Additional Income WWYD?

[Arewethebadguys]

I know there are people struggling - we are too, so from September when my youngest starts school I'll need to go back to work fulltime.

I've been PT for 7 years so I know I need to make additional voluntary contributions to my pension.

We have about 15K of debt but all on 0% interest.

How would you split the extra £800 or so?

Thanks

What savings do you have?

aim to have 6 months outgoings in easy access savings before putting more in pensions would be my advise.

what tax bracket are you in? With NI and tax savings is it worth putting at least a bit in.

Will you have to pay for wrap around care?

Will the debt be at 0% for the whole term? I would be a bit worried about that.

Savings for the next shit thing that happens…

Pay off the debt....that low interest won't last forever??

About 1K for family but I've squirrelled away 4k using a monthly amount from my personal 'fun' money.

Make sure you can pay off the debt when the 0% ends. Save that money into a high rate savings account that you can access at the right time. If you have money left pay your voluntary contributions and save any left.

If you have 15K debt … what is the fun money? Why have you not paid the debt off?

Wrap around has already been deducted. The 0% is for 15 months/9 months but can move to other 0% offers when these are up.

Excellent credit score.

So exactly what way would you split? Eg 200 avc, 400 debt, 200 savings etc?

Save, definately save. I am so glad i did. You never know when your circumstances could change.

Fair question, we needed a new window which then flagged subsidence and cost 22k to fix. We didn't gave that yo hand.

I'm no way spending every penny I have on the debts now in case there's an emergency repair needed. I couldn't sleep with 0 savings

Agreed emergency fund is important - then would prioritise getting the debt down

I would prioritise debt over savings, keep the £1k emergency fund but I would pay off as much debt as quickly as possible. You’re 0% won’t last forever and you never know what’s round the corner. When we were younger we built up a lot of debt, and we could afford it, until the economy crashed and DH lost his job, then we were completely screwed. I now only put on credit things I can pay off, either immediately or on a long-term plan (e.g car loan).

Reddit has some useful information in amongst the many stranger areas https://flowchart.ukpersonal.finance could be worth a look for you

We had 8k in savings but used that for the window and initial work.

I'll prioritise savings then. I'm 46 do just worried about pension too

You cannot guarantee the 0% switch, I would concentrate on getting that debt down, I hate debt, always have.

Op has 5K emergency fund already

I would pay 600pm to debt =25 months to pay off and put 200 into savings
Once debt is paid off then you can split 400 savings/ 400 pension

Get rid of the debt ASAP

Agree
Also its a mind set of " oh its nothing, its on 0% " and then wham life happens and suddenly you cant pay it off.

Once the debt is gone then you can focus on long / short term savings and pension.

You have years to backdate your ni contributions. Check now the oldest year you need to top up and set that amount aside. If you claim child benefit ni credits are covered until youngest is 13 anyway.

Haha I use this quite a lot. We were doing well until the unexpected repairs to the house. Especially on my PT wage!

I'm up to date with ni contributions. The avc's are for my workplace pension.

Still think getting debt paid off is the priority
We are entering a very tricky time employment wise and even NHS is making people redundant.
Debt then savings and pension
Once its in your pension you cant take it out again

Have you run the numbers for the AVCs? Assuming you’re in a defined benefit pension they might not actually be that good value. Main contributions are very much worth it due to the subsided rate from the employer but the AVCs are often not quite as lucrative.

I think you’re sensible to want to build up a savings pot but I’d also be very cautious about the prospect of getting another 0%. As a minimum you’d normally have to pay a 3% balance transfer. I think the days of easily going from 0% to 0% have gone. I’d be tempted to try and put in enough to get it below £10k within the guaranteed interest free period (I wasn’t sure if part of it was 9 months and part 15).

I’d go:

£425 debt
£250 building up savings
£125 budgeting buffer

Inevitably going back to work full time will present a challenge. I’d want a bit of a buffer for some of the unexpected stuff like more convenience food, if you decide you need a cleaner, wrap around going up, more holiday clubs etc. I don’t think it’s totally realistic to account for the entire extra income for savings/debt.

Assuming you are already paying in to a pension, I’d wait a couple of years for additional contributions once the debt is a bit smaller.

What will be the balance of your debt at the end of the 0% period?

How disciplined are you with money and savings i.e. not accessing it?

Do you have a DB scheme and what's the projected income versus where you'd want to be?

Will you be a higher rate taxpayer once you're back full time?

Thanks for this, I think you're right

This is really helpful, thank you.

I've not run the numbers for avc's, I had just though these were better as taken before tax. I'll look into this.

You're right, there's a one off fee for the new balance transfer. We had weighed up and thought this way easier than taking extra out of the mortgage. It was definitely cheaper than a personal loan but I suppose our circcould change.

I like that breakdown on how to split the money, although PP have given me the fear re debt so I'll prioritise that a bit more.

500 debt
200 savings
100 buffer

I'll need to check the balances and when interest free period ends as they are on 3 separate cards.

I'm good with money usually. We moved house to get our child into a better school and our mortgage doubled. Also bought a fixer upper but it's been fixed to a reasonable standard for now.

It's a defined benefit scheme. Atm I pay 7%, employer 26% which will rise to me paying 9.9% when ft.

I have now idea how to figure out projected income, I'm away to fall down and rabbit hole . . There's also 3 years in a CARE pension so I'll need to figure that out too.

Higher rate tax payer in Scotland at 42% for 43k-75k

Thanks for this