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In the face of the economic contingency due to COVID-19, it is better to control your debts

April 1, 2020

Experts recommend restructuring debts to reduce interest payments and consolidate them into a single financial instrument.

4 min read

The opinions expressed by collaborators are personal.

In the face of the economic contingency due to COVID-19, it is better to control your debtsIn the face of the economic contingency due to COVID-19, it is better to control your debts

To deal with the economic slowdown, the volatility of the markets and the movements in the exchange rate caused by the health emergency caused by COVID-19, experts suggest strengthening your finances.

And it is that the forecasts are not very encouraging: as warned by the Mindial Labor Organization (ILO) , companies around the world are preparing job cuts, bonuses and benefits, so they are expected to lose income for workers around the world the world, of at least 860,000 million dollars at the end of 2020.

It is well known that the Mexican encourages little saving through formal instruments. According to the 2018 National Survey on Financial Inclusion, eight out of 10 people constantly save. However, only 15% do so in banks, cooperatives or investment funds or other formal mechanisms. In fact, only 1% invest in funds, which creates greater risks. As if this were not enough, the ePesos Financial Wellbeing Survey indicates that 62% of workers say they do not feel in control of their finances.

“There are workers who are over indebted and, given the current situation, it is time for them to think about seeking debt restructuring schemes, in order to reduce interest payments and settle their loans,” says eNomina CEO Gustavo Boletig.

The manager recommends consolidating debts into a single instrument. Especially now that in some industries or companies no bonuses will be given or double shifts or any extra payments will be paid due to the decrease in demand for various products and services by COVID-19.

“In these critical moments, we must seek the lowest interest rates and take all debts to that instrument. For example, if you have a loan at a rate of 15% per month, and there are financial institutions that offer 4% per month, then you have to choose to move all the credits to where you have the lowest percentage, ”he says.

Employees in the formal sector can access through their companies products in which they can consolidate debts in financial institutions and pay them via payroll. And it is that, being a direct discount to payroll, risk is reduced and the interest rate falls.

Payroll credit is one of the most reliable and accessible instruments for workers, because the employee contracts it directly with the financial institution that best suits their needs and their employer takes the corresponding payment to transfer it to the lender on a monthly or biweekly basis.

There are many ways to contract a loan of this kind, for example, eNomina has a free technological solution for companies that grant it as a benefit to their employees.

The advantage of this financial tool is that it prevents a worker from going into debt above 30% of his income , which is calculated based on salary, in order to avoid damaging the employee's finances.

He stresses that at no time is the employer responsible for a lack of payments, but rather that the company that granted the credit and the worker will have to reach an agreement to avoid a negative report in the Credit Bureau .

Currently, the eNomina technology solution is available to 550,000 users across the country. Gustavo Boletig recommends that Mexican workers do everything possible to consolidate their debts into one to overcome the emergency, so that less impact is achieved in the pocket.

Even, he says that it is possible that after the contingency, many workers will seek to level their finances through the start of a business that allows them to replace their income. The recommendation is that if you choose a loan to start this initiative, you obtain one at competitive rates, which, again, do not over-indebt them.

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