Mutual Termination of Coaches Contracts

I just bought and started playing FM 2010 and one new option that I noticed is when I started the game and took over a club, the chairman mentioned that the staff would be willing to accept mutual termination of contracts so that I can bring in my own staff. I am playing a small Italian club in C2 and my staff isn't that good and I'm sure I could upgrade, but I already have more coaches than am allowed by my club. My question here is if I do the mutual terminations, it will cost me a combined couple hundred thousand dollars. Where does this money come from and will it effect my transfer and wage budgets? It sounds like a good option to start the game, but I don't want to completely mess up my finances even though our club finances are secure. Thanks for any advice.

Two points.

First, yes it will come out of your overall budget. Not wages or transfer budget, but in lower leagues where money is tight, it might impact on how much money you have to spend later.

Second, you say you have more coaches than you are allowed. Therefore, you won't be able to replace 1-for-1. If you're allowed 2 and you have 4, if you terminate all 4 contracts, you will only be able to hire 2. If you terminate 2, you won't be allowed to bring in any new coaches.