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Redundancy Shock

Sunday Star Times – 17/05/2009

Question: I am being made redundant. It has come as a shock and it means we as a family will go down to one income, albeit the larger of the two – my husband looks secure. We will struggle to make ends meet. We have a little cash buffer, so for a few months we won’t be too badly pressed, though it is depressing to spend our savings. I also hope to find work again soon, if only part-time, which should mean we can manage the mortgage and a curtailed lifestyle.

My question is do I need to tell the bank I am going to lose my job? Will they be angry if we later have to do something like take a mortgage holiday and they discover our change of circumstances?

Jo Kupa
Manager, Roost

Jo writes: Wondering how you are going to manage on one income can be a worry, especially when we can’t know how long we might be in that situation. It is not a time to be rushing out and changing fixed commitments that may later be critical to your family. But do give your bank a heads up and do so as soon as possible. It will help you to be real about your situation and to take steps to manage it. There is help available.

It is an ideal time for you to talk to a mortgage broker to discuss options for mortgage repayment. Rather than requesting a repayment holiday, you may consider extending the term of your mortgage. Ask your broker to put you in touch with a financial adviser (many brokers have a financial adviser arm in their business). The three of you can then review your full financial situation and come up with a well-organised budget and financial plan based on one income.

That could mean you don’t have to use all of your hard earned saving, though you may have to dip into them a little, depending on your circumstances. Once you have your overall financial plan in place, take it to your bank so you can show them you have solutions for a “worst case” situation.