Looking for some advice :)

bigbeff

Hi all, 
My current situation is as follows:
£3100 on 0% credit card (18months left at this) currently paying £100 a month
HSBC mortgage - 1.59% fixed until June 2022. Currently overpaying approx £150 a month
I have 2 regular savings 
HSBC 2.75% and Virgin 2% of which I am maxing out most months. 
I have also been concentrating on paying off overdraft that will be gone by end of this month... about £100 a month so I want to put that money where it will help me best. I'm part self employed so one of the regular savers will pay my tax bill hence paying so much in.
My question is, with the extra £100 a month, how will it best help - seems silly paying more on credit card currently if I can put it in a higher interest saver and pay that when rate runs out? If I put it on mortgage, it is gone.... I don't think I need it, but after March/April when I lost a lot of income, I am a bit more cautious! What do you all think?
Thank you in advance!

MovingForwards

£100 on £3100, for 18 months won't clear the CC, Nor will £100 into savings for 18 months. What's your alternative plan?

How's your pension looking?

How much do you have in savings, not the earmarked one. 
How stable is your regular job?

Albermarle

You need some kind of long term savings/investment plan ( pension, LISA etc ), so you don't have to rely on state handouts when you retire. How old are you ?

steampowered

The big omission from your post is your pension. If you leave it until you start approaching retirement, it will be too late. 

If you don't feel like you have a good understanding of your pension, you are not alone. You can fix that. Have a read of your pension statements to see what you have saved so far, and work out how much you are saving into it each month.

If your pension is below where it should be, you should stop overpaying the mortgage and stop putting money into regular savers - and top up your pension instead. Pensions generate better returns than the interest you'll pay on the mortgage or get from a savings account, not to mention the 20% or so top-up you'll get from the government via tax relief.

On the credit card, mathematically the best thing would be to make the minimum payments for now, make a note in your diary of when the interest free period expires, put the rest into a savings account, and pay off the balance before the period runs out - pocketing the interest.

But only attempt to do that if you are organised. If you think you might forget to pay off the balance in time, it's best to just pay £172.22 per month - which will clear the £3100 balance in 18 months. 

bigbeff

Thanks, I forgot to mention, I am also a part time teacher and I have a teachers pension which I have been paying into for the last 13years (and still do). I maybe need to look into topping that up, as I was full time until 2 years ago so obviously my contributions are now lower. My latest pension statement says total annual pension amount £7681 - does this mean that's what I would get a year now if I retired? Or would that be my projected amount? (Pensions confuse me! And I know I am not old enough to retire - I'm 38 in answer to question above!) 
And I know the £100 a month won't clear credit card, I was planning on using some of my savings to clear it, but didn't seem worth putting it on 0% if I can gain interest. Currently £1000 in non earmarked savings. My regular job is currently stable so I know I have enough to pay mortgage and bills each month if I lose self employed income again - although that is currently looking strong again, so hopefully won't be an issue. 

Albermarle

Just be aware that the one thing you forgot to mention is probably by far the most important thing in terms of having a decent income later in life. I presume the £7681 is what you will receive at the normal retirement age , although it will presumably increase with inflation and the longer you keep working as a teacher. 

dunroving

bigbeff said:

Thanks, I forgot to mention, I am also a part time teacher and I have a teachers pension which I have been paying into for the last 13years (and still do). I maybe need to look into topping that up, as I was full time until 2 years ago so obviously my contributions are now lower. My latest pension statement says total annual pension amount £7681 - does this mean that's what I would get a year now if I retired? Or would that be my projected amount? (Pensions confuse me! And I know I am not old enough to retire - I'm 38 in answer to question above!) 

Doesn't the statement tell you? £7.68k looks about right for what you'd get when you retire, with 13 years of contributions (though, again, the statement should tell you whether it's based on 13 years, or some lesser number of years - maybe 12 - when the statement was created.) Is this with the Teachers' Pension Scheme? Are you in the career average scheme or final salary?

Maybe take a look at the Which? guide to the TPS 

bigbeff

dunroving said:

bigbeff said:

Thanks, I forgot to mention, I am also a part time teacher and I have a teachers pension which I have been paying into for the last 13years (and still do). I maybe need to look into topping that up, as I was full time until 2 years ago so obviously my contributions are now lower. My latest pension statement says total annual pension amount £7681 - does this mean that's what I would get a year now if I retired? Or would that be my projected amount? (Pensions confuse me! And I know I am not old enough to retire - I'm 38 in answer to question above!) 

Doesn't the statement tell you? £7.68k looks about right for what you'd get when you retire, with 13 years of contributions (though, again, the statement should tell you whether it's based on 13 years, or some lesser number of years - maybe 12 - when the statement was created.) Is this with the Teachers' Pension Scheme? Are you in the career average scheme or final salary?

Maybe take a look at the Which? guide to the TPS 

I'm a combination of both! I had nearly 9 years on final salary, which was switched over to average salary. I will definitely take a look at the which guide, thank you And I am going to talk to them about maybe making some extra contributions.