Redundancy- what do I do now? 6 things you can do immediately

If you have been made redundant or find yourself in a situation where all of a sudden you don’t have an income, it can be a kick in the teeth. For those who weren’t expecting it, even more so. Most people don’t plan to become redundant and because of this, don’t necessarily have any emergency money sitting around for this rainy day. I have spoken about this on several occasions here, here and here. So whilst you can go back and read my posts and say ‘yes, I get that I should have done that but I didn’t’, that really isn’t going to help you in this specific situation.

So if you are here because you have just been made redundant, then here are a few tangible things that you can do straight away to help alleviate the financial pressure. 

1) Review your expenses – Work towards eliminating all non-essential expenses for the time being, and minimising where you can. This may mean cutting off foxtel, reducing your food spending, reducing your entertainment money, and going without some extra luxury items that you may have become accustomed to. Fingers crossed it’s only in the short term, so don’t think of this as a life sentence.

2) Private health insurance – If you can help it, don’t cancel your private health insurance because you avoid the additional 1% tax by keeping it. You can however call your health insurance company and enquire about reducing down your cover to just the basic hospital policy only. This means that you get to keep the tax advantage, retain a basic level of cover and it also means that when things improve financially, you can update the policy again without having to go through the full application process.

3) Contact centrelink – Do this as soon as possible. You need to find out what, if any payments are available to you and the time frame that you must wait. The sooner you get onto it the better. Sometimes you will need to wait up to 13 weeks before you qualify for any benefits.

4) Accessing super in hard times – This is not common but is potentially an option later down the track. In order to qualify for early release of some of your super funds you need to be a) Receiving some form of government benefits for at least 26 weeks (hence, step 3 is important), and b) Demonstrate that you are unable to meet any immediate family living expenses. This is not always the best option because the amount you withdraw is taxed heavily and you are only able to access a maximum of $10,000 pre tax, in a 12 month period.

5) Call your life insurance providers – some products have the option to put your premiums on hold for up to 3 months if you are made redundant but allow you to retain the full insurance cover. Cancelling this cover should not be one of your first options, but it’s great if you have the option to alleviate the premium payments in the short term.

6) Call the companies you owe money to – If you have debt that you do not believe you will be able to service in the short term, then contact your creditors to talk to them about options. You may need to change the repayments to interest only, or the providers may be willing to put payments on hold during this time. If you get on the front foot they are more willing to come to the table with an action plan.

Redundancies really can suck, especially if it isn’t voluntary and you didn’t see it coming. Your self-esteem takes a beating in the midst of trying to figure out what to do next. If you find yourself in this position, then set yourself the above tasks to do asap. At least you will be aware of your financial situation, and even though you may have to go without some luxuries in the interim, you have done everything you can to reduce your expenses to give you time to find your next amazing job.

Good Luck!

– This post is from our resident senior financial planner, Cara Brett. Check out her details in our about us page.

Posted in: Financial Planning and Cara Brett