Sunday 12 July, 2020

JMMB shares tips for good debt management during COVID-19

iStock image

iStock image

JMMB Bank experts are encouraging all Jamaicans to exercise good debt management practices during the coronavirus (COVID-19) crisis, by avoiding high-interest debt and managing their expenses, while seizing opportunities that may present themselves.

The guidelines were given during JMMB’s weekly Goal Getter Live webinar. The engaging webinar was moderated by JMMB Group’s chief marketing officer, Kerry-Ann Stimpson, via its social media channels namely: YouTube, Facebook and Twitter.

The panel also featured Owen Ferguson, branch manager at JMMB Bank's Knutsford Boulevard branch and Jerome Jarrett, manager of client partnership.

In the wake of COVID-19, many persons have been hit with unplanned expenses as they seek to make preparations or shift their way of operating to adjust to the current challenges.

Jarrett advised that persons 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.

“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).”

Jerome Jarrett, manager - client partnership, JMMB Bank.

A warning was also issued that high-interest debt can easily spiral out of control and worsen your financial situation and creditworthiness. An alternative to higher interest debt proposed by Jerome Jarrett was a debt consolidation loan, though this usually requires more time for approval than a credit card, he admitted.

The upside, however, is that the loan offers a lower monthly payment and is more manageable over the long-term.

Sharing another nugget, Jarrett said: “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 (this) over time, as you get more information and (where) any other changes take place.”

He also underscored JMMB Bank’s partnership approach to work alongside clients who may face challenging financial circumstances, to identify win-win solutions.

More than ever, financial institutions stand ready to provide options for their clients in these times, he assured, highlighting that many have announced special offers in light of the economic challenges brought about by the coronavirus pandemic.

Owen Ferguson, branch manager at JMMB Bank – Knutsford Boulevard

It is critical therefore to adapt or reinforce the fundamental principle of budgeting at this time, JMMB stressed.

“(Your budget) should be a written outline of all your expenses and incomes for the month … including smaller discretionary items, that may seem insignificant, as they add up.

“This activity can be done on a household basis, so that the entire family can make their contribution in managing expenses or increasing income," said Owen Ferguson, branch manager at JMMB Bank – Knutsford Boulevard.

The budgeting exercise will allow individuals to compare their income and expenses, and look at ways to cutback in light of the uncertainties and far-reaching impact of this pandemic. “Now is the time to manage your expenses by delayed gratification for more certain times,” said Ferguson. 

He further underscored his colleague banker’s point, to decrease high-interest debt in managing one’s expenses. “If you have the opportunity to reduce your debt, with any lump-sum payments, do so, targeting high-interest debt first,” Ferguson said.  

Take advantage of opportunities

In spite of the challenging financial times expected, Jarret outlined there is a silver lining to the cloud of financial challenges. And he urged individuals to seize opportunities to acquire assets and new skills.

He said: “If you have the financial means to undertake additional debt, while not under-cutting your emergency fund or (jeopardizing) other long-term goals, take on ‘good debt’ or assets.”  

One such opportunity is real estate, and now may be a good time to buy as market prices may be lowered and the government has reduced interest rates, as at April 1, 2020, for National Housing Trust (NHT) mortgages. He, however, cautioned prudence and staying within one’s budget. 

Jarrett also outlined that, with more persons 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.

JMMB’s weekly webinars, and the various topics explored, are based on the positive feedback from the JMMB Group’s online community, said the company’s marketing exec, Kerry-Ann Stimpson.

The series also aims to give hope, lend expertise and share solutions that will assist clients and the wider public to navigate the crisis, and will serve as an avenue to address a cross-section of topical issues on an ongoing basis, such as: “The Future You - After COVID-19” and “Personal Money Perspectives”.

Stimpson added: "This online series underscores JMMB Group’s commitment to being in our clients’ world, with their best interest at heart.”

Get the latest local and international news straight to your mobile phone for free: