Experts from JMMB Bank have encouraged Jamaicans to exercise good debt-management practices during the COVID-19 crisis.

Speaking at last week’s edition of JMMB Group’s live webinar series, the experts which included Owen Ferguson, branch manager and Jerome Jarrett, manager of client partnership both of JMMB Bank advised citizens to avoid high interest debt, manage their expenses, and seize opportunities that may present themselves.

“If you do not have an emergency fund, pull on lower interest debt in the short term, such as a cash-secured loan. Avoid high-interest debt, as much as possible, in the form of credit cards, as tempting as this may be [because of the convenience],” Jarret said while speaking in the live webinar hosted by JMMB’s Kerry-Ann Stimpson.

He advised that people should first seek to use their emergency fund, which should be savings that can cover between three to six months of expenses, or cash on hand, for important and unplanned expenses.

Warning that high-interest debt can easily spiral out of control and worsen your financial situation and credit worthiness, Jarrett also proposed another alternative which is debt consolidation loans.

“While this usually requires more time for approval than a credit card, the upside however, is that the loan offers a lower monthly payment and is more manageable, over the long term,” Jarret noted.

He also added that “the key to managing your debt during the uncertain times, resulting from the impact of COVID-19, is to reach out to your banker early and share a concrete picture of your unique circumstances. Update over time, as you get more information and [where] any other changes take place”.

Owen Ferguson, manager at the Knutsford Boulevard branch, outlined the need for customers to now adapt or reinforce the fundamental principle of budgeting.

Indicating that the budget should be a written outline of all income and expense for the month, noting that a budgeting exercise will allow individuals to compare their income and expense, and look at ways to cut back, in light of the uncertainties and far-reaching impact of the pandemic.

“This activity can be done on a household basis, so that the entire family can make their contribution in managing expenses or increasing income. Now is the time to manage your expenses by delayed gratification for more certain times,” he shared.

Ferguson, in endorsing the point of decreasing high-interest debt to manage expenses, also urged clients that if they have the opportunity to reduce debt, with any lump-sum payments, they should seek to do so— targeting high-interest debt first.

TAKE ADVANTAGE OF OPPORTUNITIES

In light of the expected financial challenges, Jarrett posited that there was a silver lining and urged individuals to seize opportunities to acquire assets and new skills.

“If you have the financial means to undertake additional debt, while not undercutting your emergency fund or jeopardising other long-term goals, take on ‘good debt’ or assets,” he said while noting real estate as one such asset.

He said that for people who were already in the real estate market, it may now be a good time to buy, as prices have been lowered citing Government’s recent reduction of interest rates on National Housing Trust (NHT) mortgages.

He however emphasised the need for prudence and sticking to one’s budget in undertaking such.

He further said that, with more people working from home, “the added time saved from commuting or reduced working hours, could be reallocated towards expanding or starting a side hustle, where possible, in a bid to boost earnings”.

— KELLARAY MILES