Debt and Job loss

dprovan

https://forums.moneysavingexpert.com/discussion/comment/81977734#Comment_81977734

Yes all credit cards and all unsecured sourcrates. I am lucky to have a great mortgage rate of 1.4% for the next 39 months. Mortgage only has 45 months to run.

sourcrates

I think you could quite easily weather any storm that may blow up.

Keep in mind that collection activity on unsecured debts can carry on for two years or more sometimes, then they get sold on, and the game starts again, and after another year or so, you might be able to settle that 87k for a lot less than its face value.

I know the thought of all that debt must be a worry, but you have lots of options here if things take a downward spiral.

dprovan

https://forums.moneysavingexpert.com/discussion/comment/81977796#Comment_81977796

yes the uncertainty is difficult and my brain keeps running programs of what if's, when I know I need to accept that i cant control what is not in my control. I appreciate everyone's advice and feel pretty confident that whatever scenario plays out we will be ok and for now I just need to continue doing what we are doing. Already in the past 5 months our situation has improved, despite the uncertainty not changing.

dprovan

https://forums.moneysavingexpert.com/discussion/comment/81977947#Comment_81977947

Thank you, this is reassuring and deep down I understand it to be true. Every month that passes with no change in work, my net position improves by a minimum of 3k. If a storm comes along I have options, including a DMP. Either way my home is not at risk and the essentials will be covered.

My plan is to continue to pay down the cc by £2,000 a month and to continue to build the savings/pension with the remaining 1k available to me. I understand the point that it is silly paying interest on some of the cc debt with a large savings nest in situ, but the way I am seeing it, the savings give me more options given the high level of uncertainty with my future employment and bearing in mind some of the savings is going into pension which I can access in 17 months, with 40% tax relief, it outperforms the 14% I am paying in interest to the credit card debt that is not currently 0%.

ArtyJ931

https://forums.moneysavingexpert.com/discussion/comment/81977992#Comment_81977992

for me working out whether I can manage the worst possible scenario helps me to reduce anxiety. So if I were in your position I’d do a new in and outgoings spreadsheet (a speculative one) based on whatever lower salary you think you could easily secure and see whether even if the worst happened I’d be ok. It would take some time but not lots of time but that might help to relieve some stress while you don’t know what’s happening.

It might not be something useful for everyone but I thought I’d mention it in case it is. (I have approximately ten million speculative spreadsheets covering such a wide berth of possibilities lol)

MasterG83

I think you are covering this in a pragmatic way, if it was me I would consider keeping the pension payments to the minimum to still trigger any matched rate from your company.

I would probably target as much as I can at debt now, your savings are substantial. If you list your debts smallest to largest I would start with clearing the smallest first, then snowball that payment into the next smallest.

Don't underestimate the power of how that affects your mind, I've been there myself. I'm now debt free but also facing uncertainty in my employment, at 58 it wouldn't be easy for me to find similar work. Can you list your debts on here so that we can see clearly how they look?

dprovan

Thanks everyone for the replies and the support, I really do appreciate it. I’m very aware that my situation isn’t as difficult as what some others are dealing with, and the advice here has genuinely helped me get a clearer head.

I’ve taken the suggestion to map things out and have done a full spreadsheet based on different scenarios. The good news is that even in a worst‑case situation I could afford to manage things, although depending on the terms of any exit from work, a DMP might be the sensible route. That’s the one variable I can’t forecast as it is not fully in my control what an exit could look like.

This uncertainty is also affecting my confidence in overpaying the debt right now. I’m at a point where, if I left on favourable terms financially or even in 4–5 months’ time, I probably wouldn’t need a DMP at all and could just continue as I am. But if things went the other way, I would need a DMP — and in that scenario it feels counter‑productive to have thrown extra money at the debt only to end up on a DMP anyway.

With that in mind, the plan I’m leaning towards is to keep things steady: continue paying £2,000 a month to the debt and £1,000 to savings. If I reach the point where a DMP is no longer on the table, I can then start overpaying more aggressively. I’m also waiting to see if I get any further 0% offers, which might allow me to move the remaining balances and get everything onto 0%. As I said before come Sept 27 i can use two pension lump sums to clear balances- so 18 month deals are perfect.

Does that sound like a reasonable approach?

ArtyJ931

I am no expert but I think do whatever makes you feel the most reassured. And that is reasonable

RAS

If humanly possible, avoid using your pension to pay off debt.

No point robbing your future self.

dprovan

https://forums.moneysavingexpert.com/discussion/comment/81979410#Comment_81979410

Thanks RAS this would mean i would need to work a lot longer than I hoped either in a higher paid job or go down the DMP route and aim for reduced agreements. On the other hand my hope and preferred route was a settlement of some kind from work - put into the pension, purely for tax efficiency (saving the 40%) and then taken out later to clear the debt. So on that route it would not be paid from pension in reality but from settlement but via pension from debt purposes. The other option is to pay from savings which is in effect from future self - does that make sense. Both pensions that i would be taking the lump sums from next September are DB pensions so have the lump sum built in to take. I appreciate all the perspectives it i really helping