The best way to prepare for financial hardship??

bakelu

I don't know if this is the right place to post........
I currently have job security and a mortgage (taken out recently). My job is under threat of serious pay cuts and I am unsure of the best way to go about preparing for this. I would potentially need to get by for 2.5 years will inadequate pay to afford the mortgage and cost of living. My mortgage is 5 years fixed, so any changes will incur serious costs.
I already live a frugal life and am very careful what I spend. I have used Martin's budget planner and although we are saving each month, it's not enough to get by for 2.5 years. Does anyone have any bright ideas?

Bobarella

Sorry but why would you not be able to get another job in that time?

bakelu

Sorry I'm not explaining myself very well. I'm tied into the job, it's a vocation and have trained hard to do it. It's not something I can walk away from. I can do extra shifts but there's only so many extra shifts one can do. Hope that explains things sufficiently.

Butti

There are some options likely for your mortgage but the first bit of advice if you are selected for a pay cut is to talk to your mortgage provider. I lost my job and retrained and waited to get a new job. In that period I got a payment holiday, a period of interest only and finally a massive extension to the mortgage period. This last option was offered with the bank fully knowing my intention was to get a job anywhere and sell up.

Butti

The other thing I did was get a lodger.

Bobarella

I see. Humm well in a nutshell you can either try and earn more or have to cut back more. It sounds like option B is a definite no. So can you do anything else to get further income? For example tutoring, a cleaning job, virtual PA, a lodger etc. Rent out a car parking space. Anyway I can see why it's a worrying time.

bakelu

Thank you both. Yes a lodger is definitely something to consider. I suppose we don't know what the bank can do for us unless we ask..... butti how was your experience with having a lodger????

Butti

I had three very good lodgers based on a good initial vibe. The last one was a nightmare because culturally she was very different to me, she seemed to be slightly autistic and she was a bit unhinged. Instinct and references seemed to work as a theme.

chesky

You mention 'we' so I assume there are at least two of you. Can the other person work?

TheBanker

bakelu wrote: »

I already live a frugal life and am very careful what I spend. I have used Martin's budget planner and although we are saving each month, it's not enough to get by for 2.5 years. Does anyone have any bright ideas?

I would start by posting a SOA - although you've cut back, others here may be able to suggest further cuts. Have you done all the things usually suggested e.g. switching insurance and energy to the cheapest supplier, checking your Direct Debits to make sure you're not paying for things you don't use etc?

Remember if your pay does reduce, you won't get hit with the full reduction as your tax and NI will also reduce. So if your gross pay fell by £100 per week, the real impact on your pay packet would be around £80 assuming you pay tax.

andyfromotley

You can only do a few things.

1. Cut everything to the bone in advance.
2. Pile up as much cash as you can
3. Do everything you can to increase your income.

Ultimately though its a mathmatical exercise. If you cannot make the figures work then you may have to make some radical changes like downsizing or changing your career for a better paid one.

Can i ask why it appears to be such a set period for reduced wages? And is it certain that it will return to its current level? If this is set in stone it may be possible to utilise debt to survive, but this is a really high risk stategy if things dont return to normal, leaving you with your reduced wages and a pile of debt!