| Surviving redundancy | | Print | |
| Written by Theresa Chapman |
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If you are currently dealing with a redundancy you know all too well how extremely emotional this experience can be not to mention the difficulty understanding the complexity of the actual redundancy entitlement itself. We would all like to think that our job is secure however the reality is that nothing is a sure thing and none of us are safe from the dreaded tap on the shoulder. Being made redundant can be one of life's most traumatic events, but taking a little extra time to chart a clear course is more effective than hitting the panic button. Most redundancy packages comprise largely of unused annual leave entitlements plus severance pay which is measured as a number of weeks' wages. The golden rule with a redundancy payment is to think first and spend later as there is no way of knowing in the early days just how long the money is going to have to last. Initially, parking your redundancy payment in a secure bank account, cash management account or online savings account earning a competitive rate of interest may be all that is needed to give you the valuable breathing space you will need to decide just how to use this money while considering alternative job options. Be careful about using large chunks of a payout to reduce debts like home loans unless it has an available redraw facility. Certainly paying off debts is normally a great idea especially your high interest credit cards but unless you have a new job organised you may need to retain as much financial flexibility as possible. As soon as you have a clear idea of how much you have in savings, you can then plan your finances to see you through to new employment. A budget is one of the most essential tools in your planning at this stage. You may find that you need to cut some non-essential spending and whilst this will not be easy it is certainly better to do it now than be forced to significantly tighten the belt further down the track. Never be too proud to ask Centrelink for help. Their Newstart Allowance provides financial support to the unemployed subject to an income and assets test and the current full rates of payment are $469.70 per fortnight for a single person and $424.00 per fortnight if you are a member of a couple. It is important to note that if your redundancy payment includes a component of annual leave, sick leave or long service leave that Centrelink may delay the date at which you start receiving your benefits to take into account the length of time covered by these payments. For this reason it is strongly recommended that you seek professional financial advice prior to registering with Centrelink to help you legally maximise any benefits. One of the biggest financial burdens facing most retrenched workers is keeping up with mortgage payments. Obviously if you are ahead on your payments and have a redraw facility that may help to ease the pressure a little. Where that is not the case and you feel you are really going to struggle with those repayments, then speak to your bank about renegotiating your loan. You must bear in mind that any of these options will most probably involve fees and charges and may stretch your mortgage out a little longer. But an unexpected redundancy generally throws us into survival mode so a few extra months or years on your mortgage is going to be a far better option than losing your home completely. Coping with a redundancy is an emotional time where you will need all the support you can get. Be careful not to make hasty decisions and seek financial advice to help guide you through the complexity.
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