Stopping pension to clear debt

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Fireflyaway
Fireflyaway Posts: 2,766 Forumite
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in Debt-free wannabe
I'm thinking of stopping my pension in order to use the extra income to pay off debt. I'm just not getting anywhere fast the way things are. My pension contribution is 6.5% but my employer pays in 14.8% and that seems a lot to sacrifice. It would only be temporary though.

My debt is £800 on an old catalogue and 2 overdrafts and 2 credit cards ( all current) total of those is around 4k.

Should I not worry as I haven't defaulted or should I get serious and wipe them out? Stopping my pension would give me an extra £140 or so a month.

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  • sourcrates
    sourcrates Posts: 28,878 Ambassador
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    Hi,

    £4000 quid is a pretty small debt to be honest, trust me, you don’t want to scrimp on your pension, when you think the most you will get will be around £700 a month on the state pension, having a private one to fall back on is going to be invaluable.

    All through my 20’s/30’s/40’s etc I put off paying into a pension, I did however, opt out of serps back in the 80’s, so now I’ve just passed 50 I have a few grand in my private pension, but wish I’d saved more.

    Basically £4000 is nothing, don’t compromise your future for it.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • theoretica
    theoretica Posts: 12,306 Forumite
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    If you pay the 4k off your debt with money which would have gone into your pension it will cost you over 8k extra from your employer, over 12k in total. Unless you have a sky high interest rate on the debt or vital deadline to be debt free it is not financially wise.
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
  • tori.k
    tori.k Posts: 3,592 Forumite
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    Why not post up a SOA, of all your outgoings I'm sure like most of us you could find a few savings within your current outgoings to help service your debt.
  • fatbelly
    fatbelly Posts: 20,499 Forumite
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    For 4k of lowest-priority debt I wouldn't mess with your pension.

    As you haven't defaulted your credit history may be ok. How about a new bank account - one that does an introductory 9% overdraft - and/or a 0% money transfer card.

    https://www.moneysavingexpert.com/banking/compare-best-bank-accounts#overdrawn

    https://www.moneysavingexpert.com/loans/cut-loan-overdraft-costs
  • ReadingTim
    ReadingTim Posts: 3,970 Forumite
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    14.8% is a very generous employer contribution - you'd be losing more than twice what you 'save' by stopping.

    Post up a statement of affairs (SOA) for people to make suggestions as to where you can cut back - expensive mobile phone contracts and Sky TV are usually good places to start.
  • Fireflyaway
    Fireflyaway Posts: 2,766 Forumite
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    Thanks all.
    I think I'm pretty good with budgeting. Not sure I can save much more. I've switched power supplier, got a basic TV package, don't have a car payment etc. No gym membership, don't smoke. I don't think my income or budgeting plan is to blame, its probably my discipline in not following it! I have just changed jobs and now have a better income. Some of the debt is from when I had less coming in.
    I just got annoyed with myself and wanted to get rid of the debt but now reading the advice I see stopping a pension would lose more in the long run.
  • enthusiasticsaver
    enthusiasticsaver Posts: 15,594 Ambassador
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    I would not touch your pension especially for such a relatively small debt.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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