this might seem like a daft question

blackserqet

I am about to be made redundant and will get some money which I hope will keep me going for several months. However, several friends have told me I should use the lump sum to pay off my credit cards and get a job asap.

Given that I am looking for a job in my field, and have irons in fire, talking to people etc. and every single day I do SOMETHING to find a new job, and it all takes time, I think that I should only pay off the credit cards IF AND WHEN I get a new job, (or as much as I can pay off, depending on how much time has passed) as it seems pointless to leave myself likely to lose house and car if I don't get a job straight away.

Does anyone else on here think I am mad for keeping my options open, or do you think I should use the opportunity to pay off the cards, (how wonderful that would be) and take a chance on getting a job, or just keep going for a few months ...sorry if the answer is really obvious, but my friends have planted this seed of doubt.

Thanks for any advice

GeorgeUK

It's a matter of perspective and not a daft question at all.

If most people got a lumps sum of money, the first thing they would do is pay off the debts.
This way you are saving by not paying any interest on the debt.

As you say though, the problem would be if you were then left with the prospect of losing the house.
What do you do then? Start using the cards to pay for everything and try to juggle one to pay off another?

Nothing is certain right now so it's probably best to look at all options and weigh both the good and bad points.

With your mortgage, if you were made redundant, would the bank make the payment for you for a year? Same on the credit cards - do you have payment protection insurance on them?

If there was PPI (and they actually paid out) then they may do this for a year, so why should you pay off the debts when you have already paid for this insurance?

Lots of points will come up here, but it's not just a straightforward yes or no to this. There are lots of other things to look at and weigh up.

Good luck with the job hunting.

DarkConvict

Not daft, but very hard.

The recession is pegged to only get worse, so the job situation is so unsure at the moment.

Personally I would try and pay off the debts (atleast those with high APR) as it saves you money. If you need to get more credit you can hopefully get lower interest cards. Its all got to be paid at some point anyway and you always have living expenses every month so it all comes around.
If new cards get interest rate increases over time, reject them and get a new card at a lower APR.

If PPI is on the credit, do consider reclaiming it if its of no use and was misold.

tking

What about writing yourself a budget for 6 months out of work - include mortgage, groceries, car costs, utility bills - everything. Then keep this amount of money from your lump sum and use the rest to pay off the highest rate debt. Worse case scenario if you are still unemployed after 6 months you sign on and use the credit cards again.

Best of luck.

Marisco

I agree with tking. And it also depends how much redundancy you get, how much debt you have and what interest rate they are, and also how quick you think you'll get a job. I know the last on is difficult, but you know what the situation is in your field of work. Good luck

Hannah_10

Sorry if this is another daft question but why would you lose the house and car? I mean if we're talking about them being on a mortgage and secured HP then those are a priority over unsecured debts (like cards). That said, clearing the cards is something you can't get any assistance with, you can however get Housing Benefit/Local Housing Allowance to cover the interest on your mortgage if you are out of work and JSA to pay for food. To find out if you could be eligable try here http://www.turn2us.org.uk/