This 39-year-old mom lost both her jobs in the pandemic and is more than $110,000 in debt. Will she have to sell her home to survive?

Millennial Money is a weekly submission-based series that provides financial advice to millennials in the GTA. Read the full series here.

For 39-year-old Naomi, the pandemic has been absolutely devastating. Before COVID-19 times, this mother of two worked six to seven days a week as a part-time flight attendant and bartender. From the two jobs, she could bring in more than $ 5,000 a month — enough to cover her family’s expenses and pay off her mortgage.

Now, that has all changed as she watches Ontario’s COVID-19 numbers rise and her sectors become more restricted.

“My head is spinning. In order to survive, not lose my house, pay my bills and put food on the table, I need both of my incomes,” Naomi said. “If I can’t get either one of these jobs any time soon, I have six to eight months left before debating selling our home.”

Right now, she’s over $ 110,000 in debt and owes the government $ 8,000 in taxes from the Canada Emergency Response Benefit (CERB) and Canada Recovery Benefit (CRB), something she can’t wrap her head around. “Even though my work history shows that for more than 13 years I have worked two jobs … I have to pay it all back? I’m never going to be able to repay that amount.”

Currently she’s receiving around $ 2,000 a month in CRB. It’s not nearly enough. “It’s not my choice to have the government cancel international flying. It’s not my choice for the government to ban restaurant dining. I have always relied on two incomes to pay my bills,” Naomi said.

On top of those “life-altering changes,” her mental health is suffering due to the financial stress and “worrying about putting dinner on the table.” The only blessing she has is selling a book she wrote when she was still working as a flight attendant that brings in some money here and there.

Naomi’s main goal is to get back on track. “I want to pay off my huge debt, and I’ve had to refinance my mortgage,” she said.

Day to day, she’s spending most of the time at home. No more date nights or ordering out — just buying the essentials. “We don’t have the money. We’re not doing anything,” she added.

We asked Naomi to give a snapshot of her weekly spending to get an idea of her finances.

The expert: Jason Heath, managing director at Objective Financial Partners Inc., on Naomi’s financial woes.

Naomi was working two jobs and seven days a week prior to the pandemic. Unfortunately, both of her employers — an airline and a bar — have had recurring closures or layoffs. Now, she’s entirely reliant on the Canada Recovery Benefit of $ 1,000 paid every two weeks. As it stands, the CRB can be paid for up to 19 eligibility periods of 38 weeks between Sept. 27, 2020, and Sept. 25, 2021. People like Naomi are no doubt hoping for more relief measures in Monday’s federal budget.

She was making over $ 5,000 a month and her expenses were about the same prior to the pandemic. But now, at $ 2,000 per month, she’s spending $ 3,000 more than she is making every month. That does not even take into account her interest costs on $ 110,000 of debt.

Naomi expects to owe $ 8,000 of tax on April 30 for the CERB. The good news is the Canada Revenue Agency is giving an extension to April 30, 2022, for those who owe tax for 2020, have less than $ 75,000 of taxable income and received eligible COVID-19 support benefits.

I am guessing Naomi’s $ 110,000 of debt does not include her mortgage. She has $ 1,800 per month of mortgage payments, so unless her mortgage amortization is five to six years, I gather she is referencing her line of credit and credit card debt. She may be able to improve her cash flow by pushing out her mortgage amortization to lower the payments. She may be able to refinance her home to gain access to more credit, or more low-interest-rate credit, by way of a secured line of credit. However, that may be tough given she has been unemployed for most of the last year and may just be a temporary solution anyway.

Selling her home comes at a financial cost as well, given she will have to pay real estate commissions of four to five per cent and may have a mortgage penalty. But at least it could allow her to clear out her debt and have a little bit of breathing room. Home prices in the suburbs like Newmarket where she lives have gone up significantly over the past year, so she has that going in her favour.

Selling her home also comes at an emotional cost. Home ownership has become an implied obligation of Canadians, but renting is not a failure. Young people may be better off renting than buying. People in transition may be better off, too. In Naomi’s case, it may be a temporary measure to make sure she can still pay the bills and has some time to get back on her feet. The key, for her, is being ahead of things. If her credit limits are close to maxed, she may soon find herself under extreme pressure rather than selling calmly and proactively.

The result: She spent less. Spending in week 1: $ 330 Spending in week 2: $ 280



How she thinks she did: “I’m not worried about my daily spending,” Naomi said, adding that for a while it’s only been the bare necessities.

“Groceries, occasionally the pharmacy, and that’s about it.”

Takeaways: After taking a look at the advice, Naomi recognizes she’s still in a period of limbo as both her previous employers aren’t returning to normal any time soon. “Numbers keep rising, we keep waiting,” she said. “I hope that I can get back to at least one of my incomes.”

For now, the best she can do is to plan next steps. “I’m hoping to be able to refinance with a blend and extend,” Naomi said, noting Heath’s advice. “Of course, this is only a temporary solution but I’ll take anything right now.”

Despite all the hardships, Naomi is fortunate that she does have a home that’s nearly paid off. “It’s hopeful to know that prices even in Newmarket are going up, and I can perhaps turn to selling the home as a solution,” she said. At the same time, she recognizes that it will be a difficult step for the family.

“Selling after 15 years would be really tough. Having to move my kids from their friends and family would be very hard. I’m not sure I could do that to them, honestly,” Naomi said.

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