Growth & Jobs |Surviving a salary cut during the COVID-19 crisis

Like most Jamaicans, *Simone Peart has been doing her best to keep her head above water and to stand up to the challenges that have affected her life, due to the COVID-19 crisis.

While she is fortunate to retain her job, her salary has been slashed as her employer faced reduced revenue inflows caused by the pandemic.

“This was a devastating blow as my company announced very early in the crisis that they would be cutting salaries for the rest of the financial year. That meant 11 months of operating on a reduced salary,” Peart noted.

“The decision signalled to me that I needed to make drastic changes in my finances if I was going to survive this challenging period.”

For the Kingston-based resident, one of her first acts was to start looking at how she was spending her salary and finding ways where she could cut back.

“For example, I had two credit cards, and do I really need two credit cards? I would be taking home less money, had other bills, and a mortgage to maintain. Plus, I knew that if I had any kind of emergency, health or otherwise, I would need to have some savings as a financial cushion to fall back on,” she reasoned.

Peart said her next step, therefore, was to reach out to her creditors to see what kind of assistance or financial reprieve she could get.

“I got in touch with my mortgage financier, JN Bank. I have been a member for years, and this would be the fourth year since I took out my mortgage with them. I wanted to find out what they could do for me to assist me to survive this pandemic,” she related.

As a JN member, Peart was able to benefit from a six-month moratorium on her mortgage payments, which means that she was granted a deferral, or a temporary pause on payment.

Peart, who works in the field of telecommunications, was also able to convert her credit card debt into an unsecured personal loan, which offered reduced monthly payments and a lower interest rate.

She pointed out that despite the uncertainties associated with COVID-19, this assistance has provided her with some level of comfort as she navigates the remainder of 2020.

“The most important thing is that there are no sleepless nights. I am not thinking, ‘Lord, what if this or that happens? What if I get laid off? How will I manage?’ At least I know that I have made some arrangements to alleviate the financial hardships,” Peart reasoned.

GOOD FINANCIAL EXAMPLE

Rose Miller, head of the JN BeWi$e financial-empowerment programme, pointed out that Peart's actions were good examples of how to navigate one’s way through a sudden financial crisis.

“She was very wise not to panic, but rather, to move quickly to make drastic financial adjustments. Her first move of cutting back on her spending was a smart decision as that helped to make room in her budget for the reduced salary,” Miller said.

She also noted that it makes good financial sense for persons who are facing economic hardships due to the COVID-19 pandemic to consider accessing a moratorium on their loan payments.

“What this does is to grant you a grace period from your mortgage payment, and this way, you avoid defaulting on your loan and possibly going into foreclosure,” she explained.

*Name change on request