# Should I apply for redundancy?



## moneyhoney (20 Feb 2014)

Age: 37
Spouse’s/Partner's age: 32

Annual gross income from employment or profession: €78,869
Annual gross income of spouse: Not relevant

Monthly take-home pay €3.5k

Type of employment: e.g. Civil Servant, self-employed Public servant

In general are you:
(a) spending more than you earn, or
(b) saving?

Saving small amount per month but nothing to write home about. No longer using credit card (below) and living well within means. Substantial opps to cut back. 

Rough estimate of value of home: Currently renting at €1,200/month. 
Amount outstanding on your mortgage: 150k (bought as PPR but rented out). Rent covers mortgage repayments. Management fees c. €1,200 p.a. and tax last year was €792 
What interest rate are you paying? Tracker ECB + 1%


Other borrowings – car loans/personal loans etc None

Do you pay off your full credit card balance each month? No 
If not, what is the balance on your credit card? €9k. 

Savings and investments:

Do you have a pension scheme? Yes

Do you own any investment or other property? Yes (details above)

Ages of children: n/a

Life insurance: Mortgage protection insurance only


What specific question do you have or what issues are of concern to you? 
My employer is inviting people to apply for voluntary redundancy. While I know I won't get such a well-paid job again, the after tax amount is €60k. This would allow me to pay off my debts of €9k + pretty much "start again". I've been working full-time for 16 years + a few months off would be great. I could also use the money to start my own business. Am I mad to consider taking redundancy is this climate? I would think that my chance of getting work are v strong - I have 16 years + comms/management experience.


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## wbbs (20 Feb 2014)

My first instinct is don't do it, but it depends on a lot of things. 

Are there vacancies in your part of the country, very little in rural Ireland if not within reach of a big city.   50k is not that much, why is spouses income not relevant?  Is it that they don't have one or you don't feel it is relevant to your decision, either way someone is going to have to pay that monthly rent and until you get another job you won't be able to.

You are young which is on your side and mobile if only renting so that is a plus but it is a hard decision to make.


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## moneyhoney (20 Feb 2014)

Thanks for your advice. I am in Dublin so plenty of jobs. The reason I say spouse's income not relevant is that he earns a lot less than me. But we split the bills (50:50) and rent (based on our current income pro rata)  So I need €800 per month for rent. 50k would pay a lot of monthly rent!


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## wbbs (20 Feb 2014)

It would but it would be an awful waste of it


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## michaelm (20 Feb 2014)

moneyhoney said:


> Am I mad to consider taking redundancy is this climate?


Yes, I think so anyway.  9k? If you overhaul your finances you should be able to clear that quickly (6 months if you put your mind to it).  Apply for other jobs and if you get one handily (as you think you might) then redundancy could be attractive.


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## dereko1969 (20 Feb 2014)

You seem to be taking the nuclear option in order to deal with a small matter - 9k should be paid off in less than a year.

Why are you saving? You should be paying off the 9k debt instead.

Also given your wages alone (not including your partner's salary is odd in this situation it seems to me) you should not be struggling. You really should try and track down all your monthly payments, it may become clearer where your money is going.


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## Gerry Canning (20 Feb 2014)

Agree with posters.

Credit card interest is high V savings rate is low.
Suggest pay down Credit card Debt promptly. 
If you cannot get the K9 down quickly and go for redundancy , you will find the tempting K60 will fritter away quickly.

Also , don,t think experience will guarantee you another good  job in this climate.

Hang in for a (hard) year , pay off credit card and then review your options.
You will have shown to yourself you can live on less and can  also pay off more.
So if you then take the big move , you know you can hack it.


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## amtc (21 Feb 2014)

I wouldn't be so negative about it - was in pretty much the same situation and I did it. Basically thought of it as the gap year I never had (at 38). My rationale was I was never going to get 9 weeks per year again....

..bak working now.


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## moneyhoney (21 Feb 2014)

Thanks everyone for the advice. I think the debt issue has been overstated by some posters. I'm not considering this option just to rid myself of that debt. It's more that I would obviously pay it all off if I got the redundancy. 

The idea of having 2/3 months career break is really nice & I would like to try new things after 16 years climbing the "ladder" but I don't think I would get the same level of salary again.


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## niceoneted (21 Feb 2014)

Is there a possibility of taking some unpaid leave in your job for a few months and do your traveling. 
I think you re capable of paying of that 9k over a few months if you have a frugal few. Then save over next few months then travel.


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## Macstuff (24 Feb 2014)

I was in a very similar position a few months ago - my story is below.   Overall, it's really worked out well for me, but there are some  downsides - see below.

I applied for voluntary redundancy in May  2013 and received an after tax payout of 72k. I was working as an  Account Mgr for a major telecoms company and was  earning a basic salary  of 50k and a bonus of approx. 10k.

I had a lot of debts (approx.  30k) and used the money to pay them off. While I am in a relationship,  my partners income is his and we don't pool our finances. However, he  was supportive of my decision. 

Once I finished work, I took  about 3 months off to enjoy the best weather we've had in years. In  Sept. 2013 I started a part-time post grad. in university through the  Springboard initiative (have a look at the Springboard website there are  lots of great courses available F.O.C.) I am doing that course now and  while it's a lot of work I will be finished it in May, 2014.

I  began proper job hunting in Dec. and focused on getting another Account  Manager role in the technology sector. The job hunting was fairly easy -  I had 3 interviews in early Jan and was offered 2 roles. I start back  work next Monday. As a result of all this - I am now debt free, have a  nice new car, a higher paid job and will have another university  qualification in May. 
I'm not saying that this would work for  everyone, but in my case it certainly worked out. Based on my experience  my advice would be:
1) Research the jobs market to see if there are  positions advertised that fit with your experience. If there are a lot  that's a good sign that finding a new job should be easy. I used a  website called indeed which aggregates jobs from a number of jobs sites  and found that more efficient than registering with a number of jobs  sites.
2) Have a good think about your next step. When I left my  company I had a business idea but had done no research on it. When I did  that I found that the set-up costs were prohibitive and so I decided to  go back into the P.A.Y.E. sector. I then looked at free course in  college available to the unemployed (as I said above, take a look at the  Springboard website.). 
In the end I went back to the role that I  know best, but I will have some additional skills and qualifications as a  result of my college program. 
3) Do a budget on how much you need  to live on - in my case I was able to live on my social welfare payments  week to week and used my redundancy to pay for some luxury's.      
4)  Check out your social welfare entitlements - I was not able to claim  any social welfare for 6 weeks. Would your partners income effect your  ability to claim social welfare. 

The downsides of this decision have been few but for balance I list them below:
1)  In my case I gave up a defined benefit pension, but felt that it was  worth it to get out of a job that was difficult for reasons unrelated to  money. I know I will never get another one, but I have made some okay  investments that should hopefully help my retirement fund.
2) As I  had high debts, almost half my redundancy was spent very quickly on  clearing them. I always had a lingering worry about what would happen if  I didn't secure a new role when I needed one. 
3) Surprisingly after  being off for about 2 months - the novelty wore off and I started to  get a little bored. All my friends were working and there were less  people to meet up with during the day than I had hoped.
4) I found  the whole process of signing on and going to the post office to collect  the dole a little soul-destroying and am glad that this week will be my  last time to do that. 

Good luck with your decision.


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## niceoneted (24 Feb 2014)

Excellent post Macstuff, that's fantastic how it all fell into place for you too. Good luck with the new job.


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## kennyb3 (24 Feb 2014)

This is going to sound really harsh but it has to be asked 2 things strike me:

1) How do you think you'll do running a business when you've trouble running your own finances?

i.e You've €3.5k net take home pay, pay €600 rent (you mention €800 later), then all the general bills. You say you save only a small amount, but live well within your means (seems a bit contradictory?) but recognise there is substantial opportunity for cutbacks. Yet you've racked up €9k CC debt??

I've a lower take home, pay a full mortgage of over €1k pm, and yet still save over €500pm. You should have no CC debt and be saving €1k+ pm imho.

It also seems you've no kids given you've no life assurance. Where is all that take home pay going?

2) Given the above, how long do you think the €51k (€60k-€9k) will realistically last? 

I'd agree with some other posters - try take a decent period of annual & unpaid leave. It seems you want a break from the daily grind more than anything else.

You talk about starting a business and also about 'a strong chance of getting work.'

I think you need to decide what it is you want to do first before you ditch a very well paid job.


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## moneyhoney (25 Feb 2014)

kennyb3 said:


> This is going to sound really harsh but it has to be asked 2 things strike me:
> 
> 1) How do you think you'll do running a business when you've trouble running your own finances?
> 
> ...



Not harsh at all. I came here looking for advice. 

The business idea is just that - an idea. I don't have any specific plans as yet. My credit card debt is historic. It was at €11k 2 months ago & now at €9k, so a substantial amount of my take-home pay goes on that. And will continue to do so for the next 9 months. The debt I built up goes back to 2011 & 2012 and I have not used the card since 2012 & do not have another credit card. 

The reason I talk about 'a strong chance of getting work' is that there are plenty of jobs advertised in my field - all of which I am qualified to do. I have also sent my cv to several recruitment consultants & there are jobs out there that I can apply for. Most are contracts though so I would be in a position where I would be giving up permanency for a contract + redundancy.


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## moneyhoney (25 Feb 2014)

niceoneted said:


> Is there a possibility of taking some unpaid leave in your job for a few months and do your traveling.
> I think you re capable of paying of that 9k over a few months if you have a frugal few. Then save over next few months then travel.



Unfortunately unpaid leave isn't an option at the moment but that could change during 2015. I am paying €1,000/month on the credit card, so should have it cleared by end year.


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## Gerry Canning (25 Feb 2014)

Moneyhoney. 

Like your comment on last thread {not harsh at all} .
Too many times views are taken as too hard , nice to see your sensible response.

From the way you write , I reckon you will make it , so good luck.


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## kennyb3 (25 Feb 2014)

moneyhoney said:


> Not harsh at all. I came here looking for advice.
> 
> The business idea is just that - an idea. I don't have any specific plans as yet. My credit card debt is historic. It was at €11k 2 months ago & now at €9k, so a substantial amount of my take-home pay goes on that. And will continue to do so for the next 9 months. The debt I built up goes back to 2011 & 2012 and I have not used the card since 2012 & do not have another credit card.
> 
> The reason I talk about 'a strong chance of getting work' is that there are plenty of jobs advertised in my field - all of which I am qualified to do. I have also sent my cv to several recruitment consultants & there are jobs out there that I can apply for. Most are contracts though so I would be in a position where I would be giving up permanency for a contract + redundancy.



I suppose finances aside what I was getting at is if you do decide to go for it you 're at a junction - do you want another daily grind job working for someone else or do you want to try get a business up and running. They are a million miles apart really and can vastly require different skills.

I'd be asking myself;

- What are the advantages and disadvantages of each?
- What % chance would I give the business of suceeding? How long do I give it if I go for it? Do I have the skills?
- How will a new job vary from the old one so I wont feel the same in 6 months time?

And so on.

If it was me i'd be deciding which way I wanted to actually go and do more research on both long before I accepted the redundancy.

Best of luck with it.


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## moneyhoney (25 Feb 2014)

Gerry Canning said:


> Moneyhoney.
> 
> Like your comment on last thread {not harsh at all} .
> Too many times views are taken as too hard , nice to see your sensible response.
> ...



Thanks Gerry. From all the advice I have been given, it seems very clear that I am not ready to take this "plunge" yet. And while it is a "one time only" scheme, it seems clear that I could regret it without proper plans in place. So, I'll stay put for now!


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## Gerry Canning (25 Feb 2014)

Mr Derp.
Delighted to see your positive comments.
You obviously have currently portable and valuable skills.
You say if you ran your department you could list in 90 seconds those for compulsory redundancy.
You probably could make a list but quickly find those that are let go, actually contributed more than is apparent.
A lot of people do not work , nor wish to work ,to their potential.
You obviously, have a strong go for it atitude , and good luck to you.
But to advocate that you could do a list of compulsory redundancy is a bit too tough..


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## Macstuff (26 Feb 2014)

I'm a bit disappointed that the OP is not inclined to take Voluntary Redundancy - however I accept that everyone needs to make the decision based on their circumstances and feelings. 
Just a point in relation to salaries in the ICT sector (am I right in assuming the OP works in this sector?) they do seem to be on the rise. My new role has a basic salary of 60k and a 20k OTE (in my previous role the basic salary was just less than 50k and the bonus approx. 10k). I looked at the option of redundancy in 2010, when it was last offered, but salaries were very low and that made me decide against applying. However, the definitely seemed higher this time round.  
Regarding work availability - I have kept in touch with the other 3 people who took VR at the same time as me (all Account Managers i.e. there were 4 including me) and the only one who has not found a new role is a lady who wants to use the time to stay at home with a young child. My conclusion is that in my sector at least, there are jobs out there.


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## kmick (26 Feb 2014)

1) Get another job

2) Take the redundacy, pay off debts and have a holiday for a month 

3) Start new job - lodge your 40k remainder in a high interest a/c

4) Work on your plan for your business in the background for 3-6 months to assess viability. 

5) Take your 40k and apply for funding from EI
https://www.enterprise-ireland.com/en/funding-supports/Company/
They may match your 40k to 80k if they like it (i.e. its in Tech, Food, Bio, Pharma) and "if your start-up business has the potential to develop an innovative product or service for sale on international markets and the potential to create 10 jobs and €1m in export sales within 3 to 4 years of starting up, then you may qualify for assistance from Enterprise Ireland as a High Potential Start-up (HPSU)."
https://www.enterprise-ireland.com/en/funding-supports/Company/HPSU-Funding/

6) Subsequently it may be possible you can work 3 days a week on PAYE and 2 days a week on the basis of your plan. Maybe even only look for a part time job if you are sure you want to launch your business.

Go for it!


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