Help!

LABMUM

I have been made redundant after a long while with a company. I will be receiving my redundancy next month and wondered whether I should still be adding to my sinking funds whilst I look for a new job. I will be paying my debts off with some of the redundancy and using the rest to pay for other bills until I get a new job which hopefully won't be too long. Thank you for your help.

enthusiasticsaver

How much of your redundancy you use to pay off debts and how much you keep back to pay for bills depends on how long you think it will take you to find a new job, the amount of redundancy you will get and your outstanding debts and your present financial circumstances - ie do you have savings or a partner who works?.

Why not post an soa? I am not sure what you mean by "adding to your sinking funds"? I hope you find a new job soon.

MallyGirl

by 'sinking funds' do you mean investments or pensions or something else?

sourcrates

Hi,

Don't blow all your redundancy on paying off debt.

You have no idea how long you will be unemployed for.

You should immediately switch to token £1 payments (on your unsecured credit) if your out of work, a letter of explanation to your creditors will ensure no further action is taken.

LABMUM

Thank you. By sinking funds I mean piggybanking accounts for Christmas, Emergency funds, clothing etc.

MallyGirl

ah - unless Christmas isn't coming next year then I think you ought to carry on as normal for as ling as you can whilst job hunting.
But I agree that you shouldn't blow all the redundancy payout clearing the debt. Maybe post the debts and APRs for advice on which ones to tackle. Are any at 0% ?
My OH didn't take that long to find another job after redundancy but, after all the HR admin delays etc, was still unemployed for 5 months.

National_Debtline

Hi

If you don’t mind the impact to your credit history, I agree making token offers seems like a good option until you know you’ve found more employment. You could then consider making full and final settlement offers on your debts.

James
@natdebtline

enthusiasticsaver

You will still need an emergency fund but I would maybe suspend the piggy banks for Christmas and clothing, holidays etc until you have a new job. What you need to calculate is your essential monthly outgoings and how long your redundancy will last. No use paying off debt if you are not left with enough to cover council tax, utilities and food.

EssexHebridean

Bless you, what a lot of conflicting suggestions! First off sorry about your redundancy, it's a horrible thing.

A lot of the decisions over how best to proceed depends on what will suit your circumstances, in my opinion. There are some things you really must do, though.

- Register as unemployed. You probably won't be entitled to anything in the way of benefits, immediately at least, BUT this means that your NI stamp gets paid, and down the line that's important.
- If you have a current SOA, brilliant, but cast an eye over it nonetheless to make sure it;s up to date. Then go over it a second time - this time note anything you can easily cut out, and any savings that you will naturally be making. You may have a current travel spend of £50 a week for example, which is entirely linked to travel to and from your current workplace. The third pass you'll need a different colour pen for (I'd suggest using a printed copy for this exercise) - and that will add all the stuff that you could cut down/cut back on if you had to. Some of these you might decide to get rid of immediately, to preserve your capital for as long as possible.

You need a 100% clear picture of your financial position, once you know what your bare minimum to live on per month is you start to get an idea of how long you can manage for without a new job, should it come to that.

Personally I'd say whether you use some of your redundancy money to pay off debt depends on the sums involved - both of the payout and the debts. Of course another option is for you to hold onto the payout for now and carry on with your minimum payments - if you get another job almost immediately you can pay off the debts, if it takes a little longer you have the reassurance of having th capital there should you need it. Likewise your funds - you have little to lose by paying in, and if you reach a position where you need to use that money, it;s there ready.

Good luck finding yourself another job.

theoretica

I would continue putting money aside for Christmas/emergencies etc as if it turns out you need it for other things you can take it out again. As others suggest, I wouldn't pay extra to the debt until you have the first paycheck from your new job. Unless they are things like overdrafts where you are confident you could easily borrow again if you need it due to slow job hunting, and can save yourself interest in the mean time.