I can't stress that enough as someone who has dug out of debt. I cleared my CC and within a few months i was back to square one as i had thought "Just £20 here for fuel will be fine i'll pay it back" 12 months on i owe £3500 again.
CUT THEM UP! DO NOT HIDE THEM OR STUFF THEM IN THE BACK OF YOUR WALLET!
If you really really really need them for that emergency, you can always order a new card and it will arrive within a few days or use their app to make payments with contactless.
@therese1234 I second speaking to stepchange. You can get a repayment plan on the credit cards and perhaps even getting the interest reduced or frozen.
Just in case it crops up, steer clear of IVAs they are a 'wolf in sheep's clothing'
@therese1234 On 3. They might not be eligible for 0% APR CC... or only get £1000 or so. And considering they've already have 7 CCs, they might already have a CC from most lenders...
@therese1234 This! With the phone thing too, if you pay for contract then call them and ask to pay off early. Then say you’ll stay on sim only with them if they give you a deal (put you in credit). EE lowered my contract to £450 from
£600 and gave me that £450 in credit so I haven’t had to pay my phone bill for six months now and still plenty of money left on it!
So many people say that, repeatedly, and then wonder why at the age of 50 they're suddenly scrambling to try and get themselves into a position where they're not going to live out their retirement in poverty.
And what happens if you don't clear the debt in a couple of years? Will you just continue to kick the can down the road? Given the effects of compound interest and growth, he best time to pay into a pension is last year. The second-best time is today.
Also, because of your employer's contributions, and the tax breaks, when you pay into a pension you are literally being given free money.
@therese1234 I don't know anyone who wishes they had started paying into their pension pot LATER or put less in.
Sure, I can foresee events where you may urgently need the money now and there's no other lever you can pull or spend you can minimise. But for me it would be an absolute last ditch option.
I'd be worried that once you stop and get used to having that extra money for day to day spending it would take a lot of discipline to avoid the lifestyle creep and to adapt to the lower amount again.
@therese1234 Agree hard with this. I was in the same boat, decided not to pay into a pension at first but I would once I cleared debts or turned 25, whichever came first.
I cleared my debts, but then kids came along, and other stuff meant I ‘needed’ the cash. Excuse after excuse persisted and I didn’t start paying in to mine until I was 33, and I tell you now I hugely regret it as I think of over a decade of lost opportunity there.
Pay into the pension right away. Your future self will thank you.
@janecruz You don’t pay tax on your pension contributions since they’re deducted from your gross pay, so effectively if you contribute £125 you’re saving £25 on your tax even in the basic tax brackets.
@pamiam This is only the case with salary sacrifice pension payments right? My current employer pension payments are paid from net earnings unless you explicitly ask for sal sac.
@johnm8269 Salary sacrifice is better because its less hassle (possible self assessment admin) and reduces both PAYE tax and NI contributions, particularly employer NICs. Some employers tip up your pension with the saved employer NICs.
If you use a SIPP (personal pension) and/or net-pay pension (basic employer provided DC pension), you will only get basic 20% tax relief which the pension provider will apply on your behalf. If you are a higher rate tax payer, you then have to fill in a self-assessment to claim the additional 20%. You do not get the benefit of NIC savings.
@servingnovice Ah yeah I didn't think about NI contributions, good shout. But still a tax break on it which is relevant for what people are saying versus potential credit card interest rates.
