Should I take voluntary redundancy

lazer-zxr

I'm thinking not ... but ....
Im a debt free wannabee.

Age 35, mortgage, 2 kids, wife only works 2 days a week for a pittance.
Salary £58k before tax
Likelihood of getting a similar job, good, but at £45k

Redundancy offered £34k. Not sure I'd be accepted.

Company is restructuring for a long term positive future. It is not a shrinking company.

It's tempting, but long term unknown scares me.

Any opinions?

chrisyboy

For 34K all day long, I can only dream of that

FBaby

How do you intend to use the money for? Be out of work for a year, blowing it on fun things, paying off debts, paying the mortgage?

When you say the likelihood of getting another job is good, is that a gut feeling or have you actually done research about it? Will there likely be compromises beyond pay (travelling distance, autonomy in the job etc...)

ACG

Looking at those debt figures in your signature, it could be a good move. If you cleared £30k of that debt you would be what, £500 a month better off in terms of expenditure? Thats £6k a year. That £6k a year would effectively put you on £51k and thats before you take in to account the savings on tax and interest.

That is only for the short term, and in the medium term or longer term unless you had a few pay rises or promotions it may not end up being as positive.

Its all reliant on how confident you are of getting another job.

The flip side is do if you really do enjoy your job and colleagues. Thats something you cant always rely on and should not be underestimated. Could you imagine walking in to a new job but hating the people?

TELLIT01

If you're confident you can get a job at the figure you state then it might be worth considering, although the £34k - tax is only the equivalent of about 3 years net pay difference. After that you will actually be losing out unless you get massive pay rises in the new job.

Xbigman

Unless you can walk into another job immediately it makes no sense to do it. 34k simply isn't enough given the potential salary difference.

If you are still considering it then you also need to consider how good your pension is right now compared to what you might expect in a new job. Plus, are there any contractual restrictions/VR restrictions on working for a competitor.




Darren

FBaby

And one other factor to remember, you will put yourself at risk with the new job to be dismissed without having to give you a reason for two years and then have very little redundancy at this stage.

My view is that unless you can pay your full mortgage with the redundancy, hence releasing a big chunk of your outgoing, so that even in the worse case scenario having to take on any job, you could still pay your bills until the time you find another well paid job, you shouldn't do it. Redundancy pay out really is for that, you are made redundant through not choice and therefore it allows you to continue to pay your essential bills until you can find another job to take over.

catoutthebag

58k but lots of debt you could pay off? Why do you have debt like these? Mortgaged / remortgaged to the hilt? Always amazes me when people with salaries more than double national average have debts like these - I can't compute

lazer-zxr

Thanks for everyone's replies. I've taken everything on board and decided that my manageable debt repayment will have me debt free in 4 years, I have a great reputation and potential with my current employer, and above all really enjoy my work and colleagues. The company pension is also excellent, along with some other benefits. The quick fix of £34k would be very short termist. .. and really against my nature (ENTJ). I will remain with my current employer.

As for your comments Catoutthebag, the debt is made up from a few items, and I'd love your feedback on this, as I'm still not sure I done the right thing being this debt:

23k is a hang over from when we were young, poor and naive, and fell foul of Northern Rock together mortgage trap. So it was spent on obtaining and improving our first property ... which we couldn't clear as we were hit hard with negative equity.

7k is investment in pv solar panels and thermal store for hot water and heating. Return on this investment will be good and green, but it's still unsecured debt

12k was buying a caravan to be used for family holidays. A luxury I know but worth it for the fun or had brought the four of us. Priceless memories.

£1300 is a recent new sofa purchase to help my wife's bad back. Had the cash but rather use the 0 percent on offer.

This is pretty much what is left to pay off.

getmore4less

I would do a bit more analysis.

Take home(Just tax and NI there may be other things that adjust this)

£58k £3413pm
£45K £2786pm.

£627pm

redundancy £34k-(£32400 after tax) so 52 months worth.
(does that include any notice pay IE is it net gross or a mix.)

If the company is doing OK and is likley to do similar packages in the future then more service and possible pay rises could see a package growing.


Debts thoughts
£23k : if still NR then this needs tackleing to free up mortgage choices.
£7k : treat as self funding from savings on bills.
£12k : fund from holiday savings, anyway to generate income when not using?
£1300 Needs to be paid in full on the 0% (Why a sofa and not a personal chair?)

You say you have a 4y DFW year plan that's at least(not counting interest) £850pm that would reduce to £225pm if changes of job.
Even if you paid off the debt with the redundancy and the left over on the reduced wage(do the numbers) you would be on the lower wage from 4 years on.

There is the other factor of the ability to change mortgage with the NR loan out the way but the savings on that will depend on rates of the various debts.

Will go and have a look at your diary to see if any other thoughts pop up.

lazer-zxr

getmoreforless - Thank you so much for your interest and help.

You're about right with my take home pay.

The company is doing ok, and I'm looking at a £1500 rise in Oct 16, and £1500 gross rise in Jan 17 ... taking gross annual to £61k.

Also, the pension is pretty good, I contribute 6%, company contributes 8%

Debt:
Aim is to get in a position for mortgage choices by end of 2016, NR together and negative equity made this a big challenge.

23k @ 4.79%
7k solar loan @ 3.6%
12k @ 4.45% - not going to use to generate income when not in use.
£1300 will be paid in 0% period. - we only had one massive sofa, and couldnt fit a chair in. So new sofa and chair, was nice to have as old sofa was 10 years old.

Your input, and opinions are very much appreciated.