CERB isn’t a blindly generous giveaway by the government. This is something some people have trouble understanding, and one of the reasons is that they think that the government has way too many resources, and a CERB payout wouldn’t even put a dent in the coffers.
The truth is that CERB has costs the Canadian government a lot of money; the government will likely spend over $70 billion in CERB payments. It’s money that most people believed would have been better for rebuilding the economy in a different way.
While CERB has been enormously helpful for many people, some have taken undue advantage of it. Many people received CERB payments even when they weren’t eligible. Some people are even avoiding finding work, just to enjoy the CERB benefits. And these are the people that CRA might be coming for. If people don’t do the right thing and send the CERB payment back if they aren’t eligible, the CRA might get inspired to take strict action.
An Ipsos poll’s result indicates that 85% of people believe that individuals who got undeserved CERB payout should be fined.
Living without CERB
If you haven’t found a job yet, and you still don’t qualify for CERB or CERB extension, you might be in trouble. The first thing you can do is cut your expenses down to bare necessities. For most people, that would be housing and food. If you rent, you can ask your landlord to cut you some slack. If that’s not an option, you may need to look into your assets, whatever they may be.
An expensive watch, a gaming console, your car, even branded clothing that you might’ve gotten when times were good can be sold for cash. An alternative is borrowing from friends or family, but that usually doesn’t end well. And even if you can’t find a full-time job, there might be plenty of work out there that you can do part-time. You can also look for some online work.
If you really make an effort and are willing to work hard, there is no reason why you can’t make enough money, even during the pandemic, to put food on the table and keep a roof over your head. If your lifestyle is too expensive to be supported by part-time jobs, you might have to make some crucial changes.
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Alternative income source
It’s important to set aside enough that you can live six months to a year without income. You never know what unexpected turns your life may take, and having an emergency fund instead of relying on government handouts can be significantly better. So, as soon as you have an income source, start saving and investing.
If you want a nest egg set up early, and with little capital, you may have to take a bit of risk. One such risky stock would be PyroGenesis Canada (TSXV:PYR). The company is one of the market leaders in advanced plasma processes. They cater to a number of different industries, including defence, manufacturing, and oil and gas industries. The company has a market capitalization of $654 million.
It’s a penny stock, currently trading at $4.4 per share, which, when we look at its price-to-book ratio of 38, seems overvalued. The growth numbers of the company are a bit skewed, since it grew over 600% in one year, off-shooting its five-year CAGR, making it 65.44%. But if the company can sustain this pace for just five more years, just $100 a month invested will result in a nest egg of $27,800, which is more than a year’s worth of CERB.
If you are not eligible and still received CERB without any intention of returning it (hoping you might slip through the cracks), you are on the wrong track. As a Canadian, you will be dealing with CRA until your very last days, and standing on the wrong side of the agency isn’t wise. So, even if the government doesn’t come up with a specific fine or punishment, you should return the payment if you aren’t eligible for it.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Adam Othman has no position in any of the stocks mentioned.