Saving on a DMP

Kendowned

Hi, I have recently posted after being inactive on the forum for a long time, and I'm hoping I could get some opinions on my current situation after a comment in my last post in the mortgage section. last year I set up a DMP with step-change I had around 20k of debt and was struggling to stay afloat. a year later I have voluntarily terminated my car finance and have around 10k and 5 years left to go and my spending is in a much better place. 

Now I'm not sure what people will think but after I voluntary terminated my car finance last May and the money I saved rather than increasing my DMP some of the money went into sharing costs with my partner's car and the rest (around £200 p/m) I have been paying into a Save as you earn scheme with my employer and prior to the DMP being put in place I had been paying around £40 a month into a matching share plan with my employer and am still doing so. an opportunity came up to start saving into the SAYE scheme based on a low share price due to covid.

This really has been one of the things keeping me going with a light at the end of the tunnel. in around 5 years' time, I can be debt-free and have a relatively decent amount of money to kickstart the rest of my life.

as it stands I have around £5k available and 10k unavailable (which I would lose if I pulled out early)  saved in the two schemes. 3k of the available is in the matching a share plan I have been in for 5 years, I would have to pay tax if I take any money from that over the coming years I can take this tax-free over time and keep the currently unavailable partner shares. 2k of the available I could pull out penalty-free but would lose any potential growth my purchase price on the shares was 2.2 and now they are at 4 I need to stay in the scheme for 3 years to take the growth.

Now it's been mentioned I should clear my debts asap and I probably could do so in around 2 years rather than 5 but lose out on a lot of money. and my credit file is already in tatters due to all the defaults I have on my file based on the above what would you do? I'm worried about speaking to step-change as I'm not sure if my DMP allows me to save in this way. 

TheAble

I don't know much about DMPs I'm afraid but I do think that building some savings while paying down debts is very motivational. Having a few quid to call your own makes a big difference, and the pot of money you'll have at the end of it is something to look forward to.

Kendowned

@TheAble thanks for your reply. It's been a big motivation to keep going and having a clear goal in mind. prior to a recent offer of my partner's parents to help us with a deposit for a mortgage I had a clear plan for the next 5 years but now I'm revisiting things and checking that I'm doing the best thing! 

sourcrates

Debt management is an unregulated arrangement, so there are no rules, you can do as you wish.

If you went with stepchange or another free provider, you can accommodate savings under "emergency fund".

MovingForwards

I saved for my home while paying debts off. Whilst I could have cleared them quicker if I didn't do it that way, knowing the light was getting brighter doing it the way I did was better for me as I ended up DF with nearly enough for my deposit.

Kendowned

@sourcrates Hi, thanks for your response. that was my understanding but I was worried if I tell step change that I'm saving £240 a month and they tell my creditors are unlikely to accept the current payments. since it's a save as you earn scheme I have just reported my take-home income after any savings in my budget sheet. 

Kendowned

The way I see it is that my credit file is trash anyway, and there isn't really any benefit in paying everything earlier. the employer scheme lines up nicely with my current debt-free date and the date my defaults drop off my file. wanted to know from the experienced people of the mse forums if there is anything I'm missing!   

runforlife

Sounds like you could go it alone Kendowned. It’s not difficult. Just tell SC you’re going solo and write to the creditors telling them you are maintaining your arrangement. I then contacted them each year saying the same, or actually reducing the amount. They kept asking for budget sheets but I just said that the current arrangement is one that I can afford . Showing a willingness to pay is all that matters, no matter how much. 

Kendowned

@runforlife do you think that would be needed? I'll be honest everything has been really easy with stepchange managing things. The information they have isn't incorrect as my pay is accurate just doesn't take into account any deductions from it. As far as I'm aware if anyone wanted proof of income I could just show a statement which would show post savings anyway.

runforlife

I never had to prove income to any creditor or stepchange, so you shouldn’t need to worry about that. If SC works for you then there’s no reason to change it 🙂