The year 2001 was a disastrous year
for many people and businesses alike. With confidence
in the market place dampening and more job losses, one
wonders what the year ahead holds for everyone?
This brief article provides a few simple tips to turn
your thoughts to protecting yourself and your finances
during the economic downturns.
Redundancy
Many people lost their jobs last year and if you are
amongst those and the worst happens, then common sense
should tell you to immediately work out your monthly
outgoings and cut them back.
Your home is the most important thing then perhaps
a status symbol car and you should think of all the
expenses, which you incur but can be cut back. If
you owe money, then you should prioritise them and
write letters to other people.
If you have been employed for more than 2years with
the same employer, you will be entitled to a statutory
redundancy payment. You also need to think of replacing
any perks like pension contributions, medical or life
insurance. If unsure, seek independent financial advice.
Cash is Best
Since the terrorist attacks in USA, the stock markets
have been pretty jittery and a full recovery looks
unlikely in the short term. With a lot of uncertainty
around, it is wiser to keep cash readily available
to meet mortgage repayments and important household
bills should you run into difficulties. If you are
keeping some of your portfolio in cash, make sure
you get a decent rate of interest -shop around even
on the Internet but take care in tying up your money
in a notice account.
If you do decide to invest into stock markets, do
it wisely and take a longer-term view and if you are
new to the game, it is probably best to stay away
or again seek expert help.
Mortgage
With lowering interest rates, there are plenty of
lenders offering attractive deals on fixed rates and
so there is every scope in saving more on your repayments.
But you must take costs into consideration as well
when switching -if you pay valuation fees, legal fees
and arrangement fees then the "real cost"
may be even higher compared to the savings you might
make.
If you can afford it, now is a good time to make
over payments on your mortgage -but you may have to
check if your lender is flexible and there are no
penalties on your mortgage as well as lump sum over-payments.
Some flexible mortgage schemes allow you to overpay
and when the recession bites you, you can take a payment
holiday whilst you get back on the feet.
Protection Policies
There are many safeguards for not being able to meet
your mortgage payments -with Accident, Sickness and
Unemployment protection covers widely available today.
However, most policies do not kick in until at least
a month + after you have been made redundant and then
last only for 12 months. If you take one out, you
may not get any state benefits such Income Support.
Also if you are being made aware of losing your job,
and the insurer has reason to believe that your job
was in danger, they will probably make the policy
void.
This article is for information only - you should
take independent financial advice, to ensure that
any plan you take out is suitable for you. It is strongly
recommended that you conduct a full financial review
with an IFA, who will recommend the best products.
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