Where to get some advice

smallzoo2

Very briefly. We have 1 year left on our mortgage but ( dont ask ) £30k on credit cards

As we only have 1 yr left on our mortgage and due to the credit card debt we are paying £800 to the credit cards and £1700 to the mortgage. We have decided to use £25k from one of my private pensions to pay off some of the debts to allow me to work less ( I am 64 ).

I just want someone to look at my figures and work out which solution is the most efficient in terms of interest but also in terms of what we are paying out every month ( these are probably not the same thing )

Is there anyone I can talk to about this as it really is stressing us that for the next year I still have to work 6 days a week just to keep all the bills paid

Thanks

StepChange_Aidan

smallzoo2 said:

Very briefly. We have 1 year left on our mortgage but ( dont ask ) £30k on credit cards

As we only have 1 yr left on our mortgage and due to the credit card debt we are paying £800 to the credit cards and £1700 to the mortgage. We have decided to use £25k from one of my private pensions to pay off some of the debts to allow me to work less ( I am 64 ).

I just want someone to look at my figures and work out which solution is the most efficient in terms of interest but also in terms of what we are paying out every month ( these are probably not the same thing )

Is there anyone I can talk to about this as it really is stressing us that for the next year I still have to work 6 days a week just to keep all the bills paid

Thanks

Hi,

I'm sorry to hear that you're feeling stressed.

StepChange can certainly help you, we can give tailored advice on the best way to deal with your debts. If you like to talk to one of our advisors, you could give us a call or you can get debt help online through our website.

If you’re struggling to afford the credit card payments, you may be able to set up a Debt Management Plan to make one affordable monthly payment to your creditors. There may also be some other solutions that can help depending on your situation. 

If you’re considering using your pension to pay off some of your debt, I would also suggest getting some specialist pensions advice from Money Helper.

I hope this helps.

Aidan

EssexHebridean

It sounds to me like you need specialised pensions advice on this one too - rather than just debt management advice.

I'll also ask - have you dealt with whatever the situation was that lead to you running up such a substantial amount of debt on cards, and have you now stopped using credit? 

Sncjw

But surely taking out lump sum from pension will reduce the amount you get to live off afte retiring 

Sncjw

Why not post a statement of affairs and we could help you crunch some numbers plus if your throwing 1700 towards mortgage and be done in a year surely could throw that money towards the debt after the kortage is paid off so that's 2500 a month and could be in 12 months so 2 years be debt free. But course the soa could show extra money to put towards the debt.

I'd rather work a little longer if I can and be debt free and have more money to live off from pension than lose 25k from pension. 

smallzoo2

Thanks for all your comments. To be honest after losing my Mum a month ago its made us both realise life is too short to worry about living it up while we are retired. We will have plenty of money on the house once we downsize, we live a quietish life, ie not bothered about fancy cars, holidays etc. Quite happy to spend some time in cottages in the UK with our lovely dogs.etc ( hope that doesnt sound boring..I can assure you we are not bored )

We will still have about £100k left in the pension and I reckon about £100k+ from the house once we downsize.

The credit card is a historic debt due to a business partner taking me to the cleaners. We havent used them probably for over 8 years , just paying them off

As I'm self employed its difficult to get any interest free cards and when I use clearscore even though its says I have a 991/1000 credit score I get no offers

Attached is a summary if this helps. Hopefully it shows ok on the post

	CREDIT CARDS						Mortgage
	CC1	CC2	CC3	CC4	CC5	CC6	Paid off in April 2023
Curent Balance	£8,881	£4,580	£3,261	£7,430	£4,276	£2,833	£23,490
Current Payments	£224	£109	£88	£135	£135	£51	£1,700
Approx % Interest/Month	1.45	1.38	1.48	0.7	0.9	0.7	0.3
Current Avg Take Home per Month	£3,000
Other Direct Debits per month	£380

Thanks everyone

smallzoo2

let me also qualify..I dont want to stop working..we both enjoy being busy BUT I dont want to have to work 5 or 6 days a week just to pay the bills..

sourcrates

If its a personal pension, you can withdraw any amount in cash, should you wish too.

25% of what you withdraw will be tax free, the rest you will pay tax on.

For some unknown reason, HMRC always tax you @ 40% on a pension, if you are a basic rate tax payer, you can claim the difference back from them quite easily.

As you have a reasonable size pot, and equity in your house, it does make sense to pay the cards off, but obviously your "pot" will reduce significantly, if you can live with that then fine, one less thing to worry about.

smallzoo2

Thanks. The conundrum I have is that if I pay of some of the credit cards it will reduce the payments by a few hundred and we will still have to pay the £1700 for the mortgage... such a difficult decision ?

kimwp

smallzoo2 said:

Thanks. The conundrum I have is that if I pay of some of the credit cards it will reduce the payments by a few hundred and we will still have to pay the £1700 for the mortgage... such a difficult decision ?

I'm finding your summary difficult to read on my phone, it seems your options are:

1. Continue working six days or cut back on spending

2. Withdraw 25k? of your pension and pay off some of your loans with a resulting reduction in loan payments to £186
3. Withdraw 25k? of your pension and pay off your mortgage, reducing your outgoings by £1700
4. Some combination of the above

As the above posters, I'd advise you to get proper advice on this, but my other thoughts are:
- your pension pot is small, there's not much leeway with state pension plus £200k for two people for replacement cars, vet bills, broken white goods etc, it's worth doing some proper thinking about what your budget will be (UK cottages are expensive). It's probably more tax efficient to leave your pensions alone.
- and the tough talk: you're talking about it being a difficult decision, but you don't appear to be doing much to help with making that decision eg talk to a pensions advisor and post a statement of affairs on here. 

EssexHebridean

I think perhaps you need to consider deferring this one for a set period of time. For example if you feel that you can comfortably deal with another year of your current working situation then commit to that, and use that year to create and learn to live with a budget and to overpay every single penny you can off your debts. At the end of the year you re-evaluate - with the first decision being how long you're happy by that stage to continue the current working arrangements, that then informs where you go from there.  

One thing you DEFINITELY need is an accurate projection of what your income will be after retirement in each scenario you are currently considering - plus an accurate idea of what you will want to have available money-wise to enable you to live as you would like to.