Joan Edwards of Jamaica Money Market Brokers Limited.

Forget about doing a bit of buying and selling with a portion of the income.

Unless Maxine is sure she can sell what she buys and make a profit, I would recommend she stay away from this.

The details of what she would buy and sell and how much profit is expected to be made on each item and where the goods would be sold should be discussed with her financial adviser to determine feasibility.

The last thing Maxine wants now is to have goods sitting at home that get utilised, eaten, destroyed or sold on credit and she is unable to collect. So, this needs to be carefully thought through.

Economic situation

After Maxine gets a steady income again and has amassed enough savings, then she can make plans to venture out into a small business. Setting up a small business requires cash up front and it takes a while to recoup what one has invested before seeing profits.

Also, given the economic situation where consumers have less disposable income - that is, we already have more sellers than buyers - one does not want to enter an already saturated market where demand is already decreasing.

I would recommend that Maxine delay the small business until she has a steady income, has cleared off her debt and has funds set aside for the business.

This can be achieved by creating a financial plan, which her financial adviser can help her develop.

More specifically

1. Do not cash the redundancy cheque. Invest it immediately in an interest-bearing account. Speak with a financial adviser.

2. Visit your mortgage company or building society and advise them that you have lost your job and that you would like to renegotiate the terms of your mortgage. This could lead to a longer tenure or extension of the loan period and reduced monthly payments.

This is supported in the Govern-ment of Jamaica stimulus package which became effective January 1, 2009.

3. Given that you have a degree in English, you should seek out a job in teaching, which is also a recession-proof profession.

4. Renegotiate the terms of the bank loan to reduce monthly payments.

5. Pay off the credit card in full as this is the debt with the highest interest.

You can do this by asking your adviser to give you a cheque payable to the credit card company at the end of the first month.

That way, you earn some interest on the $160,000 before you pay it out. This would leave you with $340,000.

6. Ask the financial adviser to make you a cheque each month for exactly $40,000 to cover your living expenses.

Assuming that monthly expenses are $40,000, this would last Maxine 8.5 months. This should give Maxine 8.5 months in which to find another job.

Email Joan: joan_edwards@jmmb.com

Dave Dixon, branch manager at Scotia DBG Investments Limited, Ocho Rios.

I will make the following assumptions about Maxine's case:

I know that it is very difficult to tell someone in Maxine's position not to worry; however, I would like to assure her that she need not worry at this point in time.

The first thing that might come to her mind is to use this J$500,000 and pay down the existing loans. However, this would only leave her with J$80,000 which could not cover her monthly expenses for the next three months.

The best thing is to establish how much equity there is available in the home and use this to consolidate, that is, combine loan and credit card to make one loan. Rewrite the total loan for a much longer period - for example, five years at 23 per cent on the reducing balance with a monthly payment of J$11,840.

Having now consolidated her debts, Maxine would have total monthly obligations of $42,840 (J$21,000.00 + J$10,000.00 + $11,840.00).

Maxine should use the $500,000 to invest in 30-day repurchase agreements, which, at this time, are yielding an average 16 per cent per annum.

On each maturity date, about J$42,840 - this amount would include the interest earned and a portion of the principal each month - should be taken from the account and used to pay the bills.

Given the amount of her monthly obligations, Maxine would have enough funds to pay these bills for a maximum 12 months.

Interest earned

The amount of interest earned each month would lessen over time as the principal would be a reduced amount each month; however, this type of investment gives a better rate than other 30-day investments.

Given her qualifications, Maxine should use this 12-month period to look for a job in the area of teaching. Over the years, a large number of teachers have left for the overseas market and there may be some vacancies. Try to land some freelance work from different media houses.

If she is successful in this effort, then she should start making additional payments to the principal of the loan and also start an emergency and long-term saving plan.

I would also recommend that she check her progress and make adjustments if necessary every six months to ensure that she is on track.

Email Dave: ddixon@scotiadbg.com