Planning for possible gap between jobs

[OccamsLadyshave]

I have just taken a leap of faith and accepted a job that is much more convenient and a good career step, but the downside is that it is a fixed term contract until the end of March next year, with no guarantee of funding after that.

It will be part of the role to secure ongoing funding, but I am a lone parent with no other income, so I want to try to give myself a bit of reassurance that I won't lose the house should it all go horribly wrong.

I currently have £2,000 in an ISA which is my emergency car holiday fund. I'm building it up £200 a month at the moment. The new role is walking distance rather than 2.5 hr commute each day, so my need for a car and the likelihood of it needing replacing or fixing will be lower. I would still want to run a car though.

I'm just looking at what I could save by next March.

At the moment I am overpaying my mortgage by £100 a month. Would it make sense to stop doing that and add it to my savings so I can access it if necessary.

Also the new job doesn't have a pension attached as it is a temporary contract. Would it make sense to continue to pay my stakeholder or take the year off, so money is all available, and pay it in as a lump sum once I feel more secure?

How much money would you want in the bank by next March (in terms of months' income / expenditure?) I'm thinking six months' expenditure (ie what I currently earn minus the amount I'm saving / overpaying / pension and a few luxuries / charities I could cut)

Obviously I'm hoping I'll secure funding or get another job fairly quickly. I should know by January whether there will be a job so I have time to apply for things, but it would be good to have a back up plan. That money could then be paid onto the mortgage or pension as a lump sum (or I could have a really good holiday!)

That sounds similar to the sort of contingency I would plan - I would probably pay the extra £100 into savings instead of off the mortgage too- some mortgages do allow a 'holiday' though if you have overpaid for a while so you could consider checking about that. The pension probably depends on your age and priorities- though keeping solvent for day to day needs is quite high up the list in my view! I'm not sure how the stakeholder works, some would let you top it up later when you were back in work. Good luck, hope it works out for you!

I would stop overpaying the mortgage and hang on to the extra £100.00 per month. I would plan for the worst and keep ready cash available if possible and put all long term plans on hold.
I presume you know about claiming for working tax credit if your income falls below a certain level.
Plus I would up my income by adding another string to my bow - difficult if you are a lone parent but I did this myself. Look at your skills and see if any are marketable as a sideline/look at ebay - lots of people are making a living from selling items retail that they have bought from wholesalers. I make jewellery and it became so big it's now my main income and I don't need to work for any one else (forageandfind.co.uk)
Above all, from one lone parent to another (since 2000) Good Luck! :))

Thanks both of you. Elaine - your stuff is lovely! If I wasn't economising I'd buy something but I've bookmarked it for my birthday!

Another question: I'm going to get paid twice in July. I have lots of annual leave and lieu time, so I can start while I'm still officially working for my old employer.

Is this going to mean I'll have to pay some extra tax? Both employers will be taxing me assuming I have no other income. Should I tell someone or will it just get corrected over time?

you may need to contact the tax office to sort that as they may both give you tax allowance for that month, so remember to put some money aside so it's not a shock! There are various ways you can pay the extra I think (or there used to be) it might even resolve itself when you pass your P45 with final pay from old employer to your new employer, or it may have to be done by the tax office.