Am I mad? Opt out of pension to pay off debts?
Discussion
Am I totally mad? Will this even be worth while?
I have some debts (all 0%) that I really would like to pay off a bit quicker, looking at my outgoings and saving where ever possible I’ve done, the last thing that is a big outgoing is my pension
Currently I put in 7% of my pre tax and pre overtime wages which is £200 a month and this is matched by the company.
If I opted out of the scheme for a year, I would lose £2400 in company contributions but after tax at 20% and NI my pay packet would be boosted by around £170 a month I think.
I could then use this extra money over a year to pay off my debts quicker, all of it in around a year instead of the projected 3/4 it’s going to take me now.
I would then be completely debt free (currently I pay out about £450 a month on various things)
I could then re enter the pension scheme, which I am aloud to pay in 10% to but is only matched to 7%
Am I totally mad? A year giving up free money to get totally debt free?
I’m 27 if it matters, been paying into said pension scheme for 3 years, have a mortgage already.
Another option is to give up my company car which costs me around £120 a month, which I don’t use for private use( Vauxhall insignia) and change to a van with no private use, (which means no tax is due) then again add this money onto paying off the debts, a van would actually be better for me to do the job I do, but I drive about 20k a year for work and not sure if a transit custom is as good as the insignia is for what is 90% motorway miles. (Although it’s a decent spec van with heated seats air con etc)
I have some debts (all 0%) that I really would like to pay off a bit quicker, looking at my outgoings and saving where ever possible I’ve done, the last thing that is a big outgoing is my pension
Currently I put in 7% of my pre tax and pre overtime wages which is £200 a month and this is matched by the company.
If I opted out of the scheme for a year, I would lose £2400 in company contributions but after tax at 20% and NI my pay packet would be boosted by around £170 a month I think.
I could then use this extra money over a year to pay off my debts quicker, all of it in around a year instead of the projected 3/4 it’s going to take me now.
I would then be completely debt free (currently I pay out about £450 a month on various things)
I could then re enter the pension scheme, which I am aloud to pay in 10% to but is only matched to 7%
Am I totally mad? A year giving up free money to get totally debt free?
I’m 27 if it matters, been paying into said pension scheme for 3 years, have a mortgage already.
Another option is to give up my company car which costs me around £120 a month, which I don’t use for private use( Vauxhall insignia) and change to a van with no private use, (which means no tax is due) then again add this money onto paying off the debts, a van would actually be better for me to do the job I do, but I drive about 20k a year for work and not sure if a transit custom is as good as the insignia is for what is 90% motorway miles. (Although it’s a decent spec van with heated seats air con etc)
Definitely keep paying into the pension if the debt is 0%. The earlier that money is in it, the better.
I'd probably also switch to the van. The Insignia will be a better motorway cruiser, but modern vans are much better than they were. £120 per month would be better than the difference between the van and the Insignia, to me. Actually, it's exactly what I did when faced with the option of an Audi A4 or Peugeot Boxer
I'd probably also switch to the van. The Insignia will be a better motorway cruiser, but modern vans are much better than they were. £120 per month would be better than the difference between the van and the Insignia, to me. Actually, it's exactly what I did when faced with the option of an Audi A4 or Peugeot Boxer
I am with everyone else on this.
Yes, you are mad to give this up.
You will lose £200 a month of free money and be only £136 a month better off after income tax and employee NI contributions (assuming your contributions are being made gross).
Get the van and find £16 a month from somewhere and you are in the exact same position yet getting £4,800 into your pension at a young age with decades of compound growth ahead of you.
It's a no brainer!
Yes, you are mad to give this up.
You will lose £200 a month of free money and be only £136 a month better off after income tax and employee NI contributions (assuming your contributions are being made gross).
Get the van and find £16 a month from somewhere and you are in the exact same position yet getting £4,800 into your pension at a young age with decades of compound growth ahead of you.
It's a no brainer!
Thanks guys! Seems like il be staying in the pension scheme Then
It’s all 0% credit cards and only about £7k running out at different times in the next year or so, mostly from buying stuff and unexpected bills when buying my first house.
Motivation is just to be rid of it as some of it has been following me around from being a foolish 18 year old with a liking for new cars and things. Snapped out of that now though.
Thought it might be foolish. Will think hard about the van in the new year
It’s all 0% credit cards and only about £7k running out at different times in the next year or so, mostly from buying stuff and unexpected bills when buying my first house.
Motivation is just to be rid of it as some of it has been following me around from being a foolish 18 year old with a liking for new cars and things. Snapped out of that now though.
Thought it might be foolish. Will think hard about the van in the new year
Gtom said:
The transit custom is a brilliant motorway tool. More than enough power to sit at a comfortable speed, quality seats and a high up driving position. So long as you don’t have a roof rack it’s quiet too.
The only negative is the no private use, having a van is very handy.
New transits are quite a nice place to be and a good quality tool for schlepping up and down motorways. Nice and high up making it a relaxing drive as well.The only negative is the no private use, having a van is very handy.
Everyone will be your best friend though as knowing a bloke with a van is handy thing to have.
Deffo van before dropping the pension.
Mikebentley said:
Zetec-S said:
If you go down the van route don't forget some lower speed limits apply.
FFSOh yes and remember it’s a different shape to a car.......no wonder some people have huge post counts posting tripe.
grahamm said:
Mikebentley said:
Zetec-S said:
If you go down the van route don't forget some lower speed limits apply.
FFSOh yes and remember it’s a different shape to a car.......no wonder some people have huge post counts posting tripe.
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