Sorting Out My Finances

shaz77_2

Hi All,

As a new year looms and faced with the possibility of redundancy in March 2013; I wanted to sort out my finances to ensure everything is maximised. At the moment I have the following portfollio

Premium Bonds - £200.
Current Account - £19,000.


Student Loan - £5000.
Mortgage - £149,000.

My salary is £21,500 and if I get made redundant my pay off will be £13,000.

I also have a part time job that pay £3000 and if I get made redundant I can secure more hours here which will push me up to between £6000 - £7000.

What changes if any can I make to put myself onto a sounder financial footing?

drjones

You sound like you're in a fairly sound position currently, even given the prospect of redundancy. You have a good sized buffer of savings to cover your mortgage and other costs, as well as a plan to increase your income somewhat if you do lose your job.

I don't think you should make any major changes at this point, given that your financial situation may change significantly in the near future, but have a couple of suggestions:

1) Unless you have a Santander 1-2-3 current account that's paying 3% gross on that £19,000 it would be worth splitting the majority of your savings between a high interest regular saver, an ISA, and an Easy access savings account - savings rates aren't great, but they'll beat current accounts. Or, alternatively, just get a Santander 1-2-3 account (through Quidco so you get £55 cashback!).

2) Don't lock any of your money away either by investing in any fixed term savings or by overpaying on your mortgage, for now. Even though both of these options would give a better return than current instant access savings rates. You may need access to your money if you are made redundant.

donkingkong

I'd be applying for new jobs between now and March.

marathon_man_3

Are you able to top up your savings, currently, from your earnings?

shaz77_2

My current account earns 0% interest on savings - I am currently have a Danskea Choice.

I'm tempted to either switch to Halifax and get £5 per month or to Bank of Ireland who pay a £100 switching fee.

I agree tying up my money is not a good idea although I dislike the idea of £19,000 sitting in a current account doing nothing.

Any

If you do not want to tie up any money (though I do think you could tie up at least some, for 12 mths + as even if you were made redundant, with the second job etc you wouldn't need the full £19k in the next 12 months, especially with £13.5k pay off - or would you??) then surely ANY savings account, even if it is with your current bank is going to pay more then the 0% current account.
And quite possibly on instant access.

I would
- tie up at least £10k in something for 12 months+, if there are options in reasonable rate in return/or and ISA
- move the rest into easier access savings account

And you can still switch - you don't need to have £19k in savings to do that. That is not sorting out your financial side at all. Just be carefull you are not changing good service for bad service for £100.. Do your research. it can have long term consequences and you have the cash to make some cash in other ways if you are happy with your bank so far.

Suarez

1. Fill up an ISA
2. Repeat step 1 in April 2013.

manyaonisland

shaz77 wrote: »

I'm tempted to either switch to Halifax and get £5 per month or to Bank of Ireland who pay a £100 switching fee.

I agree tying up my money is not a good idea although I dislike the idea of £19,000 sitting in a current account doing nothing.

Halifax will give you £5 provided you deposit £1000 every month. Money need not have to stay in account. With current 1-2-3 Santander offering you definately going to get more than £5 for 19K you have and on top of it you have instant access to money should you need.

Also i do not understand what you mean by " £19,000 sitting in a current account doing nothing. " - it will be earning you the interest (@3% Gross if with Santander ) at least which is better than your current non interest paying current account. No?

shaz77_2

Is Santander the best Current account and if so is this available in Northern Ireland? I know there are now branches closes to me.

ponbeam

There are indeed branches in Northern Ireland offering the 123 account

N1AK

As others have said your finances are fine; the only minor waste is keeping so much in a low/no rate current account. There are plenty of ways to earn more and still be able to get hold of it quickly. The likely best two are:
> An instant access ISA
> A instant access saving account

If you're going to be able to earn enough from the other job that you wouldn't be eligible for benefits then I wouldn't worry about paying off the mortgage. However if you would be eligible for benefits (inc housing benefit) then it may be worth using some of the money to pay off part of the mortgage to get your savings below the benefit cap.