Redundancy Tips 

Redundancy is a terrible thing for anyone to have to go through. There aren't many things worse in life than losing your income and the ability to provide for yourself and your family.

It's even worse in a recession because there's a general feeling of hopelessness around that compounds the problem further.

A Stitch In Time

If you're still fortunate enough to have a job, there are things you can do right now to help shield yourself to some extent.

Start Looking For Another Job immediately you suspect that something is not quite right with your current employer.

This will mean scanning the Situations Vacant columns of the newspapers and the recruitment pages in the trade press. Don't forget the networking ideas discussed on this sites too - they could prove invaluable.

Start making applications right now. Don't leave it until you've been given your notice. Get in a step ahead of your colleagues - yes, it's hard, but we are talking about your survival here.

It is far easier to get a new job when you are in employment than when you're not.

For starters, it gives you some negotiation leverage and you won't be on the back foot when it comes time to talk money, both with your new employer and your old one.

Don't think that you'll be ok when the redundancy letters come around, because the fact is that these days, we really don't know the extent of our employers' finances, as recent events with big name banks and property companies have demonstrated.

Be proactive. Start looking and look hard.

Money Money Money

Now is not the time to start being inflexible when it comes to money. You might have to consider dropping your salary or wage expectations in light of a poor economic climate.

For this reason, you might consider sitting down (with your partner if you have one) and working out exactly how much money you really actually need each month to get by.

You'll need to do a thorough income and expenditure plan. This will reveal much about your lifestyle and nobody said it was going to be comfortable.

List all the things you spend on each month - here are some suggestions:

Mortgage / Rent, Loans, Heat, Light, Water, Groceries, Local Taxes, Transport  - if you have a car, add in the cost of fuel, servicing, taxes, repairs, etc., think about clothing spend for the family over a year (and divide it by 12 or 52 to get monthly/weekly spend amounts), holidays and entertainment.

At the end of the exercise, you should be faced with a list or a spreadsheet, ideally, that lists everything you normally spend your money on each month.

Multiply this by twelve and you have your annual spend. Remember that this is a net figure, so that is not the least money you need to earn in order to stand still. You need to add income taxes, insurances, etc., to that figure.

Now it might come as a shock to some people, to discover that they don't currently earn enough to cover all of these things.

That means that you're going to have to make cut-backs - and fast.

All non-essential spending has to go. That means cutting up your credit cards and living on the cash you have coming in.

This will give you a good discipline to live by until you can get an uplift to your earnings capacity.

Next, take a look at those credit card payments.

Unless you are paying them off each month in full, you could be paying extortionate rates of interest.

Make it the bank's problem. Call then right now this minute and tell them that you are about to be affected by redundancy.

Explain that without an income, you're not going to be able to pay them $xxx a month any more and that you're trying to do the responsible thing by contacting them early.

Ask them what help they can give you.

Offer them to freeze your interest and offer them a monthly token payment of say, $1 or £1 (I have to put that in, I'm British) for a set period of perhaps 12 months, after which time you'll review it with them.

Believe me, many credit card companies will accept this arrangement with a minimum of fuss.

It also has the advantage that it keeps them from instructing debt collection agencies and bailiffs, since you're not refusing to pay, you're simply asking them for some time.

Next, you need to look at reducing your overhead further.

Do you need a holiday this year? Really?

How many cars do you own as a family? How many do you actually need? What about all the unnecessary car journeys?

Could a smaller car help?

Groceries - we all fill our homes with too much junk as it is. If you're buying brand names, try supermarket own brands, then if you don't notice the difference, try moving further down the line and go for their basic ranges - they are even cheaper.

This is all about protecting your income. It's only a temporary measure, so now is the time to look at making sacrifices.

Doing it now is better than being forced to do it after you've been given your redundancy.

Some people believe that they can live on their redundancy money for several months, which will give them more time to look for another job.

That's an incorrect and dangerous assumption.

Redundancy money doesn't last long, especially if you're supporting a family, so don't lull yourself into a false sense of security.

By taking action now, before you're affected, you can save yourself a whole load of problems.

If you have already been affected by redundancy, it's not too late to take action. Follow the steps above and help yourself back to financial recovery.