The economy operates in repetitive cycles, sometimes experiencing extreme fluctuations such as during the Global Financial Crisis of 2007–09.
During periods of economic slowdown many businesses cut back on their demand for labour. If you given a redundancy or your contract is cancelled, what can you do about it?
Managing debt is often the greatest concern for people who are made redundant. The key debt management techniques are consolidation and reduction. Consolidation refers to rolling debts together into the loan with the lowest interest rate. For example, if you don’t pay off your full credit card balance each month, you might be able to re-draw against your lower interest rate home loan and pay off your high interest rate credit cards. This can substantially reduce your expenses.
Then it’s a matter of putting any spare cash towards the outstanding loan. It’s one of the best investments you can make, particularly if you have the option of drawing back against the loan if required in the future.
If your level of debt gets out of hand or you find it difficult to make repayments, talk to your lender to try and work out a new repayment plan. The earlier you speak up the more assistance your lender can provide to get you back on track.
In the good times, it’s easy to spend without thinking. When things get a bit tougher, it’s important to sit down and work out what you need to spend, and what you can do without. It’s a bit of a chore, but a quick search on the internet will bring up a range of budget worksheets and tips on budgeting to give you a flying start.
See the opportunities
Redundancy is stressful. One day you have a steady income and dreams and the next day you have lost both. But it can create opportunities. This is a time when you can change your whole world: learn new skills or do something you’ve always wanted to do. You may be given assistance with finding a new job or with retraining. Make the most of every offer. Talk to people who have experienced redundancy and learn from their experiences.