Pension or pay debts?

andyfromotley

How did you accumulate £33k of personal debt?

If it was just living a lifestyle that you could not afford have you addressed this? If not then this should be your first task.

As the recipient of a public sector pension it was for me a gold plated investment which brought returns that were simply not achievable elsewhere. I would caution against risking your pension entitlement unless there is absolutely no alternative.

I would consider almost any type of super frugal living rather than stop your pension. Cutting to the bone, Second jobs (i see you are a teacher, so private tuition? Marking?), selling assets, whatever it takes.

Perhaps if you post your SOA on here we could look at your finances in the round.

lowely

Thanks Andy. The debt comes from prechildren stupidity (spending habits that have now gone) and then a monthly defecit due to my wife not working for 3 years. Although she will go back to work later this year, with nursery fees / travel etc it's pretty much break even. I will dig out my soa and any help will be much appreciated.

L.

japmis

lowely wrote: »

Thanks Lily!

It really does help to hear that other people have been in the same situation and come out of it. I've done my SoA several times and even really cutting things down I just can't see how to make it work. I don't want to lose the pension. I guess I will go back over it again and see what I can shave off!

L.

Have you looked at the YouNeedABudget software (YNAB)? It really has helped me account for every penny

:beer:

Brightspark87

Hi, trust me you want to keep your contributions on your pensions up. The teachers pension is one of the best you can get, and although in the sort term it may help you out, you will benefit so much in retirement.

Put up a full SOA so we can do our best to help and remember youve done the hardest thing by facing up to everything!! x

Mikeone

I agree with those saying you should maintain your pension contributions. Your debt problem feels massive at the moment, it always does when you're trying to face it down, but once it is paid off, (and yes, you can do it) it will feel like a very small part of your financial life history.

If you take a whole-life view of your finances, your pension contributions are among the most valuable expenditures that you will make and, all being well, worth far more in the long run than they are now.

Tackle your debts as a proximate problem that needs to be solved, it's easier than you might think, especially if you use all the help on offer here. :money:

Best of luck!

lowely

Thanks Mike and Brightspark. It's always pretty horrific when youf irst confront it.

My SOA is below and is pretty horrible reading. When my wife starts working, that will pay for the nursery bills (which we don't pay yet), half the holiday fund, half the entertainment, half the groceries and the 180 on other travel. Any help or suggestions are massively appreciate. I feel quite depressed and pretty crap reading this to be honest!

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2860
Partners monthly income after tax....... 0
Benefits................................ 30
Other income............................ 0
Total monthly income.................... 2890

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 1350
Management charge (leasehold property).. 10
Council tax............................. 170
Electricity............................. 57
Gas..................................... 57
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 15
Mobile phone............................ 40
TV Licence.............................. 12
Satellite/Cable TV...................... 70
Internet Services....................... 10
Groceries etc. ......................... 430
Clothing................................ 100
Petrol/diesel........................... 250
Road tax................................ 17
Car Insurance........................... 50
Car maintenance (including MOT)......... 85
Car parking............................. 0
Other travel............................ 180
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 100
Buildings insurance..................... 10
Contents insurance...................... 0
Life assurance ......................... 10
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 15
Entertainment........................... 200
Holiday................................. 100
Emergency fund.......................... 0
Pet food................................ 50
Total monthly expenses.................. 3498


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 600
Other assets............................ 0
Total Assets............................ 600

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card....................7850......237.......0
Loan...........................25000.....500.......7.5
Total unsecured debts..........32850.....737.......-


Monthly Budget Summary
Total monthly income.................... 2,890
Expenses (including HP & secured debts). 3,498
Available for debt repayments........... -608
Monthly UNsecured debt repayments....... 737
Amount short for making debt repayments. -1,345

Personal Balance Sheet Summary
Total assets (things you own)........... 600
Total HP & Secured debt................. -0
Total Unsecured debt.................... -32,850
Net Assets.............................. -32,250

japmis

Well done for posting this so quickly!! :beer:

lowely wrote: »

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2860
Partners monthly income after tax....... 0
Benefits................................ 30
Other income............................ 0
Total monthly income.................... 2890

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 1350
Management charge (leasehold property).. 10
Council tax............................. 170 is this paid over 10 months or 12?
Electricity............................. 57
Gas..................................... 57 £114/month seems high
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 15
Mobile phone............................ 40
TV Licence.............................. 12
Satellite/Cable TV...................... 70 this is the F1 thing, right?!
Internet Services....................... 10
Groceries etc. ......................... 430 you can definitely cut this to £300/month
Clothing................................ 100
Petrol/diesel........................... 250
Road tax................................ 17
Car Insurance........................... 50
Car maintenance (including MOT)......... 85
Car parking............................. 0
Other travel............................ 180
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 100 this seems really high
Buildings insurance..................... 10
Contents insurance...................... 0
Life assurance ......................... 10
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 15
Entertainment........................... 200 this can be cut until debt is under control
Holiday................................. 100
Emergency fund.......................... 0
Pet food................................ 50 again this seems high
Total monthly expenses.................. 3498


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 600
Other assets............................ 0
Total Assets............................ 600

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card....................7850......237.......0
Loan...........................25000.....500.......7.5
Total unsecured debts..........32850.....737.......-


Monthly Budget Summary
Total monthly income.................... 2,890
Expenses (including HP & secured debts). 3,498
Available for debt repayments........... -608
Monthly UNsecured debt repayments....... 737
Amount short for making debt repayments. -1,345

that's £350 you can shave off straight away.

lowely

Thanks japmis. The pet insurance is unfortunate but our dog has had quite a lot go wring with her so nobody else will insure her (we have tried everywhere!) Pet food we will cut down ASAP and I'm definitely going to bin the entertainment.

Thanks again. Any more suggestions would be massively appreciated. I think Sky needs to go!

japmis

lowely wrote: »

I think Sky needs to go!

Definitely!! :money:

Your rent is also a whopping 46% of your take home pay..... so whilst your wife is on maternity you really need to think about not taking a holiday but maybe putting some in an emergency fund instead?

Is there any way to reduce travel costs? £250 on petrol plus £180 on other (trains?) is really a huge slug of money.

I'm not sure if this is possible but if you change the name of your post to SOA or start a new thread you might get more advice.

SeduLOUs

If your SOA is true then you are getting into more debt each month, and even saving £300 a month by taking a pension break won't make a dent. Realistically the entertainment and Sky has to stop - even without debts you can't afford them at least until your partner returns to work.

Petrol also seems excessive for one worker. Is this correct? How much of it is commuting and how much is leisure? What does 'other travel' include?

The only other big numbers are your rent and council tax. Is there any possibility of you being able to move somewhere smaller/cheaper?