Small Steps Out Of Massive Debt!

GeorgianaCavendish

Thank you! First is the remaining Lloyds CC balance (£400 expiring at end of December) and then on to Tesco CC.

Moneyfordreams

I have really enjoyed reading your diary over the last few days GC... I want to congratulate you on how far you have come. And remind you that if you had added your student loan initially.. you would now have paid around 50% of your debts of :T:T:T Keep up with that teaspoon

GeorgianaCavendish

Moneyfordreams wrote: »

I have really enjoyed reading your diary over the last few days GC... I want to congratulate you on how far you have come. And remind you that if you had added your student loan initially.. you would now have paid around 50% of your debts of :T:T:T Keep up with that teaspoon

Thank you! I love that way of looking at it Back when I started this diary, the idea of paying off my student loan felt like an extremely remote possibility so hoping that some of the other debts will start to topple too!

GeorgianaCavendish

One of the things on my financial to-do list that I really want to tackle in early 2020 is my pension.
I have a stakeholder pension with Aviva, I contribute 3% of my gross salary and my employer contributes 8%, so 11% in total. My employer will match my contributions up to 5% (so up to 13% total) and increasing my contributions is on my list of financial goals for 2020.

At the moment everything is invested in the Aviva With Profits Fund (I think the risk rating is 3/7) As I've got at least another 30 years until retirement, I'm starting to think that I should at least look at products with a higher risk rating because I've got the luxury of time to let the investment accumulate. BUT I am really scared about doing this. Is this a legitimate idea or a stupid one? How do I even go about picking other funds? I notice that Aviva has an advice line, but will they genuinely be able to help me or will they want to steer me towards riskier products? I know that there is a pension board but I'm a bit scared to stumble in there and thought it might be friendlier here

PositiveBalance

Hi Georgina,


I would totally up the amount in your current pension scheme to get the match but I would consider getting some advice from someone independent about any investments over and above that. A friend of mine got a half hour free with some investment advisor and she didn't need anything more than that as he just advised her to keep ploughing money into the pension she was already using as it was really good.


I know that every penny is a prisoner at the moment, but I would even consider paying for it as you said that you have the luxury of time and making some savvy decisions right now (with or without some advice) could end up netting you some serious cash later on in life.


Do you know anyone who knows anyone who is good?

GeorgianaCavendish

Thank you for the great advice PositiveBalance!
I will ask around at work to see if anyone has a recommendation for someone independent, and I've requested a callback from someone at Aviva for an initial chat. I also think it would be worth paying for advice on this, if only to be sure that I'm comfortable with my decision.
Upping my pension contribution to 5% is very high on my list for 2020!

PositiveBalance

GeorgianaCavendish wrote: »

Thank you for the great advice PositiveBalance!
I will ask around at work to see if anyone has a recommendation for someone independent, and I've requested a callback from someone at Aviva for an initial chat. I also think it would be worth paying for advice on this, if only to be sure that I'm comfortable with my decision.
Upping my pension contribution to 5% is very high on my list for 2020!

You're welcome! Aviva will be trying to sign you up to something over the phone, so listen to it all but use your stern 'NO' when they try to sign you up! :rotfl:


You still have a significant amount of debt left to pay so I'm not 100% sure if you would be better to increase your salary sacrifice to maximise the amount you get from your employer and throw absolutely everything you can at the debt, then increase your retirement savings properly after that? Yout would have more you could afford to save at that point and wouldn't not be accrusing interest on your debts.


Just putting it out there...:p

GeorgianaCavendish

I keep changing my mind on this issue, but I think that I would like to do is increase to 5% (so I can get the extra 2% matched by my employer) during this year, while also concentrating on clearing my debts. I don’t want to “throw away” money that could be going into my pension, but equally, I don’t want to be “saving” for retirement but accruing more interest and pushing back my debt free date. I suppose the important thing is to make sure that any increase to my pension contributions is not coming out of my debt repayment budget! I might increase my contributions slowly, maybe by 0.5% every other month, to make sure that the increased pension contributions is not impacting the debt repayment.

I’m not planning on investing any more than will be matched by my employer until I’ve paid the debt off though. I want to make sure I’m making the most of the matched contributions and that my existing investment is in the best fund for long term growth. It might be that I work on getting the contributions up to 5% first and then worry about the type of funds when I’m a bit further into my snowball.

I’ll make sure that practice saying “No” before I speak to Aviva!

PositiveBalance

GeorgianaCavendish wrote: »

I keep changing my mind on this issue, but I think that I would like to do is increase to 5% (so I can get the extra 2% matched by my employer) during this year, while also concentrating on clearing my debts. I don’t want to “throw away” money that could be going into my pension, but equally, I don’t want to be “saving” for retirement but accruing more interest and pushing back my debt free date. I suppose the important thing is to make sure that any increase to my pension contributions is not coming out of my debt repayment budget! I might increase my contributions slowly, maybe by 0.5% every other month, to make sure that the increased pension contributions is not impacting the debt repayment.

I understand being in two minds about it. I think you are right to increase to 5% and no more (for now) but I don't see any point in dithering about it as now your student loan has been paid off the amount of take-home pay you get every month is going to naturally go up anyway and if you get used to that new amount it will hurt you more to have the extra 2% taken away so I would personally just increase it to 5% straight away that way you won't get used to the the larger take-home pay and it will become your new 'normal' straight away.


I'm not sure I'm helping on this...:rotfl:

EchoB

Your diary really is inspirational and has prompted me to start my own. Well done and here’s to a great 2020!