My regular readers (or those who have delved into the archives) may recall an earlier post about my recent employment insecurity. The concern was imminent redundancies were afoot, and although we are an organisation of over 5,000, my “doom and gloom” tendencies took over and I assumed the worst.

I began preparing for redundancy as if it were going to happen the very next month. This is not a bad idea even if you are not at risk; Fully identifying your financial position, and preparing a plan in advance of such a disaster can mitigate its affects. Identify all your actual and potential sources of income. What are your obligations in terms of mortgages and other debt payments? Do you have savings? How quickly could you obtain government assistance, and what kind would it be?

I am in the fortunate position of living at home with my parents again, following my marriage breakup. The government, if I were made involuntarily redundant, would pay me £64.30 a week as Job Seeker’s Allowance, or £257.20 a month. As it stands, this would be of no material use whatsoever. My loan repayment alone is £413 a month, and that doesn’t even begin to take into account essentials such as food. The loan is insured against such an event, so it wouldn’t be a total disaster for me – but what about you?

My goal was to be debt free by New Years Day 2010. The employment panic set in around August, which gave 4 months until my target – and I was not convinced, in the slightest (courtesy of my “doom and gloom” attitude!) that I would make it. So, I began a frenzied attack on my already pared down budget, and began working myself into the ground grabbing all overtime possible.

How am I doing? … tired.

I have taken a step back now, and calculated my legal position. By virtue of UK employment law I am entitled to a weeks pay (a statutory minimum of £380 a week, if no higher is paid at the discretion of the employer), for every full year of employment. I am also entitled to a minimum of a weeks notice for every full year employed, or pay in lieu.

The interesting point from this little mental arithmetic is that I would be due either 4 weeks full pay and 4 weeks statutory minimum pay (if not more), or 8 weeks notice and 8 weeks statutory minimum pay (again, if not more) depending on my choice to work the notice period or not.

Bottom line, if I had bothered to look back in August, is my target would have been met no matter what. What my little journey to exhaustion lane has done though, is bring forward my debt freedom date somewhat, and I know that I can go into next year without any major concerns of sudden instability.

I have also read the Head Cheese’s budget report for the next financial year, and my department appears unaffected. So it appears things are good until April 2011 if nothing else!

Good times!

As I wrote several months ago in my Financial Meltdown series, I took out a consolidation loan in January 2009 to pay off 2 higher-rated loans, and get in return one, cheaper, lower rate loan. The two old loans were with Barclays (my banking provider of choice), and so was the new loan.

I made an appointment with a Personal Banker in January, and proceeded to spend over an hour with her. I was open and honest, and she really spent time with me. I discussed my goals, where I was financially, and she talked through the options open to me. I left feeling very, very happy. I had finally taken steps to securing my financial future for the first time in my adult life and left with an even more positive view of my bank of choice.

The first of the two higher-rate loans was settled without complication. The other – due to the loan being created on the ‘old’ system but settled using the ‘new’ – refused to close in its entirety.  I was advised to “not worry about it” and it would resolve itself eventually.

The account remained attached to my online banking with a balance showing. I phoned every few months to check all was in order, and each time I was assured: all was in order. During each call, the balance remaining was described as simply the PPI refund that I had not had to pay during settlement. The ‘new system’ would get bored with it eventually and close it off.

On the 3rd July 2009 I received a ‘Loan Account Statement’ covering the 1st October 2008 to 2nd July 2009 listing a ‘Closing Balance’ at the end. No further correspondence was received and I took this to mean that the settled loan was in the final throes of being removed from my account. A little cheer was given, and the letter filed.

Fast forward to this month, and a Direct Debit for £7.83 bounced from my current account (as the instruction had been canceled by the branch when the old loan was settled). Curious as to what this amount was for, I phoned my branch. The lady I spoke to advised – after considerable digging – it was an attempt to take payment for the old loan still showing on my account. Due to limited information available to counter staff, she could not offer any further information.

Perplexed, I phoned the Barclays Loan line and spoke to a lending specialist, who could not answer why the payment attempt was made. Nor could she answer why it had taken over 10 months to attempt it. All she could tell me was I now owed Barclays £8.29 – courtesy of daily interest. I paid this with her by Fund Transfer, but she could not guarantee me that it would not be registered with the Credit Reference Agencies as a Late Payment.

In a letter to Barclays Customer Relations I penned:

“I find this incomprehensible and indefensible. Not only have I wasted most of this evening reviewing correspondence, bank and loan statements, and telephone records, but now fear negative reporting to my credit rating. Ostensibly, the payment is some 10 months late, but not due to any action or inaction on my part. When you settle a loan and receive repeated reassurances that everything is in order, is it unreasonable to believe that this is the case?

Currently, the loan account is registered as Satisfactory with no late payment markers. I want to ensure that this loan account is now marked as Settled without detriment to my credit history – for what is either a Personal Banker error; a computer error; or a combination of the two. I would also like to discuss the matter of compensating my time for having to be writing this letter in the first place.“

I love Barclays. But a relationship where they have treated me very well over the last 14 years is in danger of falling apart from a silly error on their part. The outcome of this complaint will very much determine where the remainder of my adult banking is conducted.

Tread carefully, Barclays. Very carefully indeed.

Have you ever been in conflict with your bank?

A few days ago I wrote that for every two steps I take forward, I appear to suffer being pushed back three. I could not see any way out of the situation I was facing, and it started to eat me up from the inside.

I am a naturally pessimistic person and automatically assume the worst of any given situation or list of potential outcomes. When the second “we don’t have any money” email came out from the Big Boss at work, I concluded that redundancy was only a paycheck or two away. It may well be, but I don’t know that. It could conceivably be a year or two away. Equally I may escape redundancy altogether. It’s entirely an unknown quantity right now.

I saw my goal of debt freedom within my grasp. After freeing myself from consumer debt, I had planned to speed-save my way to paying for my divorce when the bill finally comes in and then starting to save for my future. Everything was going to plan until those darn emails. Debt-freedom suddenly vanished.

If I paid my debt off in November when the spreadsheet said I could – but then get made redundant – I won’t be able to pay my solicitor. Net result: Still in debt.

If I carry my consumer debt but set aside a proportion of my savings  I have to pay my solicitor when the time comes – but then get made redundant – I won’t have enough to pay the settlement fee on my loan. Net result: Still in debt.

Whichever way I regurgitated those scenarios, I came out with the same result. This virtually demolished all the emotional building up I’d given myself over the past year in short order. I felt (and still do to a degree) like I was back in December 2008 again: Out of time, out of options, and despite all my hard work, still out of money.

Then I read an article over at The Simple Dollar while randomly surfing. I don’t remember which and didn’t have the presence of mind at the time to bookmark it, so I am sorry I cannot share the origin of my epiphany with you. But it provided an amazing idea to me.

If I carry my consumer debt but set aside a proportion of my savings to pay my solicitor – and then get made redundant – I can claim on my Payment Protection Insurance! I am uncertain if the cover lasts for 12 months of payments or “until employed again” (I need to read the small print), but either way, it’s a winner. If they will cover 12 months of payments then my end-insurance settlement will be somewhere around the £4,000 mark. I will have that in savings even after paying off the solicitor, with any luck.

My perception shifted.

My goal is now to become notionally debt free, even if I don’t make it happen the moment it becomes theoretically  possible. When (if?) I get comfortably beyond a positive net worth, then I will consider actually making the settlement payment. Until then, I will keep my final piece of consumer debt. The insurance on it may perversely provide a lifeline allowing the payment of another, future debt.

So thank you Trent for indirectly providing me with the idea of how to dig myself out of a hole that has not been dug yet except in my head. But having the rope and tie-off point prepared should it happen is very comforting.

The take-away lesson from this is, I guess, however bad things seem – with enough effort and help from your friends, there is always a way out to be found.