What to do with my Redundancy money.

worldofemma

Good Afternoon. 

I’ve just come off the phone from having a heartbreaking conversation with my boss. It looks like I’m going to be made redundant. I have worked for 17 yrs but my contact has capped my redundancy at 12 yrs. I’m absolutely fine with that, it gives me roughly £5090. My dilemma is this:
Do I pay off debt with this lump sum. I have accrued credit card debt of about £6000 and will finish paying off a car loan in September so will be £231 better off then. Before the phone call, I had planned on using my car loan freed up cash to pay off the cards, but now I’m thinking I should clear everything and be debt free. I would love to hear your thoughts...

Suseka97

My first question would be - what will you do for income when made redundant?  if you do not think you'll be able to find alternative employment anytime soon then I'd hang on to the redundancy money until your financial situation stabilises.  You should let your creditors know the situation so they can work with you on this, by putting your account/s on hold.  Lots of folks are in this position - so you should find them amenable and willing to help.

worldofemma

Hi there,
I forgot to say I’m also have a permanent job as a delivery driver for a supermarket. The current job is giving me a steady income (21 hrs) The job I did before I was furloughed was a home based job making greeting cards. Basically I’m just very conscious of this lump sum and really don’t know what to do. I really don’t want to fritter it away.

curlytop12

does your driving job cover your outgoings?
I'd probably hang on to money until you have a balanced budget going
could you fillout a SOA, it may make things a bit clearer, thanks and good luck

sharpe106

As above do a SOA, the people can advise you better, do it on what your income would be once you have been made redundant not what it is currently. 
https://www.lemonfool.co.uk/financecalculators/soa.php

JCS1

I'd check the redundancy money with CAB, I'm not sure a contract can limit statutory redundancy pay.  I might be wrong, but it's worth asking a few questions.

sharpe106

missed that bit of the post 
https://www.gov.uk/redundancy-your-rights/redundancy-pay

Socajam

If you can continue to pay your debt with your other job, I would say keep that money as a emergency fund and life happens fund.
We are living in the world of the unknown and it pays to have ready cash available

fatbelly

JCS1 said:

I'd check the redundancy money with CAB, I'm not sure a contract can limit statutory redundancy pay.  I might be wrong, but it's worth asking a few questions.

I agree - but I'd run it past ACAS. Statutory redundancy pay maxes out at 20  years I think. Contractual redundancy pay can add to this but not take away

fatbelly

I agree with the suggestion of a soa as the devil's in the detail here.

For instance if you have credit cards at 0% there's no point rushing to pay them offf

Fireflyaway

Are you planning to find another job? Do you need another job? 
If yes to above, hold onto the money just incase. I'm furloughed too and probably also about to be made redundant. I won't get any redundancy pay and I have just 1 weeks notice. So I've put as much of this month's pay aside as I can and I'm going to live really frugally. Hopefully I will get another job but there are probably a lot more people out there also applying and fewer jobs for which to apply. Once you have a new job and an emergency fund ( if you don't already) then pay off the car.