Student Loan, Pension or Savings Account?

Shoxt3r

Hi there,

For a few months now I've been having more of a disposable income than expected and am thinking about either opening a savings account and transferring the excess money into it, opting to put more money into my pension or whether to pay more off my student loan?

My thoughts are that the savings account would benefit me most as I'm only 28 and at the current state I'm unlikely to pay off my student loan before I retire, while I also have many years to accumulate a pension, at least a few more anyway.

There's also an option for me to pay more off the mortgage that me and my girlfriend currently have as first-time buyers, though as I've read in the terms this may not be a good idea since we may be penalised for settling the mortgage early.

Any thoughts? I tried to find information on the website about this and also by googling the question but didn't find any specific results.

Cheers,

Shoxt3r

Linton

First step - do you have an emergency fund in cash of say 6 months living expenses plus any known major expenses in the next 3-5 years? This is needed to ensure that you dont run out of cash if you lose your job or the boiler needs replacing or some other unexpected major expenditure is needed. If you dont have an emergency fund set it up first.

Second step - if you put more money into your pension will your employer also contribute more? If so maximise your employer's contribution.

If there is still money left - what is your mortgage interest rate? It may be worth investigating not paying extra off the mortgage but start investing in an S&S ISA.

I dont believe there is any great need to pay extra off the student loan at the moment.

SilverSix

Whether to pay off your student loan or not should be based on the type. See here:

http://www.moneysavingexpert.com/students/student-loans-repay

As above, keep a few months earnings behind you in case of emergency.

Most mortgages have ERC's if you overpay above a certain amount each month or % each calendar year. You could start your emergency fund and keep it capped a 3/4/5/6 months salary. Anything else on top you can use for over-payments or set aside in to a seperate over-payment fund account and periodically clear large lumps if your deal so allows. (Providing your net interest is lower than the charge on your mortgage).

Student loan would be at the bottom of my list with a toss up between pension & mortgage. If your mortgage affects your quality of life significantly now then the sooner it's gone the better but if it's quite manageable then I'd plan for retirement.

Eco_Miser

Cash savings should not be in a normal savings account, but in one or more high interest current accounts / regular savings accounts.
See https://forums.moneysavingexpert.com/discussion/5374614