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Should we cancel private pension and insurances?
sc6_2
Posts: 17 Forumite
HI everyone
Would really appreciate your views on what we do next in our situation - have taken on board all the things we have learned on here and have already vastly improved our situation with the credit card shuffle, OS shopping and cooking and swapping utilities but we still have a problem.
Basically hubby earns a good income as self employed, I also work FT (two teenagers in sixth form - one just started part time work -yay!) We have high debt
(me £22500 and OH £41000 plus car loan) plus high mortgage £1269. (£134000 outstanding - 12 years remaining). We have not used our credit cards for a long time apart from in the instance below:-
We are able to manage all our commitments without going into further debt bar saving for OH's tax bill twice a year -last time we borrowed the shortfall on a CC and the time before that we increased the mortgage (i know -stupid- we have since had our lightbulb moments).
Obviously this situation has to end. We could afford to save for the tax bill if we cancelled our life insurances/assurances and hubbys contributions to his private pension.
Has anyone else been in this situation? We currently pay insurances of £269.00 a month. This is a mixture of household insurance, level term insurance which covers all the debts if either of us pops off early, and critical illness insurance for hubby in case he is ever too ill to work. (have not included car insurance which is necessary).
OH also pays £369 into a private pension. As a higher rate tax payer he gets tax relief on this. We are both approaching 50 and he has only been paying in for two years. When it was sold to us it was supposed to provide a decent income in retirement but looking at the first statement it looks like we will be lucky to just get back what we have paid in!! (I have a non contributary works pension).
There is lots of advice on this site about not saving when you have debt but I havent been able to find anything specific about pensions. I had a look on the pensions board but no one on there seems to be in debt so am not sure they would be able to help me.
We really dont know what to do for the best -do you all think it is a false economy to cancel these and that we should go back to the drawing board and start looking at everything again - or is there a straightforward answer that you service debt first and then look at some sort of savings plan once we are out of debt? If we just cancelled the pension but kept the insurances it would make a huge difference to what we could throw at the tax bill.
Our other line of action is that we both look for a second job until we have made inroads into the debt.
Would really appreciate your help - I wish we had found this forum a long time ago!!
Would really appreciate your views on what we do next in our situation - have taken on board all the things we have learned on here and have already vastly improved our situation with the credit card shuffle, OS shopping and cooking and swapping utilities but we still have a problem.
Basically hubby earns a good income as self employed, I also work FT (two teenagers in sixth form - one just started part time work -yay!) We have high debt
(me £22500 and OH £41000 plus car loan) plus high mortgage £1269. (£134000 outstanding - 12 years remaining). We have not used our credit cards for a long time apart from in the instance below:-
We are able to manage all our commitments without going into further debt bar saving for OH's tax bill twice a year -last time we borrowed the shortfall on a CC and the time before that we increased the mortgage (i know -stupid- we have since had our lightbulb moments).
Obviously this situation has to end. We could afford to save for the tax bill if we cancelled our life insurances/assurances and hubbys contributions to his private pension.
Has anyone else been in this situation? We currently pay insurances of £269.00 a month. This is a mixture of household insurance, level term insurance which covers all the debts if either of us pops off early, and critical illness insurance for hubby in case he is ever too ill to work. (have not included car insurance which is necessary).
OH also pays £369 into a private pension. As a higher rate tax payer he gets tax relief on this. We are both approaching 50 and he has only been paying in for two years. When it was sold to us it was supposed to provide a decent income in retirement but looking at the first statement it looks like we will be lucky to just get back what we have paid in!! (I have a non contributary works pension).
There is lots of advice on this site about not saving when you have debt but I havent been able to find anything specific about pensions. I had a look on the pensions board but no one on there seems to be in debt so am not sure they would be able to help me.
We really dont know what to do for the best -do you all think it is a false economy to cancel these and that we should go back to the drawing board and start looking at everything again - or is there a straightforward answer that you service debt first and then look at some sort of savings plan once we are out of debt? If we just cancelled the pension but kept the insurances it would make a huge difference to what we could throw at the tax bill.
Our other line of action is that we both look for a second job until we have made inroads into the debt.
Would really appreciate your help - I wish we had found this forum a long time ago!!
0
Comments
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I work for a financial adviser and would suggest that you should not cancel the household insurance or critical illness or level term assurance plans - at least until you have shopped around. If you can find something cheaper that provides the same cover or better then, fine. Apply, and once its in force THEN you can cancel your existing cover.
These policies should be providing you with an amount of cover that you can't just put on your credit card or raise by a personal loan. It would be false economy to cancel them.
As for the personal pension, I would ask if the plan could be placed on a contribution holiday (the policy terms should tell you if this is possible or phone the provider, they will tell you). It may be possible to stop paying premiums for a while or reduce them to a manageable amount. Once your position improves you can ask for the contributions to be increased to a higher level.
Please don't construe this as financial advice. If you are in any doubt, consult your financial adviser. If he/she is decent, they will be more than happy to help.
Hope things get better for you soon."Bad planning on your part does not constitute an emergency on my part."
- Proverb0 -
Thank you anniebooklover - that is something we havent heard of before and will certainly look into that - it could make all the difference. I agree about the insurances - I think we would worry without the cover even tho its expensive.0
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No problem. Glad to have been of help.
Annie"Bad planning on your part does not constitute an emergency on my part."
- Proverb0
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