Written by: Cally Worden
Finding yourself out of work racks up the financial pressure, and those bills still need paying. It may be tempting to bury your head in the sand in the hope that you will secure a new job quickly, but this simply may not happen. Ignoring your finances at any stage can land you in deep debt before you know it. The best thing to do if you lose your job is to address your finances immediately. Here’s how.
Seek help with your Mortgage or Rent
For A Mortgage:
- Check out any payment protection or insurance cover you may have that could pay out in the event of redundancy and submit your claim asap. If your claim is refused then see if you can claim compensation for mis-sold cover.
- Submit a claim for any benefits you may be entitled to – these take time to process, so get yours in as early as possible to ensure you receive any payouts within the least possible delay. Check out specifically if you are eligible for the government’s Support for Mortgage Interest scheme.
- Contact your Lender – contrary to popular wisdom, lenders are there to help in times of crisis. Ask them what your options are- you may be able to secure a repayment holiday, or reduce your monthly payment to cover interest only for an agreed time period.
- Contact your local Benefits Office and submit a claim for Housing Benefit if they think you are eligible. As with a Mortgage, you may also be able to claim Jobseekers Allowance and other benefits too.
- Contact your Landlord – if there is a possibility you may fall behind with your rent, then speaking with your landlord in advance can help to buy you some time and avoid a quick eviction notice being served.
- Contact your council Housing Advisor to brush-up on your rights. Your landlord’s patience may not stretch far, so if you are threatened with eviction, being prepared and knowing the procedures he must follow could just buy you that extra bit of time you need to sort things out.
Organise Your New Income Sources
Being out of work will usually mean you are entitled to certain benefits that may help tide you over until you can secure a new job. In addition to these there are tax credits and rebates that may be available to you under your new circumstances. Talk to your Benefits Office and seek additional insight from Citizen’s Advice if you need it. Temporary incomes are unlikely to match the earned income you have lost, but can help keep you afloat while you seek new employment.
Give Credit to Tax Credits and Rebates
If you are already receiving tax credits, call the Helpline immediately to inform them of your change in situation. This will enable them to recalculate your tax credit eligibility, and could boost your income.
When you are working you pay tax on your earnings. These are calculated based on the assumption you will remain in work on a similar salary. When your situation changes you may find you have paid more tax in advance than necessary and could be eligible for a rebate. Be sure to contact your local tax office to check this out.
Manage your Budget and Debts
If you don’t already have a clear view of your monthly income and outgoings, then now is the time to change that. Sitting down and listing out all your finances in a simple ‘Money In’ and ‘Money Out’ list, will clearly and immediately flag any shortfall and help you to identify opportunities for cutting costs. Cancelling gym memberships, switching to a cheaper phone or satellite TV deal, and attacking your insurance and utility expenses can all help you to cut down on your overall outgoings.
If it’s clear following this that the numbers simply don’t, and can’t stack up, then it’s essential to seek advice on how to proceed. Debt consolidation may be an option. Prioritising your debts can help too – some lenders have greater powers to recover debts than others, so target those for repayment who have the right to seize your home for example, and place a lower priority on those lenders who have no such recourse.
Losing your job can be a scary and overwhelming time. The duration of your new jobless reality is unknown, and often significantly out of your control. Getting a grip on your finances is an essential part of the process of managing your new situation. Knowing where you stand may not cheer you up much, but it will remove a huge chunk of uncertainty from your life, and give you back a little control at a time when you most need it.