A British Man's Take on Debt, Saving & Investing

10 Things to do After Losing Your Job

Posted on May 03, 2012 by Lee

I had originally intended to write just one article about 20 things to do before and after you lose your job, but it turned out to be nearly 3,000 words which is just way too long for one post. So here is part 2, or “10 things to do after you lose your job.

 

1. Don’t Panic!

First of all there had probably been some indication things were not all well, and you had a moment to implement my 10 things to do before you lose your job. But even if you didn’t and your job loss has come out of the blue, there are still lots of things you can do.

The first one is don’t panic! You may have just been given your P45 and escorted off the premises and your brain is working at 1,000mph trying to calculate the impact, but it is important not to try and do anything about your situation while in this emotional state.

Go home, put the kettle on, brew a sweet cup of tea, and chill. You’ve lost your job, not your life!

 

2. Assess Your Emergency Fund

Hopefully you have some savings that can cover your immediate needs. These may be in a designated emergency fund that you set up to cover life emergencies such as this. But right now any liquid assets you have access to will need to be re-designated as your emergency fund.

If you have no emergency funds available but have been saving for a holiday, or a new car, or some home renovations – these no longer matter. If your income has been cut to zero or near zero then anything you have access to may need to help sustain you until you can find a new job.

Pre-recession you could probably guarantee you’d find a job in a few weeks. In these harder financial times being unemployed or underemployed for 3-9 months is not unheard of, so take stock of what you have access to.

If you’re panicking that you have absolutely nothing but a mountain of debt to service, remember; don’t panic! I will cover all in this article. Just try to relax, and keep reading.

 

3. Enjoy Some Downtime

You need to come to terms with your situation, and not make rash decisions. It will highly depend on your overall financial situation as to how you do this and how long for, but the bottom line is you need to deflate your anxiety and emotions before starting to move on.

If you have healthy emergency cash reserves, money in your holiday account and no pressing bills – you could even consider a short break away. If you’ve been wanting to take a holiday but pressures of work have not allowed it – what better way to ‘celebrate’ than jetting off to soak up some sun for a week or two?

If things are a little more bleak it is still important to take a day or two just to calm yourself. Read a book, watch some DVD’s, or finish some DIY. Anything you find both distracting and relaxing will suffice.

 

4. Check Redundancy and Final Pay

If you have been made redundant rather than simply fired, check if you are entitled to redundancy pay and how much, and make sure you get it.

If you have been employed continuously for more than 2 years by the same employer, in the main you are due at a minimum statutory redundancy pay.

Statutory redundancy pay is set at £430 a week for each year you have been employed for people aged 22 to 41, and lower for younger and more for older. You can calculate your exact statutory payment at the Direct.gov website. Your employer can override this with a more generous package though, so have a read through your contract or statement of particulars and see what you are entitled to.

The important thing is, if you are due it, make sure you get it. Additionally if you have worked beyond your last pay date, you should be due a final pay-check of some description. Depending on your employer, you might need to ‘remind’ them.

 

5. Debts, PPI & MPPI

If you have outstanding balances on loans, mortgages and credit cards, you might be panicking about how you’re going to service them.

First of all, go back to step 1. Don’t panic!

Do you have active payment protection insurance? Some mortgage lenders even make this a requirement, so read through your paperwork to double-check. If you’re at all unsure, speak with your lenders without disclosing the reason for your enquiry at this stage.

These insurance policies will pay your minimum payments for around 12 months on credit cards and loans. While this won’t assist in reducing their balance on your cards if you’re in a pickle, it will at least keep the debts serviced. Remember not to spend on your cards though, as you will just have a bigger hole to dig yourself out of when re-employed.

Mortgage Payment Protection Insurance will make your mortgage payment whilst unemployed for a minimum of 6 months, but 12 is more usual.

Do you have an income protection policy you have forgotten about? These are offered by a multitude of financial service and insurance providers and are easily forgotten about if taken out a while back.

If you are covered by any policies – activate them now. It will help your emergency fund last longer.

If you have no protection insurance anywhere, then your next actions depend on your discoveries about your emergency funding situation. If your fund permits you the ability to continue servicing your payment needs for a period, then continue to do so. Do not start electing to pay only certain creditors as this will heavily impact your credit score, possibly making it harder to get another job.

If you have no emergency funds, nothing to sell, no insurance policies and no friends or family to help, you need to talk to your lenders. The earlier you speak with them and explain your situation the better it will be for you.

If you leave it until the bailiff is trying your windows; it is too late to make much headway in negotiations.

 

6. SCRAM Plan

If you’ve been reading Five Pence Piece for a little while, you may have set up a ‘SCRAM Plan‘.

This is a plan designed to be put into action when your finances go nuclear – e.g. a job loss. If you’ve made one, dust it off and implement it. It will contain all the contact numbers and account details needed to cancel all your non-essential services such as magazine subscriptions, rolling phone contracts and so on saving you a small fortune in payments each month.

 

7. Claim JobSeekers Allowance

If you’ve lost your job or been made redundant, register as quickly as possible with the Job Centre to ensure your National Insurance contributions are kept up, and to claim Jobseeker’s Allowance. If you are over 25, this entitles you to £71 a week and while it won’t make you rich, it can at least help keep you fed at a minimum.

Providing you’re paid up, this will provide 6 months of Contributions-Based JSA. CB-JSA does not count your savings, and will be provided whether you have 6p in the bank or £6 million. After 6 months you will switch to Income-Based JSA that drops the benefit on a sliding scale depending on your savings and other income streams.

See Direct.gov for further information.

 

8. Housing Benefit

If you are a private tenant you may be entitled to housing benefit. This will pay a proportion (up to all) of your rent, and can make a huge difference to your finances. Your entitlement will depend on where you live, who you live with, and the type of accommodation, as well as your savings.

For me, they would pay my entire share of my rent making redundancy a lot less painful and help stretch my emergency fund from 6 months to almost 2 years with careful planning.

Again, more information for your circumstances available at Direct.gov.

 

9. Council Tax & Other Benefits

Check to see if you are entitled to a reduction in your council tax, or to receive council tax benefit. Like housing allowance it will depend on your local council, so make some enquiries and see if you are entitled to assistance.

Likewise your utility providers may have special ‘social’ tariffs that reduce the cost of your line rental, gas and electricity. Review your budget and ring around and see what they can do for you. If you don’t ask, you don’t get!

The Turn2Us website has a benefit calculator to check your entitlements.

 

10. Network , Network, Network!

Now that we have hopefully secured your immediate needs, it’s time to network with former colleagues, friends, family and your social networks. See if any of them have employment opportunities that fit your skill-set, or may be able to put in good words for you in places they know of.

Update your LinkedIn profile. Begin your job search in earnest.

Good luck!

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