6 month drop in income - will we manage?

[lambchopper]

Hi
I was made redundant a month ago. This was a shock ( the company folded). I hadn't worked there for long so no redundancy pay. I am going into hospital for a major surgery in 3 weeks ( dh private health care covered this - so grateful as I don't have to wait) so we've decided that I won't apply for jobs until it's all sorted. I could be looking at a recovery period of 6 months.

I have been fortunate to have a friend who has offered to employ me when I am back on my feet. The job is similar to the one I had previously in terms of responsibilities and pay. It's not a massively paid job but I willl earn around 28k a year

The problem we have is the 6 month income drop. My dh earns a good salary of 69K but we have relatively high outgoings and I am worried that things are going to be very tight.

DH takes home £3800 but all of our bills living expenses and debts takes most of this. I normally take home £1700 which makes a real difference and makes us fairly comfortable. We have cancelled all non-essential subscriptions etc. We are also prepared to live a very frugal life for 6 months. Kids are on board too. I am just worried that it's not going to work. We only have 1k saved - massively regret not making more of an effort with this.

All of our essentials including priority bills, food, fuel and debt payments come to £3400. This will leave just £400 which wouldn't go very far in an emergency DH thinks it's fine and that we will manage perfectly well. I suppose I feel a bit of guilt that I am the one who won't be earning.

Am I overthinking this?

That's a pretty good surplus to have, presumably food costs will go down while you're in hospital (one less mouth to feed).
You could look at selling surplus stuff on Vinted to make a little extra, you can print postage at home and pay extra to have postie collect it. or rope in the kids.

If you need surgery it can't be helped and you still have a surplus.

Whether its enough will depend on whether any big non negotiable expenses come up and also how generous and comprehensive your budgeted £3400 is.

Depending on what you need compared with what you want to spend it could be tight or there could be room to cut back if you need to.

You could spend the time reviewing all your expenses and seeing if you can cut back in any areas (eg food spend, reduce interest on debt repayments).

Look in the moneysavingexpert.com budgeting section for a systematic run through of things to look at.

Also, were you entitled to any statutory redundancy pay from the government? Also if you don't earn for the rest of the tax year its likely you've overpaid tax so reclaim that or use it to offset tax due when you start working again.

Not a fun situation for you, but you do still have a bit of extra, could you bung that in savings to build that up as an emergency fund?

I don't know if this is a thing, but do you have a life insurance policy that covers recovery after illness/surgery rather than just critical illness? Could you use that if things become really tight with money?

Can you go on interest only mortgage for a few months? I’ve just done that on my mortgage

I may be talking absolute rubbish but I vaguely recall my mum had private healthcare and received a payment for each night spent in hospital. It was about £250.

There’s a £10 a day thread on mumsnet which may help you pick up a little spare cash during your recovery. Selling on Vinted, surveys etc are low impact/commitment. If you are able.

Would your friend consider employing you now and then you may be entitled to SSP?

Again, if your recovery goes well there may be a little temp work around, especially WFH.

Also, I hope I don’t sound like a right arse but if you are reliant on your DH with limited savings it may be worth looking into a little income protection insurance for him, when you have the spare funds.

Of course the main thing is your health and I wish you all the best for your op and recovery.

Do you not have any savings? It’s so precarious living without any savings as a back up for things like this.

Am assuming you haven’t got any redundancy pay to help? Would your surgery/recovery entitle you to any temporary benefits?

I think it’s doable if you tighten your belt and power through. It might be painful but knowing it’s just 6 months may help you get through it.

Keep in mind this presumably will cover the Christmas period so focus some serious savings towards that and get the kids comfortable with “experiences” rather than presents. Think there’s already a thread around frugal Christmas/free activities etc that should help.

Budget every last penny. Of the £400 left seriously look at what you’re going to budget for “extras” and what you’re going to put into savings. Set up sinking funds for any non-monthly expense you know will come up (insurances/tax/mot/birthdays/Christmas) so you’re not scrambling when that comes around.

While you recover would you be able to get a bit of extra cash here and there? The £10 a day thread has some good ideas; plus I look on the r/beermoneyuk Reddit sub. You can also get a few hundred quid just by spending a few hours jumping around bank accounts.

I’d also use this as a financial wake up call. If you can afford to survive on just one salary with money left over then you need to do some serious soul searching as to why you don’t have more savings - look back on what you’ve frittered away and make a budget to stop that happening again. Make a plan once you’re back in work to knuckle down and really focus on savings - you should be able to save a 6 month emergency fund in no time.

Depends what you factored into your all outgoings- is that all food including top ups, kid activities etc? It will be tight but if you are both committed to the change in circumstance you should be fine