Redundancy lump sums and debt
Being made redundant is a shock. But quite often it comes with a lump sum payment which can seem like a lottery.
If you are in debt before you lost your job, don't just jump in and pay off a large debt.
Remember it could be months or even a year or two, in the present climate, before you get back on your feet. This money will be a vital cushion during difficult times.
It is tempting to use the money to pay off a large debt, or to reduce a mortgage, but this isn’t the best thing to do, advises the Money Advice and Budgeting Service.
“If you have a lump sum of say €25,000 and a mortgage, say, of €1,200 a month and want to get that down you could pay the €25,000 into your mortgage but it won’t actually help with your monthly payments. The mortgage might come down but you will still get your monthly bill.
“So you are better off looking at your entire debts, making a plan and look carefully at how you will survive until you get a new job or more work,” said a spokeswoman for MABS.
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