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in dire need of advice

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I would be very grateful for some advice .I have been very foolish in the past with money and have my fare share of debt .I am beginning to make some headway in that department .My main issue at present is lack of savings for the future .I am 32 and neither my husband or I have private pensions .I was wondering is it wise to look into this or would starting with something like an ISA be better,I have little disposable income as I have two small children and a lot of outgoings ,Constructive advice would be very very welcome .I cannot sleep for worrying about this issue .

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  • lisyloo
    lisyloo Posts: 30,077 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Put together an SOA (statement of affairs) detailing all your outgoings and incomings.
    Detail your debts and interest rates.
    Post it all up on the "dealing with debt board".
    There are lots of helpful non-judgmental folk there who will help you, but you need to give them all the info.

    Well done for doing something about it.
    Ideally you need some savings, insurance and pensions but you're not going to be able to do everything in one go.
    If you are being charged hihg interest rates your bets bet may be to pay that off first and then come up with a balanced plan that achieves a longer term solution.
    Good luck - if you're facing up to the problem then you're halfway there already.
  • Yes, visit the DFW board first of all. Normally it doesn't make much sense to save separately if you have more expensive debts that need to be paid off, except maybe to build up a cash float.

    There is a long debate about whether ISAs or pensions are a better savings vehicle. ISAs offer more flexibility, you pay in after tax but gains and income are then tax free.

    Pensions are less flexible, but you pay in before tax, however gains and income are taxable when you take the pension out. However you might benefit from a lower tax rate when you are older (as you get to use you personal tax-free allowance and will probably be in a lower band) and you might get to take a lump sum out tax-free.

    The problem is that pension and tax rules can and do change, so in many ways predicting what the real sitaution 33 years out will be is hard and so the debate is to some extent theoretical.

    Personally I would say if you are a higher rate tax payer then pensions are a good idea, the advantage it less clear if you are basic rate at the moment, but the eventual choice will depend on your personal circumstances and choice.
  • lisyloo
    lisyloo Posts: 30,077 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    One important thing to understand about pensions is that you cannot touch them until retirement (normally at least 55).
    So I was just wanting to put the term "less fleixble" into context.
    You get valuable tax relief but part of the deal is you don't touch the money until later even if you are in really dire straits. There are very few execptions (there is one for terminal illness but even then it's very strict and specific).

    You also need to think about life insurance, income insurance (for sickness, accident and redundancy), but it's liekly that paying off debts will be the first step.
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