EDIT 2 (1/11) - Sincere thanks to everyone who’s taken the time to educate me and provide valuable advice! I’ve decided to stick with my pension and chuck the entire inheritance towards my debts
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So I (24F) have found myself with about £15k credit card debt - I’m well aware of how silly this is so no need to go into that please.
I’m on a debt-clearing journey, but with my current debt levels and income, my disposal income ends up being low.
All I ever hear is how good and important pensions are and how you should never opt out, and I absolutely do appreciate their value, but giving up £131 of my take-home every month when I’m already scraping by and being eaten up by CC interest feels really silly to me??? I even had a financial adviser tell me to keep my pension, but it just doesn’t make sense to me? Especially considering I’m still young, it makes sense to me to put off a pension for a while until I’ve brought down my debts.
Is there something I’m missing?
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EDIT 1 (30/10)
Ok let me provide some further info to give a better idea. Apologies for the formatting, I’m on mobile.
EXPENSES
1. Take home w/o pension: £2554
2. Take home w/ pension: £2420
3. Rent & bills: £1200 (yeah it sucks but not one that can be changed atm)
4. Monthly loan payment: £72
5. Monthly commuting: ~£100
6. Monthly groceries: ~£150
7. Monthly prescriptions: £20
8. Total monthly minimum CC payments: ~£800-1000
DEBTS
1. CC1: £7,575 - 31% APR
2. CC2: £1,147 - 32.60% APR
3. CC3: £761 - 30.1% APR
4. CC4: £2,618 - 15% APR
5. CC5: £890 - 25.3% APR
6. CC6: £792 - 32.70%
7. CC7: £900 at 0% for 9 months; £50 at 30% APR
**I am not eligible for any balance transfer or debt consolidation loans at the minute
MY PLAN
First of all, I’m getting help for my spending issues and have been educating myself on my finances to avoid ending up in this situation again.
Secondly, I’ve kind of suddenly come into an inheritance of about £7000. I’m debating between:
I’m also expecting my salary to increase at the turn of the year, and I’m not expecting my living expenses to increase further.
With all this in mind, my thinking would be to opt out of my pension for a maximum of 6-12 months.
——————————————————————-
So I (24F) have found myself with about £15k credit card debt - I’m well aware of how silly this is so no need to go into that please.
I’m on a debt-clearing journey, but with my current debt levels and income, my disposal income ends up being low.
All I ever hear is how good and important pensions are and how you should never opt out, and I absolutely do appreciate their value, but giving up £131 of my take-home every month when I’m already scraping by and being eaten up by CC interest feels really silly to me??? I even had a financial adviser tell me to keep my pension, but it just doesn’t make sense to me? Especially considering I’m still young, it makes sense to me to put off a pension for a while until I’ve brought down my debts.
Is there something I’m missing?
——————————————————————————
EDIT 1 (30/10)
Ok let me provide some further info to give a better idea. Apologies for the formatting, I’m on mobile.
EXPENSES
1. Take home w/o pension: £2554
2. Take home w/ pension: £2420
3. Rent & bills: £1200 (yeah it sucks but not one that can be changed atm)
4. Monthly loan payment: £72
5. Monthly commuting: ~£100
6. Monthly groceries: ~£150
7. Monthly prescriptions: £20
8. Total monthly minimum CC payments: ~£800-1000
DEBTS
1. CC1: £7,575 - 31% APR
2. CC2: £1,147 - 32.60% APR
3. CC3: £761 - 30.1% APR
4. CC4: £2,618 - 15% APR
5. CC5: £890 - 25.3% APR
6. CC6: £792 - 32.70%
7. CC7: £900 at 0% for 9 months; £50 at 30% APR
**I am not eligible for any balance transfer or debt consolidation loans at the minute
MY PLAN
First of all, I’m getting help for my spending issues and have been educating myself on my finances to avoid ending up in this situation again.
Secondly, I’ve kind of suddenly come into an inheritance of about £7000. I’m debating between:
- Putting the full amount towards CC1; or
- Putting £500-1000 towards an emergency fund in a 5% AER current account (I currently have no emergency fund or cash savings), paying off CC6 in full, and putting the rest towards CC1
I’m also expecting my salary to increase at the turn of the year, and I’m not expecting my living expenses to increase further.
With all this in mind, my thinking would be to opt out of my pension for a maximum of 6-12 months.