Happy New Year everyone! I hope your festive period was full of pleasantries, good food, great family and consisted entirely of recharging, relaxing times? (Who am I kidding… let’s be honest, we’re all glad it’s over for another 12 months!).

Every month there are themes to personal finance. March/April time is the period of tax panic, ISA renewals/hunts and other ‘end of the financial year’ matters. But what of January? There is little changing in the UK world beyond the calendar, but it’s the perfect mental incentive time to do some financial ‘spring cleaning’.

 

1. Review/Amend/Create Household Budget

In the spirit of New Year’s Resolutions, now is the perfect time to be giving the once-over to your finances. What are you paying for that you can cut, reduce, or review? Even if you’re not in debt any money you don’t spend is money that you can save instead. Does your household budget reflect reality, or is it a pipe dream that is summarily ignored 3 days after payday?

 

2. Haggle With Providers

Paying £50 for Sky when you only watch 5 channels? Do you need the Sports package they enticed you with 3 months ago with the half price offer? Give them a call, route yourself to “If you’re thinking of leaving Sky…” and plead poverty. Get them to remove unnecessary package(s) you may have, and then beg for a reduction in price. You’ll probably get it and save a fortune over the year. If you really watch that little TV, would you do with FreeView? Click here for 5 specific tips to reduce your TV costs.

Do the same with any recurring contract you have. Landline phone, mobile phones, internet access, gym memberships, and so on. Click here for loads of tips on how to haggle!

 

3. Shop Around

One of the biggest household expenses after rent/mortgage is food. Supermarkets are at war for our custom as they realise the recession is not abating any time soon, and every foot through the door is an important one. Loss leaders are a dime a dozen, and special offers are all over the store.

If you always shop in Waitrose, try Sainsbury’s. Drop down from the ‘Premium’ brand to store’s-own, and stick to your food budget. Shamefully I have gone from spending £600/month on food down to £150-200 just by a little forward planning and spending 5-10 minutes hunting out bargains. Click here for loads more tips on cutting your grocery spending!

 

4. Check Your Rate – Savings

Are you getting the best your bank or the finance world in general has to offer on your savings account? Barclays lowest rate of interest on their savings accounts is 0.1% when online you can grab a (still pitiful) 1.5% by shopping around. Check your ISA allowance is full for this year (You have until the end of March), and make sure it is paying a decent rate as well.

 

5. Check Your Rate – Credit

After Christmas is the ‘guilty moment’. If you have overdone the Christmas spending on presents, travel and gastronomy, see if you can’t get a better interest rate or balance transfer deal than you have right now. Many providers at the moment are offering 0% deals that can be yours for the taking, potentially saving you hundreds.

 

6. Council Tax Money

For the majority of the country, for the next 2 months there won’t be any council tax to pay. Use this money wisely and put it towards your emergency fund rather than spending it on incidentals. It is money that should be in the monthly budget anyway, so won’t be missed.

 

7. Sell Your Clutter

Has a new 55″ OLED TV replaced your 40″ Plasma? Sell sell sell, on eBay, Friday Ad or any other method. De-clutter your home, your life, and release extra money for debt reduction, savings or other plans!

Good luck, and here’s to your dreams for 2013

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!

Protecting yourself and your family from a job loss is one of the most important steps you can take to providing security within your family unit. But how can you do that, exactly?

Stop and ask yourself: If you got fired tomorrow, how would you cope?

Could you cope? 

The more likely scenario in the current economic climate is rather than being fired, your department may be ‘downsized’ – resulting potentially in your redundancy – or business functions being outsourced or centralised in a location far from where you live.

Preparedness for such events can make the difference between weathering the storm, or drowning in it.

Back in 2009 I wrote about my plan for redundancy when I was deep in debt, and this 2-part post is effectively an update to that. Part 2 will look at the things you need to get rolling after you lose your job.

 

Before You Lose Your Job

There are some actions you can take before you lose your job that can help lighten the burden later on. Providing your financial house is in order, it will be relatively simple to do. If you’re just starting out after years of financial ‘head in the sand’ syndrome, it’d be best to set aside a day to go through everything.

 

1. Know Your Redundancy Rights

As an employee you have rights when it comes to being made redundant. You have a right to be consulted during the redundancy process. If your employer is getting rid of 20 or more staff, it must consult with the union or staff representative before even giving notice and should take place at least 30 days prior to notices being issued. If it is shedding 100 or more, it must take place at least 90 days before.

You should also be consulted individually and not just via your union. If this does not happen you may have a case for unfair dismissal (see next heading).

Further help and guidance can be obtained via Direct.gov:

• Your Redundancy Rights
• Entitlement to Redundancy Pay
• Calculate Your Redundancy Pay
• Redundancy Selection & Notice Periods

 

2. Know What is Unfair Dismissal

Unfair dismissal is exactly as it sounds – you lost your job for unfair reasons. There are endless potential examples, but a ‘for instance’ would be dismissing you for becoming pregnant, or refusing to work when it would be against the working time directive to do so, even when so ordered by your employer.

See Direct.gov for further guidance on unfair dismissal.

 

3. Fix Your Mortgage

Within the next 12 months myself and others are predicting a large-ish rise in mortgage rates. We are already seeing a slow rise in the cost of standard variable rates over the last 6 months, and with the Bank of England widely reckoned to be upping the base rate from 0.5%, a steady rise in mortgage rates is inevitable.

Protect yourself from untimely increases by re-fixing at a competitive rate now. Even if the rate is slightly higher than it is now resulting in a slightly higher cost than normal, when the rates begin to creep higher and higher you’ll be sitting relatively pretty than if you’d just remained on the Standard Variable Rate.

 

4. Fix Your Utilities

Similar to your mortgage, utility prices are on the up as well. If you can, shop around and find a good price-fixed deal. This will save you from untimely price rises at just the wrong moment when you can least afford to absorb them.

Dual-fuel deals are usually more cost effective, but don’t automatically assume that to be the case. See my 6 tips to reduce your electricity costs and 12 Tips to Save Water while you’re at it.

 

5. Pay Off Your Debts

Central to any plan to weather a job loss is to make sure you are debt free, or as near to debt free as possible in your circumstances. If your income is drastically reduced and you are concentrating on trying to find new work the incessant worry about how you will make the minimum credit card, loan and car payments will strangle you.

If you have debt such that you cannot hope to even meet the minimums in such a scenario, the non-stop telephone harassment and postal assault will surely drive you over the edge and severely damage your credit score in the process, potentially making finding a new job even harder.

For tips and advice to paying off your debts, head on over to my Get Out of Debt! series to get started.

 

6. Consider Your Next Job

Do you enjoy your current job, or is it time for a career change? Take the initiative and turn the current situation around into something more positive. Even if you are still gainfully employed now, begin looking around for ideas for your next move. You can write your C.V. to specifically target that market to help you get into it and have it ready to go for when the worst happens.

If you have talked yourself into wanting a change that badly, you could do worse than consider sending it in even while still in the employment of your previous employer.

Remember to balance the situation of your current employment against the potential gains of moving employer voluntarily. If you have been with your current employer for more than 2 years you have redundancy rights. If you move jobs, you would give up those rights for the first 2 years.

 

7. Spruce Up Your C.V.

If you have been in the same job for 10 years, it is quite likely that was the last time you looked at your C.V. Think of all the skills you’ve obtained since then. All the extra challenges you have faced in your work and home life that could add value to you as an employee. Dig it out, add your latest and greatest to it and sell yourself!

See the Top 10 HR secrets that will help get you hired.

 

8. Consider Your Health Insurance

If your employer currently provides you and/or your family with private medical insurance, now might be a good time to take the whole family for a check-up, a dentist’s visit and so on. Coverage will likely cease soon after your employment, so it makes sense to check nothing major needs doing before you lose your coverage.

Along a similar vain, if you are provided with a company car or insurance, consider how your transport may be affected by a job loss. You will need to factor in public transport or private insurance costs. If you own your own car there are still ways you can reduce your fuel costs and generally make your motoring life cheaper.

 

9. Review Your Household Budget

While you’re not panicking and running around like a headless chicken, take stock of your finances. What is your current cashflow situation? Do you know where every penny goes? If not then you need to start working out what you spend and when, to have some idea of how you’ll stand with a reduced income.

1. Complete an Online Statement of Affairs to calculate your monthly expenditure.
2. See what can be adjusted, reduced or disposed of entirely
3. Stick to the new budget and save what you free up

 

10. Look for Side Incomes

Any income is better than none at all, and if you can establish a side income stream while times are good, it can help carry you along when times are not so good. Why not start with my 5 tips for upping your income and then branch out from there. It need not be a huge commitment, perhaps taking a few hours a week at most. The point is to start it while you are not panicking about having no income at all.

Would you add to this list? Come share your experience and tips in the comments!