’re carrying credit card debt, is don’t use credit cards. Yet a credit-free Christmas — as exalted by the national organization representing credit counsellors — is increasingly hard in a world gone e-commerce, says Sara Kesheh, vice-president of money at RatesDotCA.

“While I love the advice of going credit free, it’s a bit impractical in our day and age.”

Still, she advises those who plan to spend with plastic should better understand how credit cards work. According to RatesDotCA research, we don’t really get how they work all that well.

Exhibit A: 40 per cent of Canadians don’t fully grasp the 21-day grace period on credit card spending. “Most people think during those 21 days no interest is being charged, but if you don’t make your payment on your credit card when the payment is due, interest will get charged going back to your transaction date.”

Exhibit B: Many fail to realize interest is charged daily on the amount owing, she adds.

This lack of understanding leads to compounding financial pain… daily.

Of course, folks seeking to reduce holiday costs (outside of budgeting) can look to couponing and other savings deals — along with advice from Manitoba’s own ‘Coupon Cutie.’

“I’m all about the learning experience,” Schaubroeck says.

“I will post a deal and then do a video of how to do it, and then I do a recap to make sure everyone understands.”

Additionally if you’re going to spend, better to shop local.

Further to that point, why not do it with frugal flair purchasing second-hand fashionable finds for friends and family?

Once again, another Manitoban has carved out an economic niche with Peg City Thrift, an online shop marketed via social media like Instagram, to help the legions of home-bound.

The enterprise “started as a ‘side-hustle’ and after burning out of my social services job during the first wave of COVID,” says owner Genevieve Boken, 28.

“Many people think shopping at Amazon or box stores online will save them money and get them items quicker, but I can tell you first-hand that the quality of goods you get from a local shop is how to get your bang for your buck.”

And you might just save a little money — while helping another cash-crafty Manitoban at the same time.

What could be more in the holiday (spending) spirit than that?

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