Pension Payout used for paying off debt

biggerpickle

@threlfaw am struck by your line "I pay £500/mth religiously which is a lot over the minimum payment each month but then I'm left with a few £100 for life which tends to run out."

I am in a similar situation where trying to get rid of the debt too quickly has left me running out and then piling more back on the cards so that 2 years down the line, I am not much less in debt than I was, the debt has just moved time frames so it's more recent spending! I would suggest that you slow down your repayment rate and then not use the cards, I am learning how to do that, it's a battle in changing habits and also means saying "No" more than I like (to myself and others!) but it's the only way forward as without the debt repayments life spend would be OK. I would absolutely not use a pension payout for debt, to me it feels much the same mantra as don't convert unsecured debt to secured / consolidation loans.

Sending you debt busting good vibes!

SpireCaptain

https://forums.moneysavingexpert.com/discussion/comment/81892821#Comment_81892821

Oh yes, definitely agree that it's easy for charges to quickly mount up especially if you pay off transactions before the statement is generated as they'll usually allocate payments to statement balances or the balance transfer that's showing in the statement, but interest from purchase date to paying off said purchase will be applied the statement after without showing as a main balance.

Luckily the Barclaycard's and Tesco CC apply payments to balances with the highest interest first and also if you clear the full balance (excluding promotional balances) there's up to 56 days interest free.

I've just had to make sure I haven't spent over the fixed direct debit amount I set up of £5 more than the minimum whilst the balance transfer is in its promotional period. Not ideal but it's allowing me to tread water for now.

threlfaw

https://forums.moneysavingexpert.com/discussion/comment/81895843#Comment_81895843

I just feel that It's a never ending cycle. Yes i've got debt, yes it's manageable and yes i'm still going to live my life but the debt never goes away so yes i've a problem. Clearing it all in one swoop with a lump some frees up a hell of a lot of money each month for me. Stops me using cards completely and gives me the ability to re-invest more then ive ever been able to whilst having money for myself.

Time2Go_25

Back in 2017 I used my 25% to pay off the mortgage. It was the only money I owed and was manageable, but it was a great feeling, knowing that the house was all mine. I have not owed any money since, and while with the way we ended with very low mortgage rates, my decision may not have turned out to the be best financially, the peace of mind was priceless.

threlfaw

CC's

		Promotional 0% End
CC1	£ 15,691.71	May-28
CC2	£ 7,588.75	Nov-26

Loan

Loan-Ends-Oct-27
£ 9,305.39

Here's my ins/Outs

Salary Net	£ 3,220.89
Household, Mortgage food etc	-£1,470.00
Car PCP	-£ 450.00
Bank interest	-£ 17.82
Loan1	-£ 466.90
Utility	-£ 7.50
Prescriptions	-£ 11.45
Investments	-£ 20.00
CC1	-£ 290.00
CC2	-£ 160.00
	£ 327.22

HelenNoreen

If you are paying above minimum payment and on zero interest, then the debt should be moving. If it isn't, you need to understand why. If it is a budget issue, then paying off the debts with the pension money is not going to solve that, and you will end up back in debt again.

I couldn't see where you explain exactly when this money will be available.. but if you decide now, that that is what you are going to do, chances are that you will put the brakes on paying it off, with the thought in your mind that the pension will sort it, meaning you end up in even higher debt, before the pay out.

threlfaw

https://forums.moneysavingexpert.com/discussion/comment/81896011#Comment_81896011

I've explained earlier that I pay the debt religiously every month but also due to running out of money use CC for fuel, food and recreations etc. So the debt level never really changes. I end up just changing CC's every 12-18 months or so to a new 0% rate. I have great credit rating so new offers aren't a problem, in fact I'm a lenders dream. Pay out would be 12 months from now when I turn 55 and no, I wont end up in more debt as I've been in and around 30k for as long as I can remember.

HelenNoreen

https://forums.moneysavingexpert.com/discussion/comment/81896018#Comment_81896018

Ok - so it definately sounds like a budget issue - even more a reason to address now, rather than clear the debt and end up in the same cycle. I would suggest posting an SOA.