What should I do?

tegai1

With the recession now official and the possibility of me being out of work higher than ever, I really don’t know what to do with my spare cash every month.
I have in savings enough to last 4 months out of work (finally). And my plan was that once this was done to overpay the mortgage to a max of £500pm. Now things are looking the way they are in the economy I was wondering if I should be sticking my money into the mortgage as I can’t get at this money should the worst happen and I’m out of work for more than 4 months.
What do you think, should I continue with my original plan or should I split the spare cash into savings/mortgage 50/50? Or savings 100% so that I have all the money possible to support my family come dooms day!!
Thanks in advance

Welshlassie

If you were to be made redundant how much would you get, if anything?
How likely is it you would be able to get another job within 4 months? a) doing what you are doing now, b) doing anything?

Follow Martins advice in the recession proofing article, if it is a real possibility you are going to be made redundant, start living as though you are now. That means cutting back on everything you can and saving any spare cash, although do make sure all other debt (other than the mortgage) have been paid off.

That way if you are made redundant but find another job quite quickly at least you could then put an extra you saved into you mortgage at this point.

tegai1

Thanks for the reply,
I'm a contractor so I know for sure I’ll be out of work in two months. However I shouldn't be out of work for more than 4 months, the most I’ve been out of work for in the past is one week. Having said that things aren't looking as rosy as they have been.
I've always said worst comes to worst I could get ANY job to pay the bills so a 4 month buffer is enough I think.

So do you think saving money is better than overpaying the mortgage in my case? I think for me it's a confidence thing - if I knew I had enough cash then I would put every spare penny into overpaying. I guess maybe it's a question of drawing a line on how much cash I need for a rainy day. Which is my problem! I don’t know how heavy this economic storm is going to be!!! :mad:

dimbo61

No one knows and you job may be safe or not safe
As a contractor and self employed ! I would build up 6/9 months of income in a cash ISA and regular saver accounts ( this also helps when the TAX bill arrives )
Pay off any other debts ( charging interest ) and dont sign up to the gym, sky HD etc at the moment.
Take a look at all your bills and see if you can get better value ( life assurance, home+contents, car, VAN !)
Think of offset mortgages when you come to remortgage and overpay if the job security is sorted. GOOD LUCK