Thursday, 30 April 2009

We don't need it yet but this maybe of help to some families... Step-by-step guide to redundancy planning

http://www.moneysavingexpert.com/protect/redundancy-help

With harsh winds of recession blowing hard; whether it’s worry over meeting your mortgage, fears of your finances falling apart, the stress of finding another job or the strain on a relationship, the pressure from a job loss can make it a tough experience. Though some will just feel the joy of release from a miserable job.

Either way don’t let it take hold of you and stop you moving on to another job, career change, training or even taking time out. With preparation you can batten down the hatches and hopefully bounce back quicker and stronger.
This guide doesn’t just apply for those who’ve been given notice or heard rumours. In the current economic climes it’s sensible for everyone to take a moment to think how they’d be impacted; and if possible put a contingency plan in place.
If you’ve been told redundancy is a possibility or think it might be heading your way, then you’re in a much better position if you take action before it happens.
Sort your finances NOW
If you’re nervous about losing your job but not in any immediate danger, the idea is to think as if you’re about to lose your job, in order to protect yourself as best you can.
Do a debt audit. Your credit score in work will usually be much better than if you lose your job, as the loss of income means lenders will be less keen to give you credit.
Therefore if your existing debts aren’t at cheap rates, it’s best to apply sooner to try and cut their costs. See the Best Balance Transfers, Best Bank Account, Cheap Loans and Mortgage Finding guides for more info.
Pay off debts. If you’ve any spare savings, use them to clear outstanding credit cards or loans. Having debts hanging over you during redundancy is a nightmare. The cost of most debts vastly exceeds the interest earned on savings.
However it’s important to ensure you keep access to emergency funds if you need them. If you do decide to pay off debts, but it takes longer than planned to find a new job, you may need this money later on for day to day living. More info in the Should I Repay My Debts guide.
Check car insurance. Rather scandalously, the unemployed often (though not always) pay higher rates for their car insurance. So it’s worth aiming to get a cheaper policy sooner. Cheap Insurance Guides: Car, Van, Motorbike.
There's also currently an offer for up to 6 months off Lloyds Home Solutions Insurance if you are made compulsorily redundant, as long as you've NO likelihood of redundancy, in 2009. Full info, and guide to getting the cheapest cover in the Home Insurance Guide.
Check out mortgage rescue. If you have a mortgage, work out what level of protection you have if you were to lose your job. Both private, work based and government schemes may help. See the Mortgage Arrears guide for more info.
Up your income. There are a host of things you can do to bring in cash in the short term, from mystery shopping to flogging your CD collection. See the Boost Your Income guide for ideas.
Do a budget & money makeover. There’s nothing more important that running through all your finances to see what bills you can cut (see the Money Makeover guide) and doing a full budget to ensure you’re spending within your means (see the Free Budget Planner). The Stop Spending guide will also show you lots of little ways to cut back.
To be truly prepared, if losing your job’s likely, start living now as if you’d already lost it. Cut back on everything, and put spare cash away to help you live when there’s less income. This way while you’re living tighter for longer, the depths aren’t as deep.
Consider joining a Trade Union
If your company or industry has a union and you’re not a member, it’s worth considering joining. Most will be able to advise on, and barter for, better redundancy packages on your behalf and provide free advice and guidance on your rights. Check out what the appropriate union is and what it provides using the TUC’s Union Finder tool.
Network and build contacts
Keep your ear to the ground and see what else is available; whether it’s openings elsewhere in your company or at a rival, many job positions become available long before they’re advertised publicly, so be prepared to take advantage.
Now could also be the time to push your luck where you might not've had the confidence before. Don't be afraid to ask if work's available if you're not sure you have the relevant experience. Sometimes you don't get if your don't ask.
Though do remember while ‘last in, first out’ no longer applies, you have less employment rights in the early stages of a new job than you do when you’ve been there for longer, so if you move when redundancy doesn’t actually happen; there is a slight risk to your security.
Plus if you’re likely to be offered voluntary redundancy and a big payout, or have long service at a company, jumping ship may mean you lose all that. Weight it up carefully.
Redundancy and payment protection
There are a number of types of insurance policy that will cover your income, or just certain loan repayments, if you lose your job.
However it’s important to understand one thing...
If redundancy is forseeable when you take out a policy, it may be void.
For example if there’s been an announcement in the firm that some jobs are going or it’s been rumoured strongly, then it’s possible this will disqualify you from claiming, meaning a policy is a waste of money. The same’s usually true if you take voluntary redundancy. So check first.
Applicable insurance types include:
Mortgage Payment Protection Insurance. This is designed to cover your mortgage repayments and related home costs in the event of accident, sickness or unemployment. See the MPPI guide.
Payment Protection Insurance. These policies cover repayments of other debts, again in the event of accidents, sickness and unemployment. Often they’re sold with loans and are massively over expensive, but bought through standalone providers can be much better value. See the Loan Insurance and Credit Card Insurance guides.
Unemployment cover. It’s also possible, albeit becoming harder to find, to take out specific ‘unemployment only’ cover as a standalone policy.
The idea is that this insurance offers a regular monthly sum to cover your normal outgoings including mortgages and bills for up to 12 months. As a rule they tend to pay out a maximum of around £1,500 or 50% of your gross salary. For example, Safety First costs roughly £4 for every £100 of cover taken out, yet this is only a little cheaper than its accident, sickness and unemployment cover.
This type of insurance is incredibly valuable in the right circumstances, but there’ve been huge numbers of mis-selling cases, and many have paid massively over the odds. If you’re considering a policy, do carefully check through all the terms to see if it’s suitable and ensure you do a full market comparison.

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