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WWYD - pension or pay off debt?

(5 Posts)
MillicentKing Wed 31-Aug-16 13:41:25

I have £4000 debt (total) from two very good friends that has helped me with my divorce.

I have standing orders set up to pay them off. The amount I pay each month is small.

Meanwhile I get a stipend each month which I am meant to put towards my pension (US employer, this was the most straight forward way). I have not been putting the money aside for the pension lately as I've been paying for the divorce.

Things should settle down soon.

Should I continue to pay back my friends at the same rate (they are fine with this) and re-start my pension payments or pay my friends back more quickly?

nb I have a an existing mediocre pension from an old employer, no savings (hello divorce) and am home owner (now with mortgage, was mortgage free but bought him out).

Muddle2000 Thu 01-Sep-16 00:15:20

an interest free loan is not to be sniffed at. Just make sure you treat your
mates once in a while.
Are you likely to increase your earnings in the future?
Remember when you own property it is not only the mortgage but also
the repairs? What would you do if the boiler blew up for example?
Pension contributions currently attract tax relief as I understand from your post there is no employer contribution?
The old pension will just remain frozen

MillicentKing Thu 01-Sep-16 15:45:01

Earnings will increase a little, but not significantly.

It seems like I should spend some time rebuilding my savings, while keeping the payments to my friends the same, though I could make a small increase in repayments as an acknowledgement that I am grateful to them and keen to pay it off.

Once savings are more secure I should re-start pension payments.

At least the home will be in my name.

Muddle2000 Thu 01-Sep-16 16:11:52

Yes, now is the time to consider your entire situation which also may bring opportunities. What if you met another partner in a few years?
Get out a spreadsheet and write down all income/outgoings .
Aim to save a little regularly - see what you could put aside every month.
Where can you save? Takeaway food/drink, clothes, but allow yourself
a treat every month to reward yourself.
Declutter Anything you can sell?
Could you take in a lodger to build extra savings?
What happens if you become ill etc ? There are insurances for that
What can be done with the old pension? Financial advisor help?

MillicentKing Thu 01-Sep-16 16:48:38

Thanks. It's been hard to forecast expenses due to current situation (EA and financially abusive relationship).

I've wanted to just have a few steady months paying the mortgage before making commitments to savings etc

I have a good salary and live comfortably but modestly.

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