Pension or Debt

chooks23

Hi

I posted this item yesterday, not sure where it went. Anyway, should I pay towards my pension or pay off my debt first?

Any advice?

Thanks

peb

This is really a personal one. How much debt do you have , on what interest rates and when do you expect to pay it off? Converseley how old are you - how long and how much have you been paying into the plan?

If you are really struggling for day to day living then give up, temporarlily, paying into the pension. Otherwise it is a balancing act!

Sorry, no definative answer.

chooks23

I'm 31, £15,000 debit which I know doesnt seem a lot, but on my own with £19000 salary paying mortgage and bills by myself. I am entitled to no benefits other than standard 25% discount on Council Tax. On my current plan I will be debt free in about 7.8 years, I only have about £100 a month to put towards debts. However, if I don't pay into pension I will have about £165 to pay towards debts.

Thanks peb.

terryw

chooks23 wrote: »

I'm 31, £15,000 debit which I know doesnt seem a lot, but on my own with £19000 salary paying mortgage and bills by myself. I am entitled to no benefits other than standard 25% discount on Council Tax. On my current plan I will be debt free in about 7.8 years, I only have about £100 a month to put towards debts. However, if I don't pay into pension I will have about £165 to pay towards debts.

Thanks peb.

A difficult choice that you have to make. A point to consider though is that with pensions, you either have to have a good one or none at all. A small pension although saved for prevents you from receiving pension credit and other top-ups.
but goodness knows if the current system will still be in force in thiry-years time.

If it was me, I would do everything to pay off the debts...but that's me - you may not come to this conclusion.

bw either way

terryw

Starlett

Hi,

I'm in a similar situation, 29 with £20,000 (just less than that now) on my own and I've personally balanced up that the £100 or so that I could put into my pension is £1200 pa to knock off my debt - which by the way has ridiculously high interest rates at the moment, I figured that the extra I pay off now I can force into my pension when I'm finally debt free without then having to change my lifestyle. I need to make sure that I remember to actually put the extra into my pension, that's going to be the big challenge I guess!

Have you reached a conclusion for yourself?

Starlett

GeorgeUK

I was going to give really good advice like this (honest)

mkbean wrote: »

Does the company contribute anything to the pension? If not then unlikely to be the better option, otherwise you may need to get the calculator out to work out which "increases your wealth" fastest.

(taken from your other thread - the only post on it)

You could post up a SOA and we'll see if we can make any savings for you which you can throw at the debt. Possibly even get you paying less interest.

chooks23

Starlett wrote: »

Hi,

I'm in a similar situation, 29 with £20,000 (just less than that now) on my own and I've personally balanced up that the £100 or so that I could put into my pension is £1200 pa to knock off my debt - which by the way has ridiculously high interest rates at the moment, I figured that the extra I pay off now I can force into my pension when I'm finally debt free without then having to change my lifestyle. I need to make sure that I remember to actually put the extra into my pension, that's going to be the big challenge I guess!

Have you reached a conclusion for yourself?

Starlett

Thats what I was thinking, when the debt is paid off I could put what I have been paying towards debt into pension at a later stage. I don't know how good my pension is, I just use the work pension.

chooks23

Whats an SOA? The company contribute 7% towards pension.

Starlett

chooks23 wrote: »

Whats an SOA? The company contribute 7% towards pension.

SOA - Statement Of Affairs - list out all your incomings / outgoings - I got heaps and heaps of advice when I posted mine! Heaps!

7% is 7% of your salary remember, my company is not so generous... will they always be offering that? and 7% of your salary on an annual basis is quite a hefty 'interest' rate!!

GeorgeUK

Sorry. SOA = Statement of Affairs. List of all income and expenditure and debts.

http://www.makesenseofcards.com/soacalc.html

chooks23

Breakdown
Mortgage £353.74
Council Tax £93.00
Buildings Insurance £17.30
Electricity £55.00
HousekeeingLonglife Food £100.00
window cleaner £6.00
pet food £50.00
TV licence £11.49
Hire PurchaseLaptop £12.31
Travelling Expenses £37.00
Packed lunch/ Weekly shop £50.00
Clothing £10.00
Telephone/mobileMobile £15.00
Internet £5.00
Precriptions/Healthdentist etc £15.00
Pet insurance £25.00
Home Repairs £20.00
Entertainment/books/DVD/Socialising £20.00
TOTAL £895.84

DEBTS
Lloyds TSBCredit Card £68.12
Northern RockPersonal Loan£ 43.65
Family LoanMoney owe Dad £31.95
LloydsTSBOverdraft £1.07

TOTAL INC DEBT £1,040.63

Here is one I prepared earlier - copied and paste from spreadsheet I did in May 20008.

My income without paying pension will be approx £1200, I don't know exactly as only been in current job a couple of months and student loan still to be applied.

A couple of things, home repairs and health/precription goes into a savings account. The way its stands if my cooker/washing machine or anything broke I have absolutely nothing to pay for it so felt the need to start to put something by and I also need 2 fillings which are going to cost £100 combined. I no longer have a credit card at all so couldn't use that to make major purchases.

My pets are my what I live for(3 cats, 1 dog (lurcher) and 1 foster dog (Greyhound) at present) I know the food bill for them is quite high, but includes treats/litter and day to day pet stuff.

I have recently ditched cable and went over to freeveiw which will save me £30 by the end of this year (given the cost of installing an aerial etc) and save me £30 every month from May 2009.

Let me know what you think.
Cheers